COVINGTON, Ky. Two lawyers accused of defrauding their clients in a diet-drug settlement of $65 million were sent back to jail Thursday after a jury deadlocked and a federal judge declared a mistrial.
The jury had considered the case against suspended lawyers William Gallion and Shirley Cunningham Jr. for eight days, and twice sent out notes indicating it was stumped. A third defendant, Melbourne Mills Jr., was acquitted earlier this week. All faced a single charge of conspiracy to commit wire fraud.
The case has been closely watched in the horse racing industry because Gallion and Cunningham are part-owners of 2007's Horse of the Year, Curlin. Curlin has won the Preakness, Breeders' Cup and Stephen Foster Handicap. The attorneys have since sold an 80 percent share of the horse.
Attorneys for Cunningham and Gallion asked U.S. District Judge William O. Bertelsman to free the two men pending a new trial, but Bertelsman ordered them back to jail. Gallion is being held on $52 million bond; Cunningham on $45 million bond. Prosecutors said they plan to request and schedule a new trial in the next two months.
"The weight of the evidence is strong, nothing has changed in my mind," Bertelsman said. "The risk to flee is even greater in my mind."
The lawyers were accused of keeping millions of dollars that should have gone to plaintiffs in a $200 million settlement of a class-action lawsuit over the diet drug fen-phen, which was recalled after some studies indicated it could cause heart damage.
Prosecutors said in closing arguments last week that the lawyers were motivated by greed when they took a $127 million payment when they should have been paid $60 million. Defense attorneys said the lawyers didn't commit any crimes and any mistakes in the settlement were unintentional.
Gallion's lawyer, O. Hale Almand, called the mistrial a disappointment.
"We think the evidence is very clear," he said.
Cunningham's wife, Patricia Cunningham, said her husband and Gallion should have been released from jail. Not only did the two men not commit a crime, they got a better settlement from fen-phen's maker, American Home Products, than any other attorney could have, she said.
"These men are not the villains," Patricia Cunningham said. "AHP gave them the drugs."
Gallion's girlfriend, Melissa Green, cried as the judge ordered Gallion back to jail. She declined comment after the trial.
A former client in the settlement who sat through much of the trial, Lisa Swigger of Salyersville in eastern Kentucky, had hoped for a guilty verdict.
"I think that justice will prevail in the next trial," said Swigger, who wore a dust mask throughout the proceedings because of multiple health problems, some of which she blames on fen-phen. "We should get all the money that's due to us."
The mistrial is not the only legal issue facing Gallion and Cunningham. The attorneys, along with Mills, are defendants in a civil suit brought by more than 400 of their former clients.
A state judge has already ordered the three suspended attorneys to repay $42 million plus interest, finding that they illegally took the money from the fen-phen settlement. A trial on punitive damages has yet to be scheduled.