08/17/2009 11:00PM

Decades in prison for Midnight Cry lawyers

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Two lawyers who are part owners of two-time Horse of the Year Curlin were each sentenced to decades in prison on Monday for their roles in defrauding clients in a settlement with the maker of a controversial diet-drug treatment.

William Gallion, 58, was sentenced to 25 years in prison by U.S. District Judge Danny Reeves, while Shirley Cunningham Jr., 54, was given a 20-year sentence. In addition, the two men were ordered to pay $127 million in restitution to their former clients, and forfeit $30 million to the court, judgments that could lead to the disposition of their horse racing assets.

Lawyers for the men said that they would appeal.

Gallion and Cunningham own 20 percent of Curlin, who stands now at Lane's End Farm outside of Lexington for a fee of $75,000 live foal. They also own the top turf specialist Einstein, who has been among the leaders of the handicap division this year after winning the Santa Anita Handicap.

Two years ago, Gallion and Cunningham, along with a third lawyer, Melbourne Mills Jr., lost a $42 million judgment in civil court sought by 440 former clients in a lawsuit against the manufacturer of fen-phen, a diet-drug treatment linked to heart problems. Because the lawyers were still facing criminal charges, a final resolution of how the civil judgment should be paid has not been released, though the judge in that case is expected to release an opinion in the next several months.

The plaintiffs in the civil case or the U.S. government will probably seek the sale of the lawyers' equine interests to satisfy the judgments against them, according to Richard Getty, a lawyer who has represented Curlin's majority owner, Jess Jackson's Stonestreet Stables, in the case. If the government seeks to sell the 20 percent share of Curlin, Jackson will be able to match the price under a right of first refusal that was contained in the contract Jackson negotiated to purchase a stake in Curlin early in the colt's racing career, Getty said.

"I would assume that at some point the plaintiffs or the government are going to target that share and seek to sell it or otherwise dispose of it," Getty said. "If that's the case, Mr. Jackson will be able to exercise his right of first refusal."

A lawyer for the plaintiffs, Angela Ford, did not immediately return phone calls on Tuesday morning.

Previously, Ford had said that it was doubtful that the lawyers could satisfy the $42 million judgment of the earlier civil suit. Most of the lawyers' assets, including their racehorses, are owned by a string of limited liability companies whose earnings have been placed in receivership.

Gallion and Cunningham are both based in Lexington. They were disbarred late in 2008 because of the civil-suit judgment, and on Monday, the judge declined a motion by their lawyers to be released pending their appeal.