04/03/2009 12:00AM

Fen-phen attorneys found guilty


William Gallion and Shirley Cunningham Jr., two Lexington lawyers whose racing interests include Santa Anita Handicap winner Einstein, were found guilty on Friday of conspiracy and eight counts of wire fraud, according to reports.

Gallion and Cunningham, who were disbarred last year, were accused by prosecutors of misappropriating money from a $200 million settlement with the manufacturer of the diet-drug combination fen-phen in 2001 on behalf of 440 clients. Last year, a civil court ordered the two lawyers and a third, Melbourne Mills Jr., to redistribute $42 million of the $94.6 million that the lawyers retained from the settlement.

The two lawyers face a maximum of 20 years in prison each. No sentencing date had been set as of Friday afternoon. The jury also continued on Friday afternoon to deliberate over the financial penalty from the charges.

This was the second trial for Gallion and Cunningham after a jury deadlocked last year and acquitted Mills. Defense attorneys had argued during the second trial that Cunningham and Gallion were unfamiliar with case law at the time the settlement had been reached, and that any misappropriation of the money was not deliberate, but rather due to errors.

In addition to Einstein, Gallion and Cunningham own 20 percent of 2007 and 2008 Horse of the Year Curlin, now retired to stud. Earnings from their horses are being sought by attorneys representing their former clients.

It is likely that the judge in the civil case will begin to proceed with efforts to collect the judgment now that the criminal trial has concluded, though both lawyers could appeal the criminal sentence.