U.S. top court rejects appeal of Kentucky fen-phen lawyer

WASHINGTON (Reuters) - The U.S. Supreme Court refused on Monday to hear an appeal by a Kentucky lawyer accused of cheating clients out of millions of dollars paid in a settlement over the diet drug combination fen-phen.

The high court, without explanation, rejected William Gallion's bid to overturn his conviction for fraud related to his representation of 440 clients who had opted out of a nationwide class action claiming injuries from the anti-obesity drug fen-phen.

A jury convicted the once-prominent attorney from Lexington, Kentucky, and his co-counsel Shirley Cunningham in 2009 for defrauding clients out of their share of a $200 million settlement with American Home Products, now part of Pfizer Inc.

Under their agreements with clients, the lawyers were supposed to receive one-third of any settlement amount. Instead, they pocketed twice that amount, prosecutors said.

Prosecutors accused Cunningham and Gallion of lying to clients about the settlement negotiations, misleading the trial judge and funneling settlement funds into a foundation, the Kentucky Fund for Healthy Living, where they were paid directors.

Gallion was sentenced to 25 years in prison while Cunningham received a 20-year term, and the men had to pay $127 million in restitution to their clients. The jury acquitted a third lawyer who had raised alcoholism as a defense.

Gallion and Cunningham appealed their convictions to the 6th U.S. Circuit Court of Appeals in 2009, claiming they were denied a fair trial. They argued that they did not intend to defraud their clients but rather relied on the guidance of another lawyer and the fact that the judge approved their actions.

But the 6th Circuit Court of Appeals rejected their arguments, finding that the pair had "participated in a massive scheme to defraud their clients."

Asking the Supreme Court to review his case, Gallion said the trial judge had improperly decided a factual question that should have been left to the jury. He also argued that findings from a parallel investigation by the Kentucky Bar Association should not have been admitted as evidence in the criminal case.

But the court, in an order without comment, declined to take the case on Monday.

Reached by phone, Gallion's lawyer Louis Sirkin said he had not yet seen the order and declined to comment.

Clifton Harviel, who represented Cunningham, said his client was serving out his sentence at a federal correctional facility in Mississippi.

The case is Gallion v. United States, U.S. Supreme Court, No. 12-533.

(Reporting by Terry Baynes in Washington; Editing by Howard Goller)