LOUISVILLE Ky.
A $1 million endowed chair at Florida A&M Law school could become central to the trial of three Kentucky lawyers on wire fraud charges that they bilked clients out of millions in a settlement over the diet drug fen-phen.
Federal prosecutors said they may use evidence that attorney Shirley Cunningham Jr., a co-owner of Breeders’ Cup Classic winner Curlin, used money taken from clients to endow the chair, which is the subject of a separate investigation.
Cunningham, William Gallion and Melbourne Mills Jr. are currently in jail awaiting trial on charges of conspiring to commit wire fraud. A state court judge has ruled that the three men owe more than 440 clients at least $42 million.
The motions concerning Florida A&M were among a flurry of filings as the case moves toward a trial scheduled for January.
Assistant U.S. Attorney Laura Voorhees said in one motion that evidence would show the $1 million gift came from fen-phen funds from clients.
“Therefore, it is relevant evidence of the execution of the fraud,” Voorhees wrote.
Voorhees hasn’t said definitively if the Florida A&M allegations will be raised at trial, only noting in a motion that she would like the option of doing so.
Cunningham’s lawyer, Steven Dobson, is seeking to keep references to Florida A&M out of the fen-phen trial.
“The federal investigation of Shirley A. Cunningham Jr., is not applicable to the case at bar because no charges were ever filed,” Dobson wrote in a motion.
Cunningham gave the money to Florida A&M in January 2002 with the condition that the school grant him the position at a $100,000-a-year salary. The school fired Cunningham in 2005 after interim FAMU president Castell Bryant said there was no evidence Cunningham had done any work at the law school.
Federal prosecutors investigated Cunningham, but have not filed charges. The Florida Attorney General’s Office said it is reviewing the arrangement.
Cunningham and Gallion bought Curlin for $57,000. They sold controlling interest of the colt in February for a reported $3.5 million to a group composed of Jess Jackson, founder of Kendall-Jackson wines; Satish Sanan’s Padua Stables; and George Bolton.
Other issues pending before U.S. District Judge William Bertelsman in the case are whether prosecutors violated the three men’s attorney-client privilege when a legal assistant to one of them recorded conversations and whether references to civil litigation and actions by the Kentucky Bar Association against the attorneys can be brought up at trial.
Bertelsman has a pretrial hearing set for December, but has not ruled on any of the issues.
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