A recent NLJ story, “Disbarment Recommended for Litigator Chesley Over Fen-Phen Fees” reports that a Kentucky trial commission has recommended permanent disbarment for attorney Stanley Chesley for allegedly taking millions in unauthorized attorney fees in fen-phen litigation.  In a 29-page report, Trial Commissioner William Graham concluded that Chesley and his co-counsel unlawfully took attorney fees totaling 49 percent of the settlement funds in a class action against diet drug maker American Home Products in a Kentucky state court.  Chesley collected about $20 million in fees.

The report stems from a $200 million class action in 2000.  A jury in April 2009 found other attorneys on the case, William Gallion and Shirley Cunningham, guilty of one count of conspiracy to commit wire fraud and eight counts of wire fraud.  Prosecutors said they kept about two-thirds of the settlement with American Home – about twice what they could lawfully collect.  Gallion was sentenced to 25 years in prison.  Cunningham was sentenced to 20 years.

The trail commissioner wrote that Chesley of Cincinnati, violated attorney ethics rules pertaining to unreasonable fees, notification of fees, making false statements to the court and more.  In addition to recommending disbarment, he called Chesley to pay back more than $7.5 million.  The Kentucky Supreme Court ultimately will decide the matter.

This story was featured on CNBC's American Greed.  CLICK HERE for more information.