Chesley undecided on arrest warrant

Prominent former attorney Stan Chesley told The Enquirer Thursday that he doesn't yet know what he will do about a warrant for his arrest issued in Boone County late last month in the latest twist in the ongoing fen-phen settlement saga.

"It's a frightening experience … having practiced law for 53 years to have a bench warrant issued in a civil matter," Chesley said in his first public comments since the warrant was issued. "And then to tie it to a $675,000 bond for not showing up in court?"

Boone County Circuit Court Judge James R. Schrand issued the warrant on Oct 29 after Chesley failed to appear for a hearing in the case over money taken by lawyers from clients' shares of the original $200 million settlement resulting from the faulty diet drug. He also set bond a $675,000, an amount equal to the next payment Chesley is expected to receive as part of a settlement in a separate Nevada case.

One legal expert said such bench warrants are common when someone doesn't show up to a hearing under court order.

"Essentially you are thumbing your nose at the judge and you'll get such a warrant almost 100 percent of the time, even in a civil case like this," said Steve Smith, a lawyer with GraydonHead in Fort Mitchell.

What isn't clear, however, is what happens if Chesley continues to stay in Ohio and doesn't turn himself in. Smith said that Chesley's outstanding warrant would show up on any police computer were he to get pulled over or otherwise come in contact with police, but that "it would be up to the discretion of the officer whether to take him in."

As for possible extradition, Smith said that this is an unusual case and that either the judge or Kentucky law enforcement officials could push the issue and officially ask Ohio police to take Chesley in.

"Is that likely in this case? It is so hard to tell," Smith said."But that warrant does exist and will continue to do so as long as Stan doesn't turn himself in."

The original case, filed nearly 20 years ago, eventually led to the conviction of two lawyers for skimming millions in legal fees and to the disbarment of a judge as well as Chesley in Kentucky. Rather than face disbarment in Ohio, Chesley retire.

Chesley's lawyers told The Enquirer Thursday that a ruling that he hand over his shares in his former firm could violate state law, and that the warrant puts him in an awkward position. Schrand held the Oct. 29 hearing over why Chesley has not passed over those shares in Waite, Schneider, Bayless & Chesley. Chesley did not appear at that hearing, prompting the warrant.

"The requirement that he appear is untenable," said Chesley's Ohio lawyer Vince Mauer. "It's either appear and be prepared to violate Ohio law, or don't appear and be in danger of facing an arrest warrant."

According to Ohio code, an attorney not licensed in Ohio cannot own shares in an Ohio law firm. Chesley and his lawyers argue that turning over his shares (currently owned by a separate trust) to a Kentucky lawyer would violate that law.

Mauer also said Chesley has no current dealings with the firm, and turned his shares over to a separate trust and does not own them directly anymore.

In June, Schrand ordered that $59 million Chesley transferred from personal accounts into the law firm be given to plaintiffs. But Chesley and his lawyers say that the money has already been spent.

Schrand found Chesley liable for the money that was stolen from the original fen-phen clients in late 2013. The original amount due plaintiffs in 2008 was decided to be $42 million, but included provisions for interest.

The other three lawyers on the case have paid $17 million to plaintiffs, so far. Those include William Gallion and Shirley Cunningham Jr., who are still serving sentences of 25 and 20 years respectively. The third lawyer, Melbourne Mills Jr., was acquitted and has accused the other two lawyers of misleading him as well on the total amount of the settlement.

The lawyer for 382 of the original clients also got $20 million back from a nonprofit the three lawyers set up with the proceeds of the original settlement. According to filings in other states, Lexington-based lawyer Angela Ford claims that Chesley owes $76 million now, due to the accrual of interest.

All three of the lawyers involved were disbarred, as was the case's original Boone County judge after he took a position with the nonprofit soon after his retirement.

Chesley, however, has long maintained he did not know the other lawyers were taking the money and that he was paid a preset amount of $20 million out of the total $200 million settlement.

"I was the one that got them from $25 million to $200 million in the first place," Chesley told The Enquirer Thursday.

Schrand declined comment on the case.

Ford, who is representing nearly 400 former fen-phen clients who had their money taken by the original lawyers, said that Chesley "should comply with Judge Schrand's orders."

Ford also said that through her discovery so far, she has come to the conclusion that Chesley's former firm is no longer operational as a law firm and that it "is only a holding company for Chesley's assets."

"Therefore, their argument isn't valid," Ford said.