A federal grand jury re-indicted two owners of 2007 Horse of the Year Curlin on charges that they bilked clients of $94 million in a settlement over the diet-drug fen-phen.

William Gallion and Shirley Cunningham Jr. were charged Sept. 3 in federal court in Lexington with one count of conspiracy to commit wire fraud and eight counts of wire fraud related to their handling of a $200 million legal settlement.

The two Lexington lawyers bought Curlin in 2005 before selling an 80% interest in the horse.

After a six-week trial, a jury could not reach a verdict in July on Gallion and Cunningham on charges of conspiracy to commit wire fraud. A third attorney, Melbourne Mills Jr., was acquitted. Gallion and Cunningham have been awaiting a retrial scheduled for 2009.

The new indictment converts what were charges conspiracy to commit wire fraud charges to charges of wire fraud. The indictment lists nine separate wire transfers of money the grand jury said should have gone to their clients.

Prosecutors are also seeking the forfeiture of $94 million from legal fees and other settlement funds handled by Gallion and Cunningham.

The indictment lists 15 properties in Kentucky and Florida that prosecutors will seek to claim to settle the forfeiture if the men are convicted.

Stephen Dobson, a Tallahassee, Fla.-based attorney for Cunningham, called the new indictment disappointing and said it contained little new in the way of allegations against his client.

“I hope this isn’t vindictiveness on the part of prosecutors,” Dobson told The Associated Press. “All of this information was known at the time it was presented to the grand jury last year.”

Gallion’s attorney, O. Hale Almand of Macon, Ga., did not immediately return a message seeking comment.

Prosecutors argued during the first trial that Gallion and Cunningham were motivated by greed when they took a $127 million payment from their clients when they should have been paid $60 million. Defense attorneys said the lawyers didn’t commit any crimes and any mistakes in the settlement were unintentional.

Gallion, who remains jailed pending a retrial, and Cunningham, who posed $1.25 million in bond last month, are the original owners of Curlin through Midnight Cry Stables when they bought him for $57,000 at public auction.

In February 2007, they sold an 80% interest in the horse for $2.6 million to a group led by Kendall-Jackson Winery owner Jess Jackson.

Jackson later bought out his partners. Gallion and Cunningham retain a 20% interest in Curlin.

Curlin is also seeking to become horse racing’s all-time money leader. He currently is third in all-time earnings, having won over $9.3 million. He trails only Skip Away ($9.6 million) and Cigar ($9.9 million).

Gallion, Cunningham and Mills are also being sued by 418 former clients. A state judge ordered Cunningham’s and Gallion’s assets, including Midnight Cry Stables, turned over to the plaintiffs to satisfy a $42 million judgment stemming from the lawsuit.

Attorney Angela Ford of Lexington has asked a state judge to force the sale of Curlin and the men’s other assets to satisfy the $42 million judgment. That request has not been ruled on.
(Source: The Blood-Horse)