Stanley M. Chesley

Last updated

Stanley M. Chesley
Born (1936-03-26) March 26, 1936 (age 88)
United States
Occupationformer lawyer
Spouse Susan J. Dlott

Stanley M. Chesley (born March 26, 1936) is a disbarred former Ohio trial lawyer. He is the husband of federal judge Susan J. Dlott. [1]

Contents

Chesley, the son of Jewish Ukrainian immigrants, graduated from Walnut Hills High School, the University of Cincinnati and University of Cincinnati Law School. He first came to fame as a plaintiffs' lawyer in litigation arising from the 1977 Beverly Hills Supper Club fire, which killed 165 people (and two unborn infants). Rather than merely sue the nightclub, Chesley sued the entire aluminum electrical wire industry, blaming them for the fire. The aggressive and unprecedented tactic of seeking enterprise liability for an entire industry worked, winning $49 million in verdicts and settlements. Individual defendants settled for about a million dollars in the face of Chesley waving gruesome photos of fire victims rather than risk going to trial and losing much more, though those who did defend themselves often won. [2]

Chesley won billions of dollars for his clients in other mass torts, representing clients suing Pan Am over the Lockerbie terrorist attack and clients suing Dow Corning in controversial breast implant litigation. [1] [3] Chesley was one of the "inner circle" of the plaintiffs' bar that negotiated the controversial $246 billion tobacco settlement on behalf of state governments, and settlements against the Roman Catholic Archdiocese of Cincinnati for sexual abuse.

He was Pro Bono Counsel in the Jewish material claims against German, Austrian, and Swiss financial institutions.

In May 2008, President George W. Bush appointed Chesley to serve on the Honorary Delegation to accompany him to Jerusalem for the celebration of the 60th anniversary of the State of Israel. [4]

Chesley is a Life Board Member of the NAACP and was for five years chairman of the Board of Trustees of the University of Cincinnati. [1]

Self-dealing

Chesley was named in a lawsuit related to the settlement of fen-phen litigation in Kentucky. Former clients sued Chesley and three other plaintiffs' attorneys for allegedly breaching their duties by diverting most of a $200 million settlement fund to themselves with only one third to the plaintiffs. [5] Judge Joseph F. Bamberger approved the settlement, but resigned when it was revealed that he was paid $5000 a month as a director of a charitable entity funded by the settlement and directed by the attorneys. [5] [6] [7] [8] [9] [10] Chesley, who collected a $20.5 million fee for negotiating the settlement, maintained that he was not co-counsel for the plaintiffs and was not aware that the attorneys were deceiving their clients and that he therefore owed no duty to the 440 plaintiffs. [3]

Disbarment and retirement

On February 22, 2011, Kentucky trial commissioner William L. Graham issued an order recommending Chesley be disbarred for his actions. The Kentucky Bar Association's board of governors accepted a trial commissioner's recommendation on June 14, which called for disbarment and restitution of $7.6 million to plaintiffs. [11] It was determined that Chesley violated several ethic rules, namely, "charging unreasonable fees; failing to document his contingency fee arrangement in writing; improperly dividing legal fees with attorneys from different firms; ratifying the misconduct of his co-counsel; representing clients with conflicting interests; making false statements to courts; making false statements in disciplinary proceedings; and general deceit in the distribution of client funds." In the course of seeking to evade judgments against him, Chesley made several below-market transactions to his wife—acts the 6th Circuit described as "red flags." [12]

The Kentucky Supreme Court disbarred Chesley on March 21, 2013, unanimously voting to uphold the 2011 recommendation. [1] Chesley faced disbarment in Ohio due to reciprocal agreements between the two states, but he opted to voluntarily retire from the practice of law in Ohio instead of go through the state's disciplinary process. The practical effect of his retirement in Ohio is the same as if he had been disbarred – Chesley will never be able to practice law in the state again. [13] [14] On November 18, 2013, Chesley was removed from the list of attorneys allowed to practice law before the U.S. Supreme Court. [15]

Continuing litigation of client funds

As of 2017, Chesley was still allegedly trying to shield assets from former clients. In 2013, Chesley transferred $59 million in personal assets to his law firm, and then ostensibly gave up his ownership in the former firm, transferring his shares to a trust overseen by friend and employee Thomas Rehme. U.S. District Judge Robert Cleland oversaw a fraudulent conveyance case brought by former clients, preventing the disposition of Waite Schneider assets. In particular, the judge barred Chesley from receiving any money from the firm. In Kentucky, Boone County Circuit Court Judge James Schrand ordered Chesley in 2015 to transfer his interest in Waite Schneider to former fen-phen clients. Chesley's efforts to block this action through the Ohio courts was stopped by the Supreme Court of Ohio, which stated that Chesley and his former firm were serial abusers of the Ohio judicial process. [16]

In 2018, Chesley's law firm, Waite Schneider Bayless and Chesley, solely owned by Chesley, agreed to pay $23.5 million to former clients, recognizing that there was "unjust enrichment" through the settlement money obtained for clients. This is separate from the legal obligation owed by Chesley himself for $42 million. The federal Sixth Circuit Court of Appeals criticized Chesley's "shell game", wherein he hid assets, sued the former clients and even sued a sheriff to avoid arrest after being found in contempt of court. [17]

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References

  1. 1 2 3 4 Musgrave, Beth (March 21, 2013). "Kentucky Supreme Court disbars famed class-action attorney Stanley Chesley". Lexington Herald-Leader . Lexington, Kentucky.
  2. ↑ Martin, Chuck (May 28, 2006). "Champion for the little guy". Cincinnati Enquirer .
  3. 1 2 Wolfson, Andrew (January 21, 2007). "A breach of duty; wealth mounts for 'prince of torts'". Louisville Courier-Journal .
  4. ↑ Lake, Eli (May 13, 2008). "Bush Visit May Boost Olmert". The New York Sun . Archived from the original on October 12, 2019. Retrieved April 28, 2015.
  5. 1 2 Wolfson, Andrew (January 21, 2007). "Lawyer: Fen-phen notes destroyed". Louisville Courier-Journal.
  6. ↑ Musgrave, Beth (February 28, 2006). "Fen-phen lawsuit judge resigns". Lexington Herald-Leader.
  7. ↑ Hannah, Jim (February 28, 2006). "Judge quits amid allegations". Cincinnati Enquirer.
  8. ↑ "Investigation of Bamberger warranted" (editorial). Cincinnati Enquirer. March 1, 2006.
  9. ↑ "A blistering rebuke" (editorial). Cincinnati Post. March 1, 2006.
  10. ↑ Bronson, Peter (March 2, 2006). "Hold this judge in contempt". Cincinnati Enquirer.
  11. ↑ "Kentucky Bar votes to disbar Stan Chesley for role in fen-phen case". The Courier-Journal. June 14, 2011. Retrieved April 28, 2015.
  12. ↑ McGirr v. Rehme, Case No. 17-3519 (6th Cir. May 31, 2018), available at http://www.opn.ca6.uscourts.gov/opinions.pdf/18a0101p-06.pdf
  13. ↑ Kimball Perry, The Cincinnati Enquirer (April 19, 2013). "Disgraced lawyer decides to retire, not fight". USA Today . Retrieved April 28, 2015.
  14. ↑ IT Office [MRD]. "Supreme Court of Ohio / Public Attorney Information". state.oh.us. Retrieved April 28, 2015.
  15. ↑ "U.S. Supreme Court disbars Stan Chesley". Cincinnati Business Courier. November 18, 2013. Retrieved April 28, 2015.
  16. ↑ Frankel, Alison (October 10, 2017). "Disgraced and disbarred, Stan Chesley is trying to shield assets from former clients". Reuters.
  17. ↑ Grasha, Kevin (October 4, 2018). "Stan Chesley's law firm admits 'unjust enrichment,' agrees to $23 million settlement". Cincinnati Enquirer.
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