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Lawyer Chesley disbarred over ethics in diet drug settlement

By Karen Freifeld

NEW YORK (Reuters) - Stanley Chesley, a renowned class action attorney, was disbarred on Thursday by the Kentucky Supreme Court, which found him guilty of ethical violations in connection with a $200 million settlement over the diet drug fen-phen.

The court said Chesley, 76, of Cincinnati, Ohio, took an excessive $20 million fee and helped cover up misconduct by other lawyers in the case to protect the improper payments he accepted.

The ruling is a blow against an attorney once described as the "master of disaster" for his success in representing families of victims. He's been involved in settlements with tobacco companies, breast implant manufacturers and Libya over the bombing of Pan Am flight 103 over Lockerbie, Scotland.

"While the good reputation he has enjoyed and his generosity serves to exacerbate the tragedy of his fall, they cannot atone for the serious misconduct he has committed in connection with this matter," the court said in a written decision.

Chesley's lawyer, Sheryl Snyder, did not immediately return a call for comment.

The Kentucky high court took away Chesley's law license but declined to make him pay more than $7 million in restitution recommended by the board of the Kentucky Bar Association.

Two other once-prominent lawyers in the 2001 settlement over the diet drug fen-phen with American Home Products, now Pfizer, were convicted of bilking clients out of millions.

The lawyers were supposed to receive a third of any settlement amount. Instead, the clients received less than 37 percent of the settlement while the lawyers pocketed the rest, according to a federal appeals court that upheld their convictions in May.

((Karen.Freifeld@thomsonreuters.com)(1-646-223-6921))

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