Once again, Ohio Supreme Court says no to a Chesley end-around

Majority frowns on ex-lawyer's latest attempt to shelter assets from creditors with $42 million judgment

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By a 4-3 vote Thursday, the Ohio Supreme Court stopped a Hamilton County court’s contested liquidation of disbarred lawyer Stan Chesley’s former firm, calling the case “the latest chapter in the ongoing campaign to shelter assets” from creditors holding a $42 million judgment against Chesley in Kentucky.

The opinion, issued Thursday, prohibits Hamilton County Probate Judge Ralph Winkler from proceeding with the sale of assets held by the defunct Waite, Schneider, Bayless & Chesley. An assignee for the firm, Eric Goering, had been on the verge of selling the Fourth Street firm’s artwork, furniture and 29 exotic cars, including six Rolls-Royces.

The Ohio Supreme Court was asked to intervene by 19 of the 382 people who were first victimized by the dangerous weight-loss supplement fen phen, then by the lawyers who represented them. Chesley, the former "king of torts," and other lawyers extracted an out-of-court settlement from the drug’s maker in 2001, but it was later ruled that they improperly withheld $42 million from their clients. Boone County Circuit Judge James Schrand held Chesley personally liable.

Facing such a large bite out of his net worth, Chesley turned to Ohio judges to block collection of the judgment. Hamilton County Common Pleas Judge Robert Ruehlman was the first to run interference, but the Ohio Supreme Court ruled last year that he had a “patent lack of jurisdiction.” Chesley’s Probate Court tack commenced 13 months ago.

The Supreme Court majority included Chief Justice Maureen O’Connor, Terrence O’Donnell, Pat Fischer and William Klatt, an appellate judge from Columbus substituting for William O’Neill. Writing in dissent was Justice Pat DeWine of Cincinnati, joined by Sharon Kennedy and Judith French. They wrote that the majority exceeded the court's own rules for issuing extraordinary writs.

The majority opinion outlined each of the maneuvers Chesley has used to keep his creditors at bay. Once, it noted, Chesley asked that the creditors’ lawyer be held in contempt of court for asking that Chesley be forced to transfer his interest in his law firm. It also noted that Chesley, facing arrest in Kentucky for failing to appear in court, sued Hamilton County Sheriff Jim Neil to block service of the warrant.

The Supreme Court’s opinion Thursday also saw fit to include a choice comment from a federal judge, James Carr, who encountered Chesley’s antics in an unrelated case.

Commenting on the Boone County judge’s assertion that Chesley’s 2013 conveyance of his law firm’s shares to a trustee was a sham, Carr wrote that the finding “casts a bright light on the tenacity with which Chesley has sought, and continues unrelentingly to seek, to retain money that he and his confederates stole from their former client victims.”

Chesley, who lives in retirement in Indian Hill, was disbarred by the Kentucky Supreme Court in 2013 for his conduct in the fen phen case. Rather than face occupational expulsion in his home state, he retired.

Angela Ford, the Lexington attorney who represents the fen phen plaintiffs, could not be reached for comment Thursday. A spokesman for Hamilton County prosecutor Joe Deters, who represents Winkler, did not respond to a request for comment.

With the help of Ohio attorneys, Ford is attempting to collect the $42 million from Chesley through federal court in Cincinnati. Because Chesley wife Susan Dlott is a federal judge in that court, the case was assigned to Senior U.S. District Judge Robert Cleland of Port Huron, Mich.

CONTACT JAMES McNAIR at [email protected], 513-914-2736 or @jmacnews on Twitter




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