CINCINNATI, Ohio – Stanley Chesley, a once-prominent plaintiffs attorney known as the “master of disaster,” may face the continued freezing of his assets after an appeals court upheld an injunction against him. The court reached this decision after determining that Chesley, who was disbarred in Cincinnati, is likely to engage in what it called a “high-stakes shell game.” The case emerged from his former clients’ efforts to collect on a $42 million judgment obtained from a Kentucky state court. These funds come from a $200 million settlement in 2001 related to fen-phen, a diet drug cocktail. Chesley and his co-counsel were accused of misappropriating the settlement funds.
The U.S. Court of Appeals for the Sixth Circuit recently supported a district judge’s asset freeze order against Chesley, despite the Ohio Supreme Court’s ruling against transferring the assets to the Ohio probate court. According to Sixth Circuit Senior Judge Richard Suhrheinrich, Chesley has provided no reason to trust that he will cease his ongoing scheme to evade the $42 million judgment. The judge stated that Chesley’s primary focus has been to move his assets beyond the reach of his creditors while still maintaining control over them. The fear is that if the injunction is lifted, Chesley will continue to do so, preventing his creditors from recovering what they are owed.
Lawyers representing Chesley’s former firm, Waite, Schneider, Bayless & Chesley, and the attorney in charge of his assets, Thomas Rehme, declined to comment on the matter. On the other hand, Angela Ford, who represents Chesley’s former clients, expressed hope that the district court would now act with urgency, bringing an end to the long-standing legal proceedings.
Chesley was a prominent figure in mass tort litigation, having secured significant settlements in various cases throughout his career. These include a $200 million settlement for Vietnam War veterans exposed to Agent Orange and a $3.2 billion settlement with Dow Corning on behalf of women claiming harm from silicone breast implants.
However, in the fen-phen case, Chesley’s clients received only $74 million of the $134 million they were entitled to from the settlement. The rest went to the lawyers involved, including Chesley, who received more than $20 million. Ultimately, former clients successfully obtained a $42 million judgment against Chesley. In 2013, Chesley was disbarred in Kentucky and subsequently retired from practicing law in Ohio.
The ongoing legal battle surrounding Chesley’s assets began when Rehme transferred them to a newly formed trust in 2016. This action aimed to institute an assignment for the benefit of creditors in Ohio probate court. However, the recent appeals court decision deemed these transfers suspect and an attempt to evade the plaintiffs. The court highlighted additional questionable transactions, including selling insured cars to Chesley’s wife for a fraction of their value and a $1 million payment made to “Cory Kumler,” who was later revealed to be Chesley’s wife.
The appeals court panel noted Chesley’s pattern of fraudulent behavior spanning two decades and emphasized the importance of ending such abuse of the judicial system. Their decision aims to protect the interests of Chesley’s creditors while conserving judicial resources and preventing further confusion and disruption in the ongoing litigation.
This recent ruling by the appeals court represents another setback for Chesley and adds to the complexity of the legal challenges he faces in connection with the fen-phen settlement. The freezing of his assets is likely to remain in effect, leaving Chesley’s former clients with hope that they will finally recover the funds they are owed.