Stanley M. Chesley

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]

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]

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]