LOCAL ATTORNEY CHARGED IN FRAUDULENT “FEN-PHEN” LITIGATION

Jackson, Mississippi - Robert Arledge, an attorney licensed to practice law in Mississippi, Louisiana, and Colorado, who at the time covered in the indictment was employed by Richard Schwartz and Associates, was indicted by a federal grand jury today for conspiring with others to submit false information so that plaintiffs, who falsely claimed they took the fenphen drugs, Pondimin and Redux, would obtain settlement payments in connection with the fenphen litigation. The indictment charges that, as a result of submitting the false information, Arledge and numerous fraudulent plaintiffs received over $8 million in settlements and attorney’s fees to which they were not entitled.

In 1997, the fen-phen drugs, Pondimin and Redux, were taken off the market after research revealed these diet drugs could cause heart valve regurgitation. Following the withdrawal of Pondimin and Redux, numerous lawsuits were filed, nationwide including in Mississippi, against American Home Products Corporation (AHP), a pharmaceutical company that produced and distributed Pondimin and Redux.

In the fall of 1999, a group of attorneys, including Arledge, entered into an agreement whose purpose was to set forth the allocation of attorneys’ fees, costs and responsibilities of various attorneys regarding the litigation of fen-phen cases. The agreement outlined the percentage of fees that each attorney would receive for each plaintiff who was successful in recovering damages from AHP for alleged or possible injuries due to ingestion of diet drugs manufactured by AHP.

Pursuant to a $150 million jury verdict in a 1999 lawsuit filed in the Circuit Court of Jefferson County, Mississippi against AHP regarding the use of Pondimin and Redux, AHP agreed to a settlement which resulted in the establishment of settlement funds for making payments to qualifying plaintiffs. Millions of dollars were disbursed from these funds.

In order to qualify for payment from the settlement funds, plaintiffs had to provide some form of proof showing they had been prescribed Pondimin and/or Redux. Each plaintiff was awarded a different settlement amount depending on the medical condition and the type of proof, if any, submitted in support of each claim.

Numerous plaintiffs, who are charged and uncharged co-conspirators, were awarded settlements based upon false information (including false prescriptions, pharmacy records and medical records) submitted by them or others showing that they had taken certain diet drugs when, in fact, they had not. The indictment alleges that Arledge, who represented most of these plaintiffs, conspired to create these false documents.

John G. Raucci, Special Agent in Charge of the FBI in Mississippi, stated, "Since 2003, as the result of a joint effort by the FBI, the IRS and the U. S. Attorney's Office for the Southern District of Mississippi, 26 people have been prosecuted for filing false claims or otherwise being involved in pursuing fraudulent claims against American Home Products in the fen-phen litigation. This and similar multi-million dollar frauds caused the national media to dub Mississippi's civil legal system a Mecca for 'Jackpot Justice.' At that time, the FBI, the U.S. Attorney's Office and the IRS stated that the investigation would continue. It did. Today's indictment of ROBERT ARLEDGE is another step in the progression of that initial investigation. It does not stop here. Together, the United States Attorney's Office for the Southern District of Mississippi, the IRS and the FBI will persist until other participants in this conspiracy are identified and prosecuted to the fullest extent of the law."

This particular portion of the fen-phen investigation has been handled by Assistant United States Attorney Cynthia L. Eldridge and FBI Special Agent Bill Stokes. Other portions of the ongoing fen-phen investigation are being handled jointly by Fraud Section Assistant Chief Robertson Park, Fraud Section Trial Attorney Rina C. Tucker Harris, Public Integrity Section Trial Attorney Nicholas Marsh, and Assistant United States Attorneys Richard Starrett, in conjunction with agents from the Federal Bureau of Investigation and the Internal Revenue Service’s Criminal Investigation Division.

The United States Attorney’s Office stresses that these charges represent accusations only and all defendants are entitled to a presumption of innocence.