BAILEY SAYS FEDERAL PROSECUTORS, DRUG CLIENT PROPOSED STOCK DEAL

NAPLES - F. Lee Bailey testified Thursday that a drug agent and federal
prosecutors salivating over the capture of a $600 million drug empire let a
kingpin pay his attorneys fees in stock as a way to get the most out of
their big capture.

Demonstrating the flair for drama that made him legendary, Bailey unfolded
a tale of legal posturing and financial wrangling in the case of
international drug smuggler Claude Duboc that led to charges Bailey paid
himself with $6 million in stock the U.S. government intended to seize.

Bailey said the agreement was not written down nor discussed in plain terms
to avoid it reflecting poorly on the U.S. Attorneys Office in Tallahassee.

Attorneys fees are usually approved by a judge and the federal prosecutors
have testified there was no such deal for the stock, which eventually
quadrupled in value.

"We do a lot of double-talk in negotiations because there are some things
that can't be said, like how much am I really going to get?" Bailey said.

In day three of the hearing before Circuit Court Judge Cynthia Ellis, who
will recommend whether Bailey be disbarred, otherwise disciplined or
cleared of misconduct charges. The Florida Supreme Court will have final
say over Bailey's fate.

Thursday, Ellis refused to allow Bailey to submit the results of a
polygraph test that showed he was telling the truth about the unwritten
agreement that the stocks were his payments.

Bailey has been accused of mishandling the stock, lying under oath and not
properly protecting Duboc, who through his drug trade amassed a $600
million empire of real estate, businesses and cash.

Bailey, 66, began his testimony with a rare glimpse into his personal side.
Recounting his career, he said he stopped practicing law in the fall of
1998 when his wife Patricia told him she had pancreatic cancer.

Wiping tears from his flushed face, Bailey said he traveled the world for
nearly a year searching for a cure for his wife. She died in September, and
several months later - as Bailey's fight with the government intensified -
his 90-year-old mother died.

"What happened to your law practice," asked Bailey's attorney, Don Beverly.

"I shot it down," Bailey replied in a hushed voice. "I shut off all income."

In 1994, things were much different for Bailey.

He met Duboc three months before joining O.J. Simpson's defense team.
Robert Shapiro, another member of Simpson's "dream team" of attorneys
introduced former Aspen, Colo., neighbor Duboc to Bailey after Duboc was
indicted in north Florida on federal drug trafficking charges.

Before Bailey took the case, he said he flew to Europe to meet with Duboc's
ex-wife to make sure there would be untainted money to cover his fees.

Bailey said he met with the U.S. Attorneys office in Tallahassee and
Florida Department of Law Enforcement Agent Carl Lilley, who had landed the
massive case when he passed himself off as a drug mule to one of Duboc's
traffickers.

Bailey said he knew that Duboc held substantial assets in foreign countries
that would want their cut; at most the U.S. government might get only 20
percent of Duboc's empire. Duboc was looking at two life sentences after
being caught with 37,000 pounds of marijuana and hashish.

Bailey crafted what he called a "carrot and stick" plan that was "all
honey, no vinegar."

After getting the government's assurance that they would not go after other
members of Duboc's family, the trafficker agreed to testify against another
kingpin and make it easy for the U.S. to seize his assets in hopes of
getting a lighter sentence.

Bailey said the plan was crafted in a series of meetings with the assistant
U.S. attorneys and Lilley in an informal atmosphere. None of it was written
down.

Bailey said the decision to use the stock to pay his attorneys fees came at
the crux of the negotiations. Bailey and Duboc spent a day making a list of
all his assets, including a $3.5 million cash account in a Luxembourg bank
that Bailey wanted as a non-refundable retainer.

Bailey said he dropped the list of assets off at the U.S. attorneys office
in early evening and didn't say a word about the account until the next
morning.

"I wanted to wet their appetites for a deal being made the next day," he said.

The officials agreed that Bailey could have the cash, but before the
transfer was made to Bailey's Swiss bank account, Lilley pointed out the
stock. Duboc owned 600,000 shares of a Canadian company, Biochem Pharma,
developing an AIDS vaccine.

Bailey said the stock would have to be sold immediately after it was seized
because the federal government cannot own securities. Duboc worried that
dumping the stock would ruin the company and make the stock worthless.

"The understanding was all the risk was mine," Bailey said. "There was no
talk whatsoever of Claude Duboc using me as a storage place for the stock
so it could go up and the government get more."