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Mississippi State Update


Scruggs gets 5 years in prison in bribery scheme
Jun 27, 2008
OXFORD, Miss. (AP) — Richard “Dickie” Scruggs, the attorney who built his career by taking on tobacco, asbestos and insurance companies, was sentenced Friday to five years in prison for conspiring to bribe a judge.
U.S. District Judge Neal Biggers Jr. called Scruggs’ conduct “reprehensible” and fined him $250,000. The judge handed down the full sentence requested by prosecutors despite arguments from the defense for half that time in prison.
Scruggs appeared to nearly faint as the federal judge scolded him for his conduct. Some people in the courtroom gasped as Scruggs started to sway side to side and his attorney grabbed his arm to steady him. He had to be seated before the sentence was read.
“I could not be more ashamed where I am today, mixed up in a judicial bribery scheme,” Scruggs told the judge.
Scruggs must report to prison by Aug. 4 and pay the fine in one lump sum within 30 days.
Scruggs gained fame in the 1990s by using a corporate insider against tobacco companies in lawsuits that resulted in a $206 billion settlement. That case was portrayed in the 1999 film “The Insider.”
Scruggs was indicted in November along with his son and a law partner after an associate wore a wire for the FBI and secretly recorded conversations about the alleged bribery.
Scruggs initially denied wrongdoing. But in March, Scruggs and former law partner Sidney Backstrom pleaded guilty to conspiring to bribe Lafayette County Circuit Court Judge Henry Lackey with $50,000.
Prosecutors say Scruggs wanted a favorable ruling in a dispute over $26.5 million in legal fees from a mass settlement of Hurricane Katrina insurance cases.
Scruggs’ son, Zach Scruggs, pleaded guilty to misprision of a felony, meaning he knew a crime was committed but didn’t report it. He is to be sentenced next week.
Many high-profile friends had sought leniency for Scruggs in letters to the federal judge, including Former “60 Minutes” producer Lowell Bergman and tobacco industry whistleblower Jeffrey Wigand, both portrayed in “The Insider.”

Reining In the Kings of Tort
By David Ignatius
June 5, 2008
In the novels of John Grisham and the real-life exploits of consumer advocates such as Ralph Nader, the plaintiff’s lawyers are the good guys — populist heroes who battle the avarice of corporate America. But that folkloric image has been battered by two recent cases that show how the plaintiffs’ bar itself has been vulnerable to the greed and lawlessness it seeks to combat.
The cases involve two of the country’s most prominent class-action lawyers, Melvyn Weiss and Dickie Scruggs. Over the past several decades, they have won billions in judgments against tobacco companies, asbestos companies, energy companies and other putative corporate villains. Both pleaded guilty this year to criminal abuse of the legal system — Weiss for paying kickbacks to clients who agreed to serve as instant plaintiffs, Scruggs for attempting to bribe a state court judge in Mississippi in a dispute over legal fees.
What destroyed Weiss and Scruggs was a system in which the money just got too big. The two had helped spawn an industry of class-action mega-cases that was so lucrative, the plaintiffs couldn’t bear the idea of losing. So the “good guys” began to cut corners.
Weiss and Scruggs got in trouble in part because they were especially aggressive in representing people they believed had been wronged. “They were the Daniel Boones, who cut through the Cumberland Gap,” argues Alex MacDonald, a prominent plaintiffs’ lawyer with the Boston firm MacDonald Rothweiler Eisenberg LLP.
What’s weird about these cases is that neither of the men needed more cash. Weiss owned a Long Island mansion worthy of Gatsby, with Picasso paintings on the walls, according to the Wall Street Journal. His share of his firm’s profits was more than $200 million over the past 25 years.
Scruggs, the good ol’ boy from the Gulf Coast, was reckoned to be a billionaire; a New Yorker profile of him last month by Peter J. Boyer described a flamboyant philanthropist who entertained his Ole Miss pals in lavish homes and on his own private jet.
“The money got intoxicating,” argues John Epps, a lawyer with Hunton and Williams in Richmond who has defended corporations in some of the asbestos cases. “They were making more money than any lawyer in history had made.”
The huge fees that Weiss and Scruggs were able to pocket stemmed from their technique of gathering very large groups of plaintiffs to sue corporations for damages. Weiss’s genius was getting in the door first as lead counsel, using a ready-made stable of clients who, it turned out, were receiving kickbacks in what a federal judge described this week as a “nationwide conspiracy that continued for decades.”
Scruggs was also adept at enrolling long lists of plaintiffs — whose damage claims were so sizable that corporations often settled rather than run the risk of multibillion-dollar payouts and possible bankruptcy. Scruggs’s special talent was working with politicians and elected judges in Mississippi and other plaintiff-friendly Southern states. As described by the New Yorker, Scruggs’s legal crusades were closer to turkey shoots than normal litigation. The elected judges looked to the plaintiffs’ bar for campaign contributions and rewarded it with friendly courtrooms that produced huge settlements.
These mega-cases have turned traditional notions of legal practice upside down. The old system revolved around individual plaintiffs who hired lawyers to seek redress through the courts. Lawyers back then regarded it as unethical to solicit clients, and until 1977 there was a strict ban against attorney advertising. Nowadays, advertising is pervasive, and in class-action cases, it’s the lawyers who in effect are hiring clients — often in a rush to file civil suits against companies that have just admitted guilt in criminal cases. At its worst, the system is close to legalized extortion.
“The way the system developed, it broke down the connection between lawyers and clients,” argues Jamie Gorelick, a former deputy attorney general in the Clinton administration. “These practices result in part from changes in the rules governing our profession.”
Nobody who remembers the primitive auto-safety standards before Nader, or the arrogant power of the tobacco companies, would want a system in which consumers couldn’t challenge corporate wrongdoing. But the convictions of Weiss and Scruggs, two “kings of torts,” tell us that something is seriously wrong in the plaintiffs’ bar. It would be nice if the class-action lawyers reformed themselves, but if not, someone should file a lawsuit.

from The Wall Street Journal
March 14, 2008
Mississippi plaintiffs attorney Richard “Dickie” Scruggs pleaded guilty to a charge of conspiracy in a judicial bribery case. The surprise plea came during a hearing on pretrial matters. His trial was set to begin at the end of the month. Scruggs and co-defendant Sidney Backstrom both pleaded guilty to conspiring to bribe a judge. Scruggs’s son, Zach, also is charged in the case but hasn’t entered a plea.

Scruggs Pleads Guilty in Bribery Case
March 14, 2008
JACKSON, Miss. (AP) — Richard Scruggs, the powerful plaintiffs’ attorney who made millions from tobacco and asbestos litigation, pleaded guilty on Friday to conspiring to bribe a judge for a favorable ruling in a case involving legal fees from a post-Hurricane Katrina lawsuit.
The surprise plea came during a hearing in Oxford, Miss., on pretrial matters. His trial was set to begin at the end of the month.
Mr. Scruggs and a co-defendant, Sidney Backstrom, both pleaded guilty to defraud the United States. Mr. Scruggs’s law partner and son, Zach, also is charged in the case but did not enter a plea and is expected to go to trial.
Prosecutors said they would recommend five years in prison for Mr. Scruggs and two and a half years for Mr. Backstrom, penalties significantly lower than what they could have faced.
One of the best-known trial lawyers in the country, Mr. Scruggs was indicted along with his son and three associates in November.
They were accused of conspiring to pay a Lafayette County Circuit Court judge $50,000 for a favorable ruling in a dispute over $26.5 million in legal fees from a mass settlement of Hurricane Katrina cases.
Judge Henry L. Lackey reported a bribe overture to the Federal Bureau of Investigation and worked undercover. Two of the men who were indicted —Timothy Balducci, a lawyer, and Steve Patterson, a former Mississippi state auditor — pleaded guilty and began working with the prosecution.
Mr. Scruggs is a brother-in-law of former Senator Trent Lott, a Mississippi Republican. He helped negotiate the multibillion-dollar tobacco settlement in the 1990s, working with the whistle-blower Jeffrey Wigand, a former tobacco company scientist. The actor Colm Feore played Mr. Scruggs in the 1999 movie about the case, “The Insider,” starring Al Pacino and Russell Crowe.

State attorneys general shouldn’t be toy inspectors
The Washington DC Examiner Newspaper
Mar 3, 2008
Everywhere one looks these days, state attorneys general seem to be transforming their offices from Solomonic dispensers of impartial law enforcement to crusading agents of special interest groups, most often the plaintiffs’ bar, whose members often finance their campaigns. Some, like Mississippi’s Jim Hood, find themselves hip-deep in controversies involving major political allies. In Hood’s case, state papers already have begun calling on him to resign even as he refuses to conduct a state investigation into tort king Dickie Scruggs. Hood says investigating Scruggs “would be like prosecuting a relative.” Hood is just one of the many state AGs who “contract out” loads of work to trial lawyers who contribute to them, with dispassionate justice being replaced by all of the profit motives that contingency-fee arrangements entail.
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Witness claims Scruggs pays ‘bagman’ for work on tobacco settlement
Feb. 26, 2008
— A mystery man receiving $50 million from prominent Mississippi attorney Richard “Dickie” Scruggs earned the money by paying off allies during Scruggs’ epic battle with the tobacco industry in the late 1990s, said a former colleague turned government witness.
As state attorney general during that time, Mike Moore mustered the legal troops Scruggs helped lead into battle, wresting unprecedented settlements from the tobacco industry that earned Scruggs’ firm almost $1 billion in legal fees. The war involved lobbying at the state and federal levels and years of negotiations with tobacco company representatives.
Scruggs has said a $50 million cut from his fees will go over 20 years to P.L. Blake, a politically connected son of the Mississippi Delta who now lives in Birmingham. Scruggs and Moore have said Blake worked political cloakrooms, bringing his keen political knowledge and connections to their settlement efforts. Blake has said he simply clipped newspaper articles, watched C-SPAN and kept Scruggs updated on political maneuverings.
Scruggs’ former cohort, Timothy R. Balducci, offered an FBI agent a different explanation. Balducci was in deep trouble for attempting to bribe a state court judge when FBI Agent William P. Delaney interviewed him Nov. 2.
In his notes, Delaney said that Balducci described Blake “as the ‘bagman’ for DS during the national Tobacco case.” The notes refer to Balducci as a “Confidential Human Source (CHS).”
They also say: “The CHS met Blake when the CHS was employed at the Langston Law Firm and Joey Langston represented DS on some tobacco settlement cases regarding attorney’s fees. Blake is paid approximately $1 million per year out of attorney’s fees which are controlled by DS. Blake receives the money directly from DS, the CHS does not know why Blake receives money from the Tobacco Settlement fund.”
In legal disputes involving the attorneys’ fees, sworn testimony indicates that Scruggs paid Blake an initial $10 million through Langston. Court records show Scruggs is paying Blake the bulk of the $50 million in quarterly installments of $468,000 over 20 years.
Coincidentally, Langston pleaded guilty in January to one count of conspiracy, admitting he tried to bribe Hinds County Circuit Court Judge Bobby DeLaughter for Scruggs in one of two long-running disputes over tobacco litigation fees.
Both Balducci and Langston, a wealthy and prominent attorney from Booneville, agreed to surrender their law licenses.
Balducci talked to the FBI only after agents caught him on tape bribing Circuit Court Judge Henry L. Lackey in his Calhoun City office. The ambitious young attorney had recently left Langston’s firm to start his own practice in New Albany and was relying on Scruggs for some work.
The case before Lackey involved a dispute between Scruggs and another attorney who felt cheated out of his share of $26 million in legal fees from Coast clients’ Katrina insurance settlements. Balducci, who considered Lackey a friend and mentor, said that he agreed to talk with the judge about Scruggs’ case, a breach of legal ethics.
Lackey reported the March 2007 conversation to federal authorities, agreeing to cooperate with an investigation. The judge, by this time wearing a wire, told Balducci he was hurting for money. He wondered if Scruggs would be willing to pay $40,000 for the right judicial order.
The federal investigation indicates Balducci and former state auditor Steve Patterson, a consultant in the Balducci and Patterson firm, fronted the cash to pay Lackey, with assurances that Scruggs would pay them back. Those assurances, according to taped conversations, came from P.L. Blake. Blake and Patterson, forced from office in 1996 for malfeasance, are longtime acquaintances.
Balducci, Patterson, Scruggs and two other members of the Scruggs Law Firm in Oxford were charged in November with conspiracy and fraud for allegedly attempting to bribe Lackey. Both Balducci and Patterson have pleaded guilty in the case. Patterson also is cooperating with investigators.
Scruggs, his son, Zach Scruggs, and a third attorney from the firm, Sidney A. Backstrom, have pleaded not guilty and are scheduled to be tried March 31 in U.S. District Court in Oxford. They deny any knowledge of a bribery scheme, claiming Lackey set them up and the government misled a federal judge to secure wire taps and a warrant to search the Scruggs office.
Scruggs has not been charged with a crime in the case involving Langston.

Lawsuit Inc.
February 25, 2008
Should state Attorneys General be able to outsource their legal work to for-profit tort lawyers, who then funnel a share of their winnings back to the AGs? That’s become a sleazy practice in many states, and it is finally coming under scrutiny — notably in Mississippi, home of Dickie Scruggs, Attorney General Jim Hood, and other legal pillars.
Read More

Another Scruggs Case
January 15, 2008
The Dickie Scruggs bribery case keeps getting curiouser, with yesterday’s news that even the tort baron’s former defense attorney has copped a federal plea.
Mr. Scruggs was indicted in November along with his son and three other lawyers for conspiring to bribe Mississippi Judge Henry Lackey. Two of the defendants have already pled guilty and are cooperating with the feds. And according to court papers released yesterday, Joey Langston, who had until recently represented Mr. Scruggs, has now pled guilty to conspiring with Mr. Scruggs in a scheme to influence a different judge in a separate case.
This new case involves yet another battle over dividing up attorneys fees, this time in state Judge Robert DeLaughter’s court. According to the indictment, sometime in 2006 or early 2007 Mr. Scruggs told Mr. Langston that “he could arrange for [Judge] DeLaughter to be considered for a [federal] appointment” and said Mr. Langston should have that information conveyed to the judge. How Mr. Scruggs was intending to help Judge DeLaughter isn’t clear, but it has escaped no one that Mr. Scruggs’s brother-in-law is Senator Trent Lott.
Judge DeLaughter says he took no bribe, and Mr. Lott isn’t named in the papers. Mr. Scruggs is also not a named defendant, though the papers describe him as integral to the scheme. Mr. Scruggs’s current lawyer, John Keker, says “Joey Langston apparently has his own problems, but they’re not Dickie Scruggs’s problems.” Presumably, that’s what a jury will decide. But Mr. Scruggs must now confront three former intimates who are talking to the feds about Mississippi’s tort bar culture, in which bribery seems to have been a signature practice.

Mississippi Hoods

November 15, 2007; Page A24

It isn’t often that a state Attorney General finds himself on the wrong end of a lawsuit. Then again, it isn’t often that a state Attorney General has such a cavalier approach to the law as Mississippi’s Jim Hood.

Since Hurricane Katrina, the AG has been waging a legal and PR war against State Farm and other insurance companies, a populist campaign that helped win him a second term last week. Weary of being a political pi?ata, State Farm has now turned the tables with a federal lawsuit against Mr. Hood. The suit accuses him of breaching a non-prosecution agreement, using his power to retaliate against the insurer over separate litigation, and colluding with tort lawyers to purloin documents and assist in /their /lawsuits. The details are colorful, if you find legal abuse entertaining.

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Mr. Hood’s low-jinks were supposed to have ended in January, when State Farm agreed to settle. The insurer had been fighting a Hood civil suit for refusing to pay for flood damage, even though its policies clearly excluded such claims. But when Mr. Hood cranked up a criminal probe, and State Farm lost a case in court, the insurer decided to cut its losses.

State Farm agreed to reopen some 35,000 claims and to pay off suits brought by Mr. Hood’s friend and political ally, tort baron Dickie Scruggs. It also wrote a check for $5 million to cover the AG’s investigation costs. In return, the prosecutor signed a paper agreeing to “conclude” his investigation and to “not bring criminal charges against State Farm or any of its employees . . .”

However, this is Mississippi. After federal Judge L.T. Senter Jr. blocked the settlement on fairness grounds, Mr. Hood promptly reneged. By June, he had ginned up another complaint against State Farm, this time for breaching the settlement that the judge had declared invalid. By August, Mr. Hood was busy with a /new/ criminal investigation, despite his prior legal agreement not to do so.

State Farm then filed its countersuit, and its complaint is a study in the marauding tactics of the modern Attorney General. Most revealing are details showing how closely Mr. Hood worked with the trial bar — a strategy designed to pressure State Farm to settle both with the state and the tort posse.

Many of these details are wrapped up in a separate case involving a State Farm contractor, E.A. Renfroe. Not long after Katrina, tort king Mr. Scruggs convinced two Renfroe employees — sisters Cori Rigsby Moran and Kerri Rigsby — to steal documents to aid his civil litigation against State Farm. According to previously filed court documents, the women were performing this clandestine work for Mr. Scruggs.

However, the State Farm complaint says Mr. Hood also knew about the Rigsby sisters, and that they were also acting as his agents in collecting State Farm documents. State Farm says this amounts to “warrantless searches and seizures of State Farm property” — a valid point, given that prosecutors have subpoena power precisely so they can obtain documents legally. If this is true, Mr. Hood was allowing state informants to simultaneously conduct discovery in aid of Mr. Scruggs’s private litigation.

The State Farm complaint also notes that former Mississippi Attorney General Mike Moore, “acting as an agent of Attorney General Hood, was involved in compiling information from State Farm for use by Attorney General Hood in his criminal investigation of State Farm.” It also points out that Mr. Moore has appeared as a private attorney for policyholders suing State Farm. The idea of a lawyer working both in a criminal investigation for the state and as a private attorney for plaintiffs is ethically outrageous.

Renfroe later sued the Rigsby sisters to have the documents returned, and the State Farm complaint says Mr. Hood was “angered” by that litigation and wanted State Farm to pressure Renfroe to drop the case. As State Farm and Mr. Hood continued to talk about a settlement this February, the complaint says Mr. Moore, working as “Attorney General Hood’s agent,” sent an email to State Farm officials stating: “can we get renfroe [sic] settled, its [sic] holding up progress on my end . . .” Two days later Mr. Moore sent another email to State Farm: “I am told that the Renfroe lawyers made unreasonable demands for resolving the issues on the Rigsby sisters issue today . . . I am going to wait til tomorrow to report to the Attorney General what they are up to because the response will not be pretty.”

A federal judge later found that Messrs. Hood and Scruggs had “teamed up to bully State Farm into civil and criminal settlements,” and ordered Mr. Scruggs to return the documents. Instead, Mr. Scruggs defied the judge’s order by shipping them to Mr. Hood. This caused federal Judge William Acker in June to request that the U.S. Attorney prosecute Mr. Scruggs for criminal contempt.

Once again Mr. Hood rode to the rescue of his partner in shakedowns, sending a letter to the U.S. Attorney requesting that she not prosecute Mr. Scruggs because he was a “confidential informant” of the state. The prosecutor acquiesced, which inspired an angry Judge Acker to appoint three special prosecutors. (Mr. Scruggs is due to be arraigned shortly before Thanksgiving.) By the way, Mr. Scruggs made a $33,000 campaign contribution to Mr. Hood in July. About a week after receiving it, Mr. Hood sent a letter to federal authorities confirming he’d re-initiated his criminal probe of State Farm, and that this time he viewed Renfroe as a “potential co-conspirator.”

You can’t make this stuff up.

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Mr. Hood has tried to keep all of this under seal, but we’re delighted to make it public. The Hood-Scruggs story is all too typical of the way state Attorneys General and the tort bar are teaming up to shake down political targets. Congratulations to State Farm for fighting back.

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