http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20071128/NEWS/71128029

Scruggs arrested on bribery charges

By Jerry Mitchell
jmitchell@clarionledger.com

Mississippi multimillionaire lawyer Dickie Scruggs has been indicted on charges of conspiring to bribe a judge handling the case involving $26.5-million in attorney fees related to Katrina claims.

Others indicted in the alleged scheme include Scruggs� son, Zach, former State Auditor Steve Patterson and attorneys Sidney Backstrom and Timothy Balducci.

Each are charged with conspiracy to defraud the United States, converting property and wire fraud. If convicted on all counts, each of those indicted face up to 75 years in prison and $1.5 million in fines.

Scruggs � the brother of U.S. Sen. Trent Lott � is best known for his handling of mass litigation on behalf of the state of Mississippi, first involving asbestos and the second involving tobacco.

In both cases, Attorney General Mike Moore hired Scruggs to handle the litigation on the state�s behalf � a move later criticized by some others because Scruggs and other lawyers received millions in legal fees.

More recently, Scruggs has handled litigation against State Farm Insurance Co. for its handling Katrina claims.

According to the indictment, Lafayette County Circuit Judge Henry Lackey cooperated with the FBI in the investigation after reporting a bribery overture to authorities.

According to the indictment, Scruggs and others tried to influence Lackey by giving him $40,000 in cash to resolve the attorney fees� dispute in favor of Scruggs� law firm.

In March, the law firm of Jones, Funderburg, Sessums, Peterson & Lee sued Scruggs and other lawyers, claiming they were owed $26.5 million in legal fees.

Scruggs, his son and Backstrom all practiced at the Scruggs Law Firm in Oxford.

Balducci practiced at the law firm that he and Patterson and Balducci formed in New Albany, although Patterson is not a lawyer.

According to the indictment, Balducci, on Scruggs� behalf, met with Lackey and agreed to pay him $40,000 to rule in Scruggs� favor.

The Scruggs firm created false documents that showed Balducci was doing jury consulting work when in reality Balducci was being reimbursed for $40,000 in cash and an additional $10,000 for bribes, the indictment claims.

On March 28, Balducci met with Lackey and made an overture on behalf of Scruggs to resolve the litigation in Scruggs� favor, the indictment claims.

On May 3, Balducci talked on the telephone to Lackey, saying �they had changed their strategy� and would rely on a motion to compel arbitration rather than a motion for summary judgment, the indictment claims.

The next day, Backstrom emailed a proposed order to Balducci, who in turn faxed the order to Lackey, the indictment claims.

Some of the conversations between Balducci and the judge were apparently taped.

On May 9, Balducci called Lackey and told him �my relationship with Dick is such that he and I can talk very private about these kinds of matters and I have the fullest confidence that if the court, you know, is inclined to rule ... in favor ... everything will be good,� the indictment said. �The only person in the world outside of me and you that has discussed this is me and Dick. ...

�How shall I say, for over the last five or six years there, there are bodies buried that, that you know, that he and I know where ....�

According to the indictment, Balducci�s conversations with Lackey continued for the next several months.

On Sept. 21, Balducci agreed to pay Lackey $40,000 in cash in return for a ruling favorable to Scruggs, the indictment claims.

Six days later, Patterson discussed the bribe with Balducci, the indictment claims.

That same day, Balducci delivered $20,000 in cash to Lackey, according to the indictment.

Later that day, Balducci was quoted as telling Patterson by phone, �All is done, all is handled and all is well.�

On Oct. 18, Patterson called Balducci to find out what was going on with the order, saying he talked to Scruggs 15 times and Balducci needed to call Scruggs, the indictment claims.

That same day, Balducci delivered $10,000 in cash to Lackey and picked up a $40,000 check from Scruggs to conceal the bribe, the indictment claims.

On Nov. 1, Balducci delivered another $10,000 in cash to Lackey and obtained an amended order favorable to Scruggs, the indictment claims.

Later that day, according to the indictment, Balducci discussed the order with Zach Scruggs and Backstrom, saying, �We paid for this ruling; let�s be sure it says what we want it to say.�

That same day, Balducci discussed an extra $10,000 payment to Lackey with Scruggs, who said he would hire Balducci to prepare jury instructions in an unrelated case, the indictment claims.

The indictment does not say whether Balducci actually paid the extra $10,000.

U.S. District Judge William Acker of Alabama recently found Scruggs in contempt for failing to turn over documents he received from two whistleblowers, sisters Kerri and Cori Rigsby.

The records were sought by lawyers for E.A. Renfroe and Co., a Birmingham business that was serving as a claims contractor for State Farm Insurance Co. after Katrina.

Scruggs gave the documents to Mississippi Attorney General Jim Hood rather than the judge.

He maintains Acker�s order provided that documents taken from State Farm could be disclosed to law enforcement officials, including Hood�s office.

The sisters, who were processing claims, have said they uncovered evidence that State Farm was unfairly handling claims after Hurricane Katrina in 2005.

Well, there is news and then there is great news. Glad to see an honest judge come forward. Now the scoundrels will get their due.

I will never forget that 1 hour TV special slanted against Insurers, specifically State Farm, with the Rigsby sisters wearing adjuster uniforms.

While they interviewed the homeowners, standing on a bare slab, you could see the water on the horizon. The homes were on the freak'in coast. The show talked about how the evil insurance decided the house was totaled by water, when it should have been wind. Anyone who worked that area knows it was water - and seeing the water on the horizon during the interview made it clear these houses were in the path of the storm surge.

I wish the same TV station would run a 1 hour show on the current scene. And apologize for the bad PR they gave to the insurance companies. They are so fast to find fault, and may print a small correction at the last page of some newspaper.

Bryan, what is it with you? Do you just like to argue with people??
Before I start walking this road, you tell me if you worked flood at Katrina. I know you are currently a contractor, and that you have worked as an adjuster in the past.

I was in the flood unit for State Farm for 5 months, not at New Orleans, but closer to where the eye of the storm hit. I watched a DVD shot by a resident who "stayed home" and filmed the storm surge approaching as he was on the 2nd story of an elevated home (sort of 3rd story).  He photo'ed his neighbors houses being swept away.     

I worked claims, interviewing the owners of property all along the coast and saw first-hand how that damage differed from the claims I had that were north of the storm surge. Homes north of the storm surge were not swept from the slabs.

I worked a hurricane in 1992 with some of the worst wind damage I have ever seen, and it doesn't pick the slab clean like moving water does. Water at 5mph will do things that wind cannot do at 150 mph. It will sweep the walls off the slab, and that is what the interviewed homeowners were standing on during that show.

Gotcha.  Just to illustrate this point a bit:

This is near the border of Louisiana and Mississippi, there used to be houses on those pilings.  There used to be a house on that slab to the left.

Same slab.  The house in the foreground was normal construction.  The one behind it is still standing, built on piers, the shop-garage and contents were swept away, had "break-away walls" made to come off with moving water.

The pile of wood to the right is the debris from house that was not on pilings.

I have dozens of photos of boats that landed in places they did not belong.

What gets me about this is the lack of news coverage.  When Scruggs was standing on a soap box screaming for the wind insurers to pay for flood (surge) damage, the media was all over it.  I have seen nothing about this on CNN's cable or online network.  It seems that the news of this has been contained to the local area.  Yesterday, I head about Trent Lott's resignation with no details.  I cannot find anything about this on Fox news.  Maybe it's too early.

I'm local (Tupelo, MS) and I will keep y'all (you guys) up to date. My wife works for a large law firm and she advised that Judge Lackey is very well respected among the attorneys. Looks like that is true and Dickie picked the wrong Judge to try and bribe.

If I was a dishonest judge it would be a slap in the face to be offered a $40,000 bribe when Scruggs law firm expects to receive $26.5 million in attorney fees. Doing the math that's .0015%.

If the judge was a Cat Vendor he would want 35% or $9,275,000.