Dickie Scruggs indicted in alleged bribery case involving Katrina claims

SCROLL DOWN FOR THE LATEST AND NEWEST, I WILL UPDATE THIS POST THROUGH THE EVENING AND HAVE A FURTHER POST TOMORROW MORNING.

Incredible breaking news.  I guess that answers the questions about what the FBI was looking for. Here is the story from the Clarion Ledger:

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

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

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.

Some of the conversations between Balducci and Lackey were captured on tape.

I note the headline on the Clarion Ledger story said Dickie Scruggs was arrested, but obviously they have not fleshed out the story yet and just have these few grafs up as of 3:15 p.m. Pacific Time.    

UPDATE: Here is a pdf of the indictment.

The indictment alleges that Dickie Scruggs; his son and law partner Zach; Sidney Backstrom, an old friend and associate of Scruggs; Timothy Balducci, a Mississippi trial lawyer; and Steven Patterson, a former Mississippi State Auditor, conspired to bribe state court Judge Henry L. Lackey with $40,000 to influence his decision in a lawsuit by attorney Johnny Jones against Scruggs.  The lawsuit was over how to divide $26.5 million in attorney fees received in the early 2007 settlement of some 640 Katrina cases against State Farm.  Jones sued Scruggs when Scruggs allegedly paid Jones, who had done substantial work on Katrina cases as part of the Scruggs Katrina Group, much less than the percentage that Jones said had been agreed upon.   Here's a post I wrote earlier this year on the lawsuit.  

The indictment also claims that Dickie Scruggs tried to cover up the conspiracy by creating false documents to show that the hired Balducci to do jury selection and other legal work, when in fact he was reimbursing Balducci for the $40,000 he allegedly paid out in bribe money, along with another $10,000 for the same purpose.

I'll be posting more later.  Day job calls.   

SECOND UPDATE:

I had a chance to read the grand jury's indictment several times on the bus ride home tonight.  This scheme, if what is alleged is true, was incredibly lame and stupid.  Supposedly, Scruggs and a small group of colleagues decided to bribe a state court judge in the fee dispute case -- not for a final disposition of the case in their favor, but to obtain an order compelling the plaintiff, Johnny Jones, to arbitrate rather than sue in court.  That may account for the miserly $50,000 total bribe offered.  Under a cold, hard calculus, that may have seemed like a reasonable sum to pay for an order that was just one step along the way. 

The judge, Henry L. Lackey, of the Third Circuit Court District in Mississippi, went to federal authorities when he was approached about the bribe, and one can see this case has been most of the year in the making. 

It isn't clear when it became apparent to the judge that he was being offered a bribe -- the indictment says he was approached by Balducci in March and that Balducci "made an overture . . . to resolve the . . . lawsuit favorably" to Scruggs.  On May 4, Balducci allegedly talked with Lackey by telephone and said the Scruggs Law Firm "had changed their strategy" and would rely on a motion to compel arbitration rather than a summary judgment motion.  All other things aside, let's just stop a moment and note the complete unacceptability of a lawyer having ex parte contact with a judge about the merits or strategy of a case, and how brazen one would have to be to carry out such contact. 

That same day, Balducci faxed a proposed order to compel arbitration to Lackey.  Then on May 9 -- and here the indictment contains a long, long quote, so Lackey was evidently wired -- Balducci met with Lackey and allegedly said that "We, uh, like I say, it ain't but three people in the world that know anything about this . . . and two of them are sitting here and the other one . . . the other one, uh, being Scruggs  . .  he and I, um, how shall I say, for over the last five or six yers there, there are bodies buried that, that you know, that he and I know where  . . . where are, and, and, my, my trust in his, mine in him and his in mine, in me, I am sure are the same."  Bodies buried? Hmmmm. I wonder what else might come out during the prosecution of these fellows.

Balducci, according to the indictment, had several more discussions with Lackey between May 9 and September 21, when he allegedly agreed to pay Lackey $40,000 on behalf of Scruggs and his firm for the favorable order.  Balducci allegedly delivered cash -- the indictment says $20,000, so I wonder if that is a typo or whether all of it was not really delivered -- to the judge's chambers.  He allegedly delivered another $10,o00 on October 18.  The indictment then alleges that Scruggs wrote him out a check for $40,000 as reimbursement and provided fake documentation to cover the payment to make it look like it was for legal work. In early November, Scruggs allegedly gave him a check to cover the extra $10,000 along with the same kind of documentation for fake legal services.

I have heard an earful from folks in Mississippi today, many on the policyholder side of these cases, who are shocked and steaming at Scruggs, and afraid these allegations will tarnish what they see as a righteous, honorable fight against insurance companies in the Katrina cases.  They point out this case was a mere fee dispute between lawyers, and has nothing to do with the actual Katrina insurance cases.

I'll be writing another post for tomorrow that I will actually post tonight, if you're up late. 

Trackbacks (2)
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Ping sent from PointOfLaw Forum on November 28, 2007 3:55 PM
As I said in a post earlier today, just when you think things in Mississippi Katrina litigation can't possibly get any stranger, there's something new that tops all the rest. According to the Jackson Clarion Ledger, well-known attorney Dickie Scruggs...
Ping sent from Overlawyered on November 28, 2007 8:11 PM
"A federal grand jury today indicted one of the nationís most successful trial lawyers, Richard F. Scruggs, on criminal charges that he and other lawyers engaged in a scheme to bribe a judge." The 13-page...
Written By:MS Smitty On November 28, 2007 3:57 PM

I'd bet the FBI easily found the file.

Written By:Thick On November 28, 2007 3:58 PM

I had a feeling Johnny Jones was a factor in the document search. Scruggs has really stepped in it this time. Surely Senator Lott has enough connections to realize this was gonna happen? And he states the timing of his resignation was a mere coincidence? Even Strom Thurmond wouldn't buy that one.

Written By:curious george On November 28, 2007 8:27 PM

Interesting fact - prior to being elected Mississippi's Attorney General, Jim Hood served as the district attorney for the same judicial district in which Judge Lackey presides.

Written By:Duckhead On November 29, 2007 6:52 AM

Anyone who is really interested in this case needs to read the Jones v. Scruggs et al complaint to get to the beginning.

We will get a better feel for the governments case as more facts and evidence surface.

For now, I would have to say this is not a "slam dunk" case against Dickie and Zach yet. They will be well defended.

I do not know Balducci but the evidence against him looks pretty compelling.

Steve Patterson was a former State Auditor who resigned in disgrace over his nonpayment of a car tag.

Written By:Jim Giles On January 19, 2008 10:46 AM

Duckhead's comment on 11/29/2007 looks ancient today.

Can someone tell me if the excerpt quoted below from Langston's plea has been emphasized by anyone? All the talk has been about DeLaughter emailing Peters but I didn't know until I read the transcript that Peters was feeding DeLaughter info from Scruggs' counsel; this seems flagrantly violative of the Code of Judicial Conduct and there is NO justification for it; DeLaughter cannot justify not notifying opposing counsel.

"While Peters was not fully cognizant of the issues surrounding the litigation, he would relay whatever information he received from Langston, Balducci, and Patterson to Judge DeLaughter before any of this information was filed with the Court."

Written By:Ed On May 2, 2008 5:27 AM

All this disaster is due to bad karma creating nature's revenge on man. Just remember the clouds in Katrina.

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