Good morning, Scruggs foloers. I ask our Mississippians for patience as I introduce a couple of names well known to y’all but new to the rest of us, George Dale and Lee Harrell. The strangling tendrils of kudzu (okay, another something green: money) binding public and private players together in this just may suggest why Mississippi stays so poor a state.
As we all know, the background story to this new criminal case is the Katrina litigation, whose main players included the state, State Farm Insurance, and (what was) the Scruggs Katrina Group. Now in that litigation, specifically the McIntosh v. State Farm case, on this last October 31, State Farm’s attorney Dan Webb (of the Webb Sanders firm that NMC has told us Tim Balducci once worked for — see here and following comments) took a sworn deposition (34-page pdf; h/t David Rossmiller) from Lee Harrell, Deputy Insurance Commissioner of Mississippi.
Zach Scruggs was SKG’s voice at the Halloween depo, where one topic of conversation was a December 15, 2005, meeting that Dickie Scruggs had asked for and that he, Insurance Commissioner George Dale, and Harrell held in Dale’s office. Here’s a Reader’s Digest-style extract of pp 320-324 of the transcript that I’m bumming from Rossmiller. “He” is Dickie Scruggs.
“He said he was going to do it the same way he did in the tobacco case, that he had a couple insiders, high-ranking State Farm representatives working for him as insiders, and he was going to work it the same way he and [former Mississippi AG] Mike Moore worked the tobacco case.
“He told Mr. Dale that, George, a lot of people on the coast are calling you the Commissioner for Insurance. He talked about how he had always liked Mr. Dale, and had always been there, trying to help Mr. Dale, but if we didn’t work with him on this, he was not going to be able to support Mr. Dale in the future, politically.
“My understanding of the discussion, or my perception of it, was that if Commissioner Dale didn’t go along with trying to make State Farm put up $500 million, that Mr. Scruggs was going to attempt to get Mr. Dale beat.”
[A question was asked, "Did the department insist that State Farm put up the $500 million for Mr. Scruggs to administer"?]
“No, sir. Mr. Dale advised Mr. Scruggs that he didn’t think that was legal to do that and, Dickie, you are just going to have to do what you have to do.”
In what Rossmiller calls “one of the most remarkable passages I have read in anything having to do with these Katrina cases,” Harrell also spoke of meeting, in early 2007, with Moore and current AG Jim Hood. According to Harrell, Hood said, “If they [State Farm] don’t settle with us, I’m going to indict them all, from Ed Rust [State Farm's CEO] down.”
Here’s a passage from pages 332-4 of the transcript, Harrell speaking first:
A. I asked General Moore who was he representing.
MR. WEBB: Q. What did he tell you?
A. He said he was serving as resolution counsel.
Q. And was this in the meeting that he had where it was just you and him?
A. And Jimmy Blissett. That’s it.
Q. And he was resolution counsel. Did he explain what that term meant to you?
MR. SCRUGGS: I’m going to object on relevancy, too.
HARRELL – A. I asked him, well, who’s paying you? I know you are not doing it for free.
MR. SCRUGGS: Move to strike as non-responsive.
MR. WEBB: Q. What did he say?
A. He said he gets paid at the end of the day.
Q. He said he gets paid at the end of the day?
A. Yes, sir.
Q. Did he ever say how he was going to get paid or by whom?
A. We never could figure that one out.
Q. Okay. Did Mr. Moore ever represent to you that he was doing any work in conjunction with any Grand Jury?
MR. SCRUGGS: Object to the form.
A. Yes, sir.
MR. WEBB: Q. What did he tell you about that?
A. In that meeting, in my office, he said he was helping Jim Hood with the Grand Jury process.
Q. And this is the same meeting where he told you he was resolution counsel who got paid at the end of the day; he also told you that he was helping Jim Hood with the Grand Jury process?
MR. SCRUGGS: Object to the form.
A. Yes, sir.
Rossmiller:
So, do you see what Harrell’s testimony says? That Hood worked with Scruggs and the Rigsby sisters to take documents from State Farm, without a warrant, for use in a criminal investigation and to assist Scruggs in his civil lawsuits, and then he not only worked on criminal investigations with a man who was also working for the Scruggs Katrina Group, he used the threat of criminal indictments that would culminate from this process as a means of coercing settlements in the civil cases he had help create. I think I did well to hang on to the red Yellowstone mug. I encourage you to read this deposition, it is quite short.
Zach Scruggs’s questioning in this passage from transcript pp 367-8 is (to me) rather startling too:
Q. Do you recall Mr. Dale telling Mr. Scruggs that he didn’t intend to do anything about the Hurricane Katrina insurance problem because he considered it only a six-county problem?
A. No, sir. That wasn’t said.
Q. Do you remember any discussion where George Dale said this was only a six-county problem?
A. No, sir.
Q. Do you remember any discussion where Mr. Dale told Mr. Scruggs that if I get indicted, my reelection rate is 69 percent; if I don’t get indicted, it’s 70 percent?
A. No, sir.
Q. And speaking of that, Mr. Dale was previously indicted, was he not?
A. Yes, sir.
Q. In the early ’90s. Do you recall that?
A. Yes, sir.
Q. And he was indicted for misuse of monies given to him by a health insurer that conducted business in Mississippi; is that correct?
A. I don’t remember the specifics.
Q. But you remember he was indicted related to his role as Insurance Commissioner?
A. Yes, sir.
Q. And were you aware that Mr. Scruggs, Dickie Scruggs, that is, the person you are speaking of, was the largest contributor to his criminal defense fund for that indictment?
A. No, sir.
Q. You were not aware?
A. I was not aware he was the largest.
Q. Were you aware that he contributed money to George Dale’s criminal defense fund?
A. Yes, sir.
In other words, in pressuring George Dale to reach a $500M global settlement with State Farm (which SKG would administer, as in the tobacco settlement), Dickie tried to call in a chit. Alan Lange infers:
This is powerful stuff (allegedly). Obviously it’s not the gospel truth as its only my interpretation of one side of the story. HOWEVER, if matters happened substantially as Mr. Harrell represents, this is much much bigger than just some jakeleg lawyers bribing a judge.
Much bigger indeed.
So why would Zach go there? Whose side is he on? Help me out here, readers who know from insurance-lit better than I.
Meanwhile, back at Jones v. Scruggs, via Rossmiller we’ve got interesting new pdfs: the motion for court ordered control of “all attorney fees brought into the Scruggs Katrina Group . . . before January 2007 and subsequent to January 2007,” the motion to amend the complaint, and the amended complaint. For more skinny on/around these, see NMC’s guest post below and Holbrook Mohr of the AP. As Dave Rossmiller says:
Instead of alleging breach of contract as the first claim, the new complaint alleges the contract is void, and also alleges as a new claim that defendants intentionally interfered with the exercise of constitutional, statutory and common law rights. The other claims are still in there: tortious bad faith, breach of fiduciary duties, usurpation, conversion, interference with prospective business advantage, fraud, constructive trust, conspiracy, unconscionability, punitive damages. Everything except piracy on the high seas and RICO.
And, you know, it just may suffice.
lotus
