folo

The Eagle’s webmaster has finally put up the Friday edition. I was hoping for a look at Tim Balducci but instead we get this photo that makes me wonder about the barber schools in North Mississippi (if any). Anyhow, here you go . . .

Former Mississippi state auditor Steve Patterson (right) with attorney Hiram Eastland as he enters U.S. District Court for sentencing this morning. Patterson appeared light-hearted before being sentenced, asking the photographers taking his photo: “Where were you when I was running for office?” Photo by Bruce Newman.

2/13/09 – Last two judicial bribery defendants sentenced
Alyssa Schnugg
Staff Writer

The last two defendants in what’s been branded the Scruggs I judicial bribery case were sentenced to spend 24 months in federal prison for their roles in the scheme to bribe a circuit court judge.

Timothy Balducci and Steven Patterson both appeared before U.S. District Court Judge Neal B. Biggers this morning at the Federal Courthouse in Oxford.

Both men pleaded guilty a year ago to a charge of conspiring with Richard “Dickie” Scruggs, his son and attorney Zach Scruggs and his law partner Sidney Backstrom to bribe Circuit Court Judge Henry Lackey with $40,000 for a favorable ruling in a lawsuit against the elder Scruggs involving legal fees in Hurricane Katrina related litigation.

During Balducci’s sentencing hearing, U.S. Assistant Attorney Bob Norman told the judge that his department had never seen such “complete cooperation” from another defendant. He said Balducci’s help has opened the doors to other investigations of corruption and that the Scruggs case got as far as it did because of Balducci’s assistance.

“His cooperation was immediate,” Norman said. “He’s doing the best he knows how to do to right the wrong he has done.”

Biggers agreed but reminded Balducci he was the “bag man” in the case.

“You carried the money,” he said. “You talked the judge into going along with what you wanted to do.”

Balducci told Biggers and the court that he was “profoundly sorry” for what he had done.

“All I can do now is try to make things as rights as I can,” Balducci said.

Norman also reported that Patterson has cooperated with the government, albeit to a lesser degree than Balducci.

Patterson was called a “minor” participant in the case, although he received the same sentence as Balducci.

Before he was sentenced, Patterson said he was embarrassed and humiliated.

“If God gave me a choice to live carefree in paradise the rest of my life, or to choose to go back two years ago and change my actions, I would not hesitate to enlist to do the latter,” he told Biggers.

Both men will report to prison on March 25. The government asked for the later reporting dates because their testimony may be needed when the grand jury meets in the March.

The saga began on Nov. 27, 2007, when FBI agents raided Scruggs’ office on the Square. The next day, the five men were indicted.

On Dec. 5, 2007, the day of his arraignment, Balducci pleaded guilty to the bribery charge.

It was later learned that Balducci had been working with the government in building its case against Scruggs and the others.

But it was also Balducci who got the ball rolling. In trying to gain favor with Scruggs, during a meeting with the other defendants in March 2006, he told the famous trial attorney that he could use his friendship to corruptly influence the judge to find in favor of Scruggs in the lawsuit Jones v. Scruggs.

After Balducci approached Lackey and suggested that if Lackey would find in favor of Scruggs, he would give Lackey a place in his law firm after Lackey retired. Appalled, Lackey told the FBI about the conversation. For six months, Lackey allowed his office and telephone to be tapped. In September 2006, in another meeting with Balducci, the subject of money came up and Balducci offered Lackey $40,000. It was later discovered Scruggs was providing the funds.

Balducci was approached by the FBI in November 2007 and he began cooperating with the government and wore a wire tap himself on the day the money was given to Lackey.

Scruggs was sentenced in June to spend five years in a federal prison in Kentucky. His son is serving a 14-month sentence in Forrest City, Ark., and Backstrom is serving 28 months in Forrest City.

Earlier this week, Scruggs was sentenced to seven years in prison for his role in a bribery case involving Hinds Circuit Court Judge Bobby DeLaughter, which came to light during the Lackey case and through testimony of Balducci. The sentence will run concurrent with his original five-year sentence.

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Oxford has had its fair share of being in the limelight this year, such as hosting the first presidential debate in September on the University of Mississippi campus.

But just a few months prior, it was the rise and fall of prominent attorney Richard “Dickie” Scruggs, often referred to as the “Tort King,” that turned all eyes on Oxford in 2008.

On Nov. 28, 2007, Scruggs, his son Zach Scruggs, law partner Sidney Backstrom, former attorney Timothy Balducci and former state auditor Steven Patterson were indicted on federal charges for trying to bribe Circuit Court Judge Henry Lackey with $40,000 for a favorable ruling in a lawsuit — Jones v. Scruggs —against the elder Scruggs over Hurricane Katrina litigation.

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Alyssa gets her confirmation (emphasis mine):

8/19/08 – Lawsuit that felled famed attorney settled
Alyssa Schnugg
Staff Writer

The lawsuit against former trial attorney Richard "Dickie" Scruggs — that led to his being incarcerated — has been settled, Oxford attorney Grady Tollison said this morning.

"We settled Thursday morning," Tollison said.

On behalf of Jackson law firm, Jones, Funderburg, Sessums, Peterson & Lee, Tollison filed a lawsuit in March 2007 against Scruggs and other former members of the now defunct Scruggs Katrina Group. Jackson attorney Johnny Jones claimed his firm was pushed out of the Scruggs Katrina Group and only offered a fraction of what was owned to them for the firm’s work on several Hurricane Katrina-related cases.

In November, Scruggs, along with his son, Zach, law partner Sidney Backstrom, former attorney Timothy Balducci and his partner and former state auditor Steven Patterson were charged with attempting to bribe Circuit Court Judge Henry Lackey for a favorable ruling in the Jones v. Scruggs suit. All five men have pleaded guilty.

The elder Scruggs is serving a five-year sentence for his lead role in the scheme. Zach is serving 14 months on a lesser charge of knowing about a felony and failing to report it. Backstrom is serving 28 months in prison for his role in the attempted bribe.

Balducci and Patterson have not been sentenced.

Tollison said the amount of the settlement is confidential.

Also listed in the suit are the Barrett Law Office, Nutt & McAlister and Lovelace law firms — which were all part of the SKG when it was formed.

Tollison said his client has also settled with the Nutt & McAlister Law Firm. He said he expects to go to trial against the Barrett and Lovelace firms.

"We’re attempted to [settle] with them," Tollison said. "But my feeling is, we’re headed for trial."

In April, Circuit Court Judge William Coleman ruled Jones’ firm is entitled to fees and possibly punitive damages since the lawsuit lead to the attempted bribe.

Last week, the Mississippi Supreme Court granted a hearing to decide whether the lawsuit should go to arbitration and a temporary stay on all proceedings in the lawsuit. The trial against Barrett and Lovelace is currently set for November, but that could change due to the Supreme Court’s ruling last week.

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There were hearings today in the Jones v. Scruggs case, the one in which Scruggs attempted to bribe Judge Lackey.  I posted earlier a description of the morning hearing, and reposted Judge Coleman’s words in support of Judge Lackey from the bench.  I want to encourage everyone to read the remarks about Judge Lackey.

This afternoon, they came back to set the schedule.  After being told this morning by Judge Coleman to agree to deposition dates or else, and the Jones lawyers gave Scrugg’s lawyer dates, Scruggs’s lawyer asked this afternoon for additional time to come up with dates for Scruggs as a courtesy since he had just learned the Jones dates. Judge Coleman stated that he had extended many courtesies and ruled:

• Dickie and Zach Scruggs will be deposed on July 28th.
• Jones July 22nd, Funderburg July 29th

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This has been driving me nutz, so I can’t tell you how proud I am finally to have hit on the right misspelling to get folo’s Search box to play along. Just knew I’d seen the name “Lisanby” — or something close — in our pages before, and sure enough:

According to NMC’s liveblogging of the April 15 hearing in Jones v. Scruggs, David Nutt named the poor unaware Lisanbys’ case as the cover story for the $40,000 Dickie reimbursed Balducci for bribery payments. As NMC took it down, Nutt testified:

… When I read about this in the paper, according to the paper a false invoice had been submitted for Mr. Balducci by Mr. Scruggs. I went to the office and got Mr. Bill Jones who is the comptroller for SKG and works in my law firm and asked if he recalled an invoice for voir dire to Balducci. He did not recall it. I asked him to search our records and he did. There was a manifest with many items and among those items was the Balducci invoice. After he secured the invoice I met with Barrett and Mr. Lovelace and thought we should call the FBI and be very open with them and show them what we had in our office. Set up a meeting with Delaney to come to my office, which they did in a couple of days. Present in the meeting were Bill Jones, Lovelace, Barrett, myself. I walked Mr. Delaney through the process by which this invoice got paid, a total $750,000 check for reimbursement that we had paid. Showed them the invoice for voir dire in the Lisanbe (sp?) case which was handled exclusively by Mr. Scruggs’s office. They had done all the legal work and the client contact. My office were handling hundreds of cases, but had nothing to do with the Lisanbe case. …

While Nutt may have perceived it as an exclusively Scruggs case, actually Don Barrett’s the one who’s shepherded Lisanby from SKG/KLG times into the present: turns out that he’s second-chairing Tom Thrash in this trial (which was originally set for December 2007, I hear, but I guess got discombobulated by the Scruggs bust and aftermath). Anyhow, here’s Barrett’s August 2006 notice of appearance for the plaintiffs. 

Now, how Tom Thrash caught the hand-off from the KLG crowd might be an interesting story (any of y’all with insights?), but so far Anita Lee has neither explained that nor mentioned Barrett’s presence in the case. I dunno, maybe she’s working up to one or both . . .

Note: I’ve got a couple of early appointments this morning but plan to catch us up on the Lisanby and phen-fen trials when I get home (and the belladonna wears off so I can see though facing an east window).

UPDATE: Blearily I say unto youse: A double h/t and much thanks to the two emailers whose separate explanations I here weave into one.

The story is that in the mid 1990s, Tom Thrash (whom one of my emailers IDs as an Arkansas native and alum of the Rose Law Firm of Hillary Clinton fame) filed suit against State Farm over the use of “after market” replacement parts in insureds’ vehicles. First he invited Jack Dunbar into the case, but Dunbar had a conflict (previous work for State Farm) and recommended Don Barrett. Around ‘98, Barrett, realizing the case’s potential, joined Thrash as co-lead counsel and brought in mega-firm Lieff Cabraser. [Aha: another name we've seen before. Recall that Dickie's fruitless run at St. Dominic's Hospital involved Don Barrett and San Franciscan Elizabeth Cabraser, among others.]

Anyhow, the next year they won huge against State Farm: a $1.3 billion verdict — which the Illinois supreme court eventually reversed. That must have been a bummer, but in the process, Thrash and Barrett became good friends. They’ve done many cases together since, and one emailer assumes that Thrash took on Lisanby out of loyalty to Barrett.

Rats. My eyes need a little more time before I try posting again, but there’s that story.

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There have been events I haven’t yet got to reporting (the Miss. Supreme Court turned down Scruggs’s interlocutory appeal on doing sanctions before arbitration in Jones v. Scruggs, for instance, and there’s Barrett’s affidavit in the same case. Nothing earth shattering but there’s some grist for the mills), and I am pretty close to certain there’s more to come from several quarters. For now, I’ll post this open thread. Comment at will.

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Even days later, we still have much to consider about what transpired at and resulted from Tuesday’s hearing in Oxford. I haven’t fully processed it all yet, but the biggest chunk of understanding came immediately.

The key event I looked forward to in the trial of U.S. v. Scruggs — the testimony of Judge Henry L. Lackey — finally came to pass in Jones v. Scruggs instead, and it exceeded all expectations. What I’d give to have been a fly on the wall there (with a fly’s compound eyes, the best ears in the world, and flawless multi-channel recall)! Well, we had the next best thing: NMC at the keyboard.

MSlawyer’s observation that, but for NMC’s liveblogging, “we’d never have known that Judge Lackey said a word about Hood or Moore in his testimony,” and jim’s marveling “no telling what we have not been told nor what we have been told that is wrong over the years,” enunciate the nastiest shock: Mississippi’s (indeed, the region’s) traditional media were either missing-in-action or actively, inexcusably, materially wrong on one of the biggest regional stories in years.

Lesson learned #1: They cannot be trusted and all too often can be safely ignored.

Remember the story Sailor told about the local reporter’s whining to her that he might cover an important story “but only if he could get it out before ‘those damn bloggers’ [who are] ‘killing us!’” Doesn’t that just say it all? Cry me a river, ya worthless fuck, you sound like Don Rumsfeld on the Iraqi insurgency. If you’re that flaccidly clueless, you’ve already lost.

We foloers, with mighty few exceptions, are merely amateur do-it-yourself journos (though NMC is brother to a fine reporter, Lee Hancock of the Dallas Morning News). We’re just regular folks who give a damn. And you’ve let us beat you to the ground?

Lesson learned #2: So it appears.

That being the case, what must we do about it? “Keep on” is what, until such time (if any) as professional journalism catches a clue and either begins or resumes its proper function with proper dedication, independence, and relish. Alyssa Schnugg and Paul Quinn have freshly demonstrated how doable that is.

Awrighty then, foloers, let us continue this exercise in good-citizenly self-help. Let us keep on staying alert; keep on finding and trading information that “the pros” are too mad, sad, or bad to uncover and report; keep on hitting folo’s tip-jar and patronizing its advertisers so we have a place to put it all (please oh please!); keep on riding the GOBs and their media enablers like banshees until they too give up, as broken-spirited as that fellow whimpering to Sailor. Because:

Lesson learned #3: We have only ourselves to save, and it sure as hell looks like only we are willing to do it.

(What? Why yes. Yes, I am utterly disgusted — why do you ask?)

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Here’s the whole story, from Alyssa Schnugg at the Oxford Eagle. A link to the site will come later:

Assistant DA says Lackey’s testimony was true

Hood denies Scruggs threatened to fund opponent

By Alyssa SchnuggStaff Writer

What would a good legal thriller be without some "he-said-she-said " to throw into the mix of intrigue, corruption and accusations?

But in the infamous judicial bribery case involving Richard "Dickie " Scruggs and four others, there appears to be a case of "he-said-he-said-he-said. "

On Tuesday, Circuit Court Judge Henry Lackey testified during a civil lawsuit hearing against Scruggs that Assistant District Attorney Lon Stallings told him in March 2007 that Attorney General Jim Hood told him that Scruggs, through former Attorney General Mike Moore, had promised him if he did not go along with the settlement in a legal dispute between State Farm Fire & Casualty Co. and Scruggs over the insurer’s handling of homeowner’s claims, that Scruggs and Moore would find a candidate who would run against him.

Hood has denied Moore ever made such a threat to him.

"No, Mike Moore never approached me with such a message, " Hood said Wednesday in an e-mail to The EAGLE. "Judge Lackey was right to turn the case over to the federal government which has the wiretap authority that the state lacks. "

Lackey’s testimony Tuesday came during a civil hearing for a lawsuit filed by a Jackson law firm, Jones, Funerburg, Sessums, Peterson and Lee. The lawsuit alleged Scruggs and the others conspired to "freeze out " the Jones firm and offered it a "ridiculously low figure " for its work on Katrina cases. The firm claims Scruggs is withholding money the firm is owed for working on Hurricane Katrina insurance-related litigation. It’s the same case in which Scruggs pleaded guilty to conspiring to bribe Lackey for a favorable ruling.

Scruggs, his son, Zach Scruggs, law partner Sidney Backstrom, former New Albany attorney Timothy Balducci and former state auditor Steven Patterson were indicted in November and have pleaded guilty to charges related to the federal bribery investigation. They are awaiting sentencing.

Circuit Court Judge William Coleman ruled in favor of the Jones’ firm Wednesday. A hearing is set Nov. 12 to decide how much Jones will be paid by the members of the former Scruggs Katrina Group.

Threats denied

Moore said that recently published reports claiming that Stallings had text messaged him to assure Moore that Lackey’s comments about his threatening Hood’s position were untrue. Moore said the text message he received earlier this week came from his associate, Lee Martin.

Moore also denied threatening Hood in any way.

"Never happened, " he said this morning. "First off, I wouldn’t threaten someone to run against (Hood). I’m the one who got him to run to begin with. He’s been my friend a long time. When his second campaign came around, we helped run his campaign … If anyone is trying to do anything negative against (Hood), they’re gonna be on the other side of me. I’m on Jim’s side. "

Moore, who is representing Zach Scruggs in the bribery case, said he worked as an unpaid "facilitator between all the parties " in the legal battles that followed Hurricane Katrina, which hit the coast in August 2005. Moore said he did advise Hood, but never pressured him to do anything on behalf on Scruggs.

"As far as what Judge Lackey said, the information is wrong, " Moore said. "Maybe he’s confused. Maybe someone else is doing that stuff. Maybe Steven Patterson. I prosecuted and removed (Patterson) from office. He doesn’t like me much. Whatever those boys are saying, they aren’t talking to me about it. "

Patterson was removed as state auditor after admitting to filing papers to avoid paying car taxes.

Backing Lackey

For his part, Stallings — upset about media reports claiming he made the story up and that he sent a text message to Moore on Tuesday during the hearing saying he never made that comment to Lackey — told The EAGLE Wednesday he was "really hurt " reading the statements in the newspapers.

"I grew up in Calhoun City and have known Lackey since I was a child, " Stallings said. "The last thing I’d want people in Calhoun to think is that I would have done that or said that about Judge Lackey. He told the truth. A few details got confused, but the thrust of his testimony was correct. "

Stallings said Lackey had come to him in March, shortly after being approached by Balducci who appeared to be trying to corruptly influencing Lackey by asking him to side with Scruggs in the Jones v. Scruggs lawsuit and offered Lackey a position in his law firm after Lackey retired.

"(Lackey) was upset about it and asked me why someone would think he’d do something like that, " Stallings said. "He suspected Scruggs was behind it … I told him we had an investigator that we’ve used in voter fraud cases that would wire up and send in there. "

Stallings said Lackey didn’t trust the Attorney General’s office to investigate the case since Hood, Moore and Scruggs were friend.

"I told Judge Lackey that I didn’t think Jim (Hood) was as close to Mike (Moore) anymore, " Stallings said. "I told him that to my recollection what (Hood) told me, and that was Mike (Moore) had told him that Dickie threatened to get him an opponent to run against him if he didn’t settle the case. "

Lackey later decided to go the U.S. Attorney’s Office and report the incident.

Friendships may end

Stallings said Hood called him Wednesday, after hearing about Lackey’s testimony.

"I think Jim remembers it differently, " Stallings said. "I consider Judge Lackey, Mike and Jim friends. All of this could end some friendships. "

Hood, a Democrat and former district attorney, was elected to his second term last year. Scruggs was one of his biggest campaign contributors.

Moore, a popular Democrat who served four terms as attorney general before going back to private practice, had a close relationship with Hood and Scruggs.

Scruggs, the brother-in-law of former U.S. Sen. Trent Lott, was one of the most prominent lawyers in the country. Moore, acting as attorney general in the 1990s, hand-picked Scruggs to lead the legal assault on tobacco companies that resulted in multi-billion dollar payout.

This is not the first time allegations have surfaced that Scruggs sent messengers to tell Hood how to handle cases against State Farm.

An FBI report made public in February said Scruggs paid $500,000 to two men now entangled in the bribery investigation — Balducci and Patterson — to persuade Hood not to file criminal charges against State Farm.

Scruggs, who was suing State Farm on behalf of storm victims, was afraid that the insurer "was not going to settle the civil cases " if the attorney general’s office filed criminal charges, according to the FBI report based on Balducci’s statements.

Hood has acknowledged meeting with Patterson and Balducci around Christmas 2006, but said he was not influenced by them.

Meanwhile, the sign on the Scruggs Law Firm door on the Square has been taken down. A receptionist answering the phone said the firm was "apparently not closed " since someone was still answering the phone. However the receptionist referred any questions to John Keker in California who is representing Scruggs in the criminal procedure. Keker decline to comment about the status of the law firm.

(The Associated Press contributed to this report.)

–alyssa@oxfordeagle.com
Alyssa Schnugg

Staff Writer

Oxford Eagle

662-234-4331 Ext. 245

 

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Okay, let’s masticate this:

OXFORD – Assistant District Attorney Lon Stallings and former Attorney General Mike Moore say a Daily Journal story Wednesday was substantially correct, but it missed on a couple of points.

Tuesday, Circuit Judge Henry Lackey testified in the lawsuit Jones v. Scruggs that he had not wanted to tell Attorney General Jim Hood’s office about a possible bribery suggestion from then-New Albany attorney Timothy Balducci because he believed Hood was close to Moore and Oxford attorney Richard “Dickie” Scruggs. Lackey suspected the bribery suggestion might have come from Scruggs through Balducci.

On the stand, Lackey said he had heard that because Hood didn’t want to settle a claims dispute with State Farm Insurance, Moore and Scruggs got mad, with Scruggs’ [sic] threatening to find a campaign opponent for Hood in the 2007 statewide election, just like he had done to Insurance Commissioner George Dale. Lackey said he heard that from Stallings.

However, Stallings told the Daily Journal on Wednesday he had told Lackey about Hood’s disagreement with Moore and Scruggs, but that he had never mentioned anything about Dale.

The threat to Hood did not include Balducci or co-defendant Steve Patterson, which an earlier story stated.

Stallings also said he told an investigator for Moore, who represents Zach Scruggs, about his advice to Lackey and what he had said about Moore and Scruggs’ disagreement with Hood.

A text message shown Tuesday to the Daily Journal, which reporter Patsy Brumfield originally thought was from Stallings, was not. It was from Moore associate Lee Martin, and Moore said again Wednesday it confirmed his recollection of what his investigator told him about speaking with Stallings and his advice to Lackey. …

So how did Patsy achieve her “original thought,” hm?

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Our jim’s favorite summing-up of Scruggsiana is, as you know, “Circles and cycles.” I thought of his saying just now while over slurping some ketchup at Rossmiller’s:

[R]eaders pointed out something I didn’t remember — two new members of Zach’s defense team, Chip Robertson and Mary Winter, are old hands with the Scruggs Circus. Their firm represents the Rigsby sisters in the False Claim Act “whistleblower” case against State Farm, and as one enterprising reader found out in doing research on my blog, Robertston and Winter are mentioned in one of the Kerri Rigsby depositions I’ve posted. See beginning on page 17. Also, here is the post in which I discussed other aspects of the deposition.

Kerri Rigsby met them, according to her testimony, back in early 2006 in a trailer along with Dickie Scruggs (the trailer may have been the one set up on former Sen. Lott’s property after Katrina in Pascagoula, but this is not clear from the transcript). Apparently, Cori Rigsby brought her laptop and accessed the State Farm claims documents with her laptop and State Farm password. These claims documents, the value of which appears to be some mixture of hype and hope, were used by Scruggs in a variety of sensationalism ways to drum up publicity and to use as leverage — the Rigsby sisters’ 20/20 interview, numerous uncritical press stories featuring Scruggs’ exaggerations, the False Claims Act case, several Katrina cases including McIntosh v. State Farm, grand jury investigations in conjunction with state and federal prosecutors, and of course, as a negotiating ploy in the settlement of the 640 Katrina cases against State Farm. This last item, of course, led indirectly to two prosecutions of Scruggs — the first stemming from his game of keepaway with the help of AG Jim Hood with the documents in defiance of Judge Acker’s order, the second as a result of the conspiracy to bribe Judge Lackey in the Jones v. Scruggs fee dispute that arose out of the settlement.

When you see it written down that way, you can see how one thing led to another and brought us to where we are now. So it’s only fitting that Robertson and Winter, who were there at or near the beginning, should be there at the end.

UPDATE:

Reading this reminded me to go back and fetch the email I received first thing this morning from a reader in position to know, explaining that s/he believes Zach Scruggs’ father-in-law is state supreme court justice George Carlson and that s/he knows Mary Winter is former Mississippi governor William Winter’s daughter.

The reader concludes, “Doesn’t mean much, but just illustrates the closed circle that is Mississippi law.”

Yep.

My source, whose identity and relationship to some of the Scruggs principals I know, has now been outvoted by other readers apparently in even better positions to know the family relationships under discussion. Thank you all for the corrections.

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