The Dickie Scruggs Scandal
A Call to Arms
by Alan Lange
What an incredible week of news. It is hard to know exactly where to start to untangle all of the relationships.

The revelation that Dickie Scruggs, Zach Scruggs, Timothy Balducci, former State Auditor Steve Patterson and and Sidney Backstrom have been indicted on bribery charges has shaken the political landscape in Mississippi to its very core. Sitting Attorney General Jim Hood, former Attorney General Mike Moore, and well known plaintiffs lawyer Joey Langston are all very very close relations to this group of people, and there seems to be a pattern of political influence and personal gain that is weaved throughout all of these relationships. And, of course, US Senator Trent Lott is Dickie Scruggs brother-in-law, and his recent notice to resign for the US Senate has conspiracy theorists running wild.

What is now incumbent on us is to begin the process of untangling all of the incestuous relationships between these folks to find where the truth lies. It will take months, and it can only fractionally happen in this article. We need your help. Let's get it started by examining some of these relationships and political fallout.

Trent Lott's Resignation
While the Lott resignation had some strange timing, I personally doubt that he is tied to the scandal other than by marraige. He has had a white hot spotlight on him for years as a Minority Whip, and he has a tremendously bright future ahead of him in the private sector. His resignation was not a surprise, as he almost didn't run for re-elect in 2006 citing the exact reasons as he has now expressed for his resignation.

Worst case scenario is that maybe he knew the indictments were coming, and that might have advanced his time frame. I personally even doubt that. But to believe that he was involved in Scruggs scandal means that he would in essence have had to have rationalized throwing away almost 40 years of public service and basically his future. I doubt he did that, and I think the evidence when it comes out will prove it.

There are two real cases that bind all of these lawyers together . . . the MCI case and the Katrina Litigation.

MCI
This whole crowd was deeply involved in the MCI for back taxes owed to Mississippi. The story goes something like this. MCI, in bankruptcy and a potential merger with Verizon, needed to get a major back tax claim to the state of Mississippi lifted. Some estimates put that at one billion dollars. MCI offered $20 million. Attorney General Jim Hood allowed his largest campaign contributor, Joey Langston, to be the plaintiff lawyer and also appointed Tim Balducci as a Special Assistant Attorney General in that case, as stated in their own website. Also notice that MCI retained (who else?) former Attorney General Mike Moore. Scruggs, Langston and company were all huge contributors to Mike Moore and huge beneficiaries of state legal contracts as well under Moore's regime.

With MCI having offered to sell at $20 million, but needing the liability to go away quickly, Moore was brought in to "make it all go away". The result? The state got $100 million as a settlement, and the lawyers got $14 million.

Katrina Litigation
Fast forward to Hurricane Katrina. Now Dickie Scruggs places himself in the middle of the scenario by recruiting clients to file suit against State Farm and other insurers. Meanwhile, AG Jim Hood begins to pursue criminal charges against State Farm, that in essence force the hand of State Farm to settle civilly. That would enormously benefit the members of Scruggs Katrina Group, which included Zach Scruggs, Sidney Backstrom and Dickie Scruggs, one of Hood's largest donors.

Meanwhile, Dickie's train has started to come off the tracks in Alabama. Dickie defied Judge William Acker's order to return some documents to the Court in the Rigsby whistleblower lawsuit, and sent those documents to Jim Hood, who provided Scruggs "safe harbor" by declaring him a "confidential informant". In fact, Hood reneged on a settlement with State Farm, and reopened an investigation prompting the insurer to sue Hood's office.

Of course, we know at least part of the rest of the story. Richard "Dickie" Scruggs and company have now been indicted by the feds for bribing a judge for a favorable ruling to compel arbitration against another group of plaintiffs lawyers that could not come to an agreement on how to split $26 million in attorneys fees from Katrina litigation.

By the way, did we mention that the State's Executive Director of the Ethics Commission is Jim Hood's brother Tom Hood?

If you can follow all of this, you are probably a lawyer. This will continue to work its way through the system, and we will be here for every step.

Posted November 30, 2007 - 1:33 pm

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