Grand jury indicts lawyer in bribery

Published 12:01 am Thursday, November 29, 2007

NEW ORLEANS (AP) — An attorney who helped negotiate a multibillion dollar settlement with tobacco companies in the 1990s and represents hundreds of Mississippi homeowners after Hurricane Katrina was indicted Wednesday in an alleged scheme to bribe a judge.

A federal grand jury in north Mississippi indicted Richard ‘‘Dickie’’ Scruggs, his son and law partner Zach Scruggs, two other lawyers and a former Mississippi auditor of conspiring to bribe state Circuit Court Judge Henry Lackey with $40,000 in cash.

The 13-page indictment accuses the men of trying to bribe Lackey to rule in favor of Scruggs in a civil lawsuit, filed by other attorneys, that accused Scruggs of withholding fees for work on Katrina insurance litigation.

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The indictment says Lackey, who sits in Mississippi’s Third Circuit Court District, reported the ‘‘bribery overture’’ to federal authorities and agreed to assist investigators in an ‘‘undercover capacity.’’

Joey Langston, a lawyer for Scruggs’ firm, said Richard Scruggs, his son and a third defendant turned themselves in to authorities Wednesday afternoon at a federal building in Oxford, where the grand jury handed up the indictments earlier in the day.

‘‘I’m convinced that these guys did not do what they’re accused of doing,’’ Langston said.

The charges against Scruggs and the others include one count of defrauding the federal government and two counts of wire fraud.

Also named as defendants in the indictment are Zach Scruggs; Sidney Backstrom, a lawyer in Scruggs’ firm; Timothy Balducci, a New Albany, Miss.-based lawyer; and former state auditor Steven Patterson, an employee of Balducci’s firm.

Patterson resigned as auditor in 1996 after he allegedly lied on state documents to avoid paying taxes on a car tag.

Following their arraignment Wednesday, Richard Scruggs was released on $100,000 bail, while Zach Scruggs and Patterson each were freed on $50,000 bail.

Langston said Backstrom is expected to be arraigned Thursday, but he couldn’t say when Balducci is expected to appear in court.

Langston said it was too early for him to comment on the details of the allegations.

‘‘Right now, we’ve just got to get our arms around it,’’ he said.

Scruggs, whose brother-in-law is Sen. Trent Lott, R-Miss., earned millions from asbestos litigation and from his role in brokering a multibillion dollar settlement with tobacco companies in the mid-1990s. After Katrina hit on Aug. 29, 2005, the Gulf Coast native sued insurers on behalf of hundreds of policyholders whose claims were denied after the storm.

On Tuesday, FBI agents searched Scruggs law offices and left with copies of computer hard drives, Langston said.

The alleged bribery scheme stems from a lawsuit filed in March against Scruggs by a Jackson law firm, Jones, Funderburg, Sessums, Peterson & Lee in a dispute over $26.5 million in attorneys’ fees.

Scruggs, a native of Mississippi’s Gulf Coast, created a legal team called the Scruggs Katrina Group to represent policyholders who sued their insurers after the hurricane.

In January, Scruggs’ legal team reached a mass settlement of suits with State Farm Insurance Cos. that involved more than $26 million in lawyers’ fees.

The lawsuit accuses Scruggs of trying to ‘‘freeze out’’ lawyers from the Jackson law firm, including senior partner John G. Jones, and pay it a ‘‘ridiculously low figure’’ for its ‘‘substantial’’ work.

After the suit was filed, Balducci allegedly had several meetings and conversations with Lackey in which Balducci agreed to pay the judge $40,000 for ruling in favor of Scruggs in the case, according to the indictment.

Scruggs allegedly tried to cover up the alleged scheme by falsely creating documents that showed he hired Balducci to work on an unrelated case, when he was actually reimbursing him for the $40,000 cash bribes, the indictment alleges.

The indictment includes excerpts of telephone conversations between Balducci and the judge that were presumably recorded by federal authorities.

In one, Balducci allegedly told Lackey, ‘‘my relationship with Dick (Scruggs) is such that he and I can talk very private (sic) about these kind of matters and I have the fullest confidence that if the court, you know, is inclined to rule … in favor … everything will be good.’’

Balducci allegedly delivered $20,000 in cash to Lackey in his court chambers on Sept. 27, and gave him separate $10,000 payments on Oct. 18 and Nov. 1.

On Nov 1., Balducci also allegedly picked up a court order that was favorable to Scruggs in the case. That same 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.’’


Associated Press writer Holbrook Mohr in Jackson, Miss., contributed to this report.