Latest Scruggs Katrina Charges put Miss. AG Hood and Politics in Spotlight

Scruggs has ties to Republican Sen. Trent Lott and Democrats Hood and Clinton

Mississippi Lawyer Timothy Balducci pleaded guilty to conspiracy to bribe a judge and is assisting federal prosecutors in a case involving one of the nation’s wealthiest trial lawyers.

Balducci is allegedly the lawyer who physically delivered thousands of dollars to a judge in exchange for a favorable ruling in a case involving $26.5 million in disputed legal fees from a Hurricane Katrina insurance settlement. A 13-page indictment in the case claims Balducci made the bribe at the behest of prominent attorney Richard “Dickie” Scruggs and others in Scruggs’ firms.

Scruggs and the others deny the claims. Scruggs’ son and law partner, Zach Scruggs, was also charged.

In federal court in Oxford, Balducci entered a plea of guilty to one count of conspiracy to bribe an elected state official. No sentencing date was set and Balducci was released on his own recognizance. U.S. Attorney Jim Greenlee said Balducci had already cooperated with the government in its investigation of Scruggs and would be doing more to help the government’s case.

Balducci’s court appearance came a week after Scruggs and the others were in court and pleaded not guilty to charges against them.

Balducci is accused in a federal indictment of bribing state Circuit Court Judge Henry Lackey earlier this year at the behest of Richard Scruggs. The charge carries a five-year sentence.

Richard 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.

Meanwhile, Mississippi Attorney General Jim Hood says the bribery charges against Scruggs, whom he used as a “confidential informant” in a Katrina investigation, won’t affect the state’s lawsuits over storm damages.

Democrat Hood and Scruggs were closely aligned after Katrina and Scruggs reportedly gave the attorney general’s office information about insurers’ practices in reviewing claims.

When a federal judge in Alabama ruled in June that Scruggs violated a court order for providing Hood with documents taken from an engineering company, Hood came to Scruggs’ defense.

Hood wrote a letter July 16 to U.S. Attorney Alice Martin in Alabama, asking her not to pursue charges because Scruggs “has functioned as a confidential informant for our investigations,” according to a copy of a letter in court records.

Hood won’t say exactly what information Scruggs provided or how it was used in an investigation of State Farm Insurance Cos. But, Hood said, it won’t affect a massive settlement between the state and insurers.

“The federal indictment has absolutely nothing to do with our case against State Farm,” Hood said in a written response.

Matt Steffey, a law professor at Mississippi College, said “it remains to be seen” what impact the bribery investigation could have on other cases that Scruggs has worked on. “That depends ultimately on how far reaching this federal investigation turns out to be,” Steffey said. “If the charges against Mr. Scruggs turn out to be true, there will be a lot of people taking another look at those cases.”

State Farm spokesman Jonathan Freed would not say if the company would try to use Scruggs’ indictment to its advantage in an ongoing legal battle over homeowners’ claims.

The FBI has seized files from the law office of one of Scruggs’ attorneys, Joey Langston. Balducci once worked at the Langston firm and FBI agents wanted files related to the case Balducci had worked on, said Anthony Farese, an attorney for Zach Scruggs, Richard Scruggs’ son and law partner.

“Neither the Langston law firm nor any of its principals have been implicated in any wrongdoing,” Farese said.

FBI spokeswoman Deborah Madden would not say what the agents took when they searched the office.

Scruggs is also a major player in state and national politics. Former President Bill Clinton had been scheduled to be at Scruggs’ home in Oxford recently for a fundraiser for the presidential campaign of Sen. Hillary Rodham Clinton. It was canceled when the bribery indictment was announced.

The bribery charges arose from a lawsuit filed against Scruggs by another law firm that wants a bigger cut of at least $26.5 million in legal fees from a mass settlement of policyholder lawsuits over Hurricane Katrina damage.

Scruggs and a group of his legal associates known as the Scruggs Katrina Group brokered a deal with State Farm Insurance Cos. and were to split the legal fees. But the Jackson firm of Jones, Funderburg, Sessums, Peterson & Lee, which worked on the case, said it was shortchanged; the firm rejected a check for $617,924 from the Scruggs group in March and sued, according to court records.

Hood won’t say if he is pursuing state bribery charges against Scruggs or if he has been contacted by federal authorities.

“If I am asked to cooperate with any federal investigation, I will do so,” Hood said. “If anyone is caught breaking the law, whatever the crime, they need to face the consequences.”