Mississippi Attorney General Jim Hood says the bribery charges against the prominent lawyer he used as a “confidential informant” in a Hurricane Katrina investigation won’t affect the state’s lawsuits over storm damages.
Richard “Dickie” Scruggs was indicted Nov. 28 on charges claiming Scruggs and several associates tried to bribe a state court judge in a case involving disputed legal fees.
Hood and Scruggs were closely aligned after Hurricane 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 on behalf of homeowners.
“The federal indictment has absolutely nothing to do with our case against State Farm,” Hood said in a written response to questions.
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 the handling homeowners’ claims.
“It would involve discussing our legal strategy, which is something I cannot do at this time,” he said.
Scruggs’ son and law partner, Zach Scruggs, former Mississippi Auditor Steve Patterson and attorneys Sidney Backstrom and Timothy Balducci were also indicted in the case. Balducci is the only one of the men who has pleaded guilty. Authorities say he is cooperating in the investigation. The others say they are innocent.
The latest development in the case came Monday when the FBI 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 early Monday at Langston’s office in the northeast Mississippi town of Booneville.
John Keker, an attorney for Scruggs, said the agents should have been able to get the information they needed just by asking.
“It does seem a little heavy handed,” he said of the search warrant.
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 this Saturday 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.”
Hood has also worked with Langston and Balducci in the past. He hired Langston’s firm to represent the state in collecting $100 million in back taxes from telecom giant MCI. Langston and Balducci were paid $14 million as part of a settlement in 2005.
Hood tried to distance himself from Balducci.
“Our contracts have been with the Langston Law Firm, not directly with Timothy Balducci,” Hood said through a spokeswoman. “His only involvement with our office is in whatever tasks he was assigned by his employer.”
Associated Press Writer Michael Kunzelman in New Orleans contributed to this report.
Topics Mississippi
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