Hood in middle of $14 million legal fee fight

Steve Korris Dec. 13, 2007, 4:47pm


NEW YORK CITY - Most politicians would leap at a chance to win back millions of dollars from attorneys under federal investigation, but Mississippi Attorney General Jim Hood must pass up the chance because he hired them.

Hood refuses to represent State Auditor Phil Bryant in his effort to recover a $14 million fee that MCI Worldcom paid Joey Langston's law firm in 2005.

Bryant believes the money belongs to Mississippi taxpayers.

Hood believes the money belongs to the lawyers, although he has not said so since one of them pleaded guilty in a bribery scheme and the FBI raided Langston's office.

In the bribery plea, Tim Balducci admitted Dec. 4 that he conspired with Oxford attorney Dickie Scruggs to buy favorable rulings from a local judge for $40,000.

Scruggs, like Langston and Balducci, has earned millions settling state claims as special assistant to Hood.

Balducci confessed five days after a federal grand jury indicted him and four others.

The grand jury didn't indict Langston but after Balducci confessed, the investigation expanded and the FBI searched Langston's office in Booneville.

Langston and Balducci signed a contract with Hood in 2004, to represent the state in negotiations with MCI over back taxes at U.S. bankruptcy court in New York City.

Langston and Balducci separately agreed to split their fees evenly with the firm of Lundy and Davis, already working on the case for Hood.

Hood claimed MCI owed the state about $1 billion.

At a settlement conference in 2005, Hood, Langston and William Quin of the Lundy firm bargained the state's claim down to $100 million.

MCI agreed to pay that and transfer to the state its real estate in Jackson.

MCI agreed to pay the Langston firm $14 million.

The bankrupt company also agreed to donate $4.2 million to the Children's Justice Center of Mississippi.

U.S. Bankruptcy Judge Arthur Gonzalez approved the settlement.

Bryant opened an investigation and reported that under Mississippi law, the legal fees and the donation represented recovery of state claims.

He said the money belonged in the state treasury for appropriation by the Legislature.

Last year he asked the Children's Justice Center to turn $4.2 million over to the state treasury. The group gave it up.

He asked Langston for $14 million. Langston did not give it up.

This Sept. 10, Bryant hand delivered a letter to Hood asking him to sue Langston and Balducci for $14 million.

Bryant advised Hood that if he did not sue Langston and Balducci in two weeks, Bryant would sue them in Rankin County, where Bryant lives.

With statewide elections less than two months away, the drama between Bryant and Hood carried partisan overtones.

Hood, a Democrat, ran for reelection while Bryant, a Republican, sought to advance from auditor to lieutenant governor.

Three days before Bryant's deadline, Langston and Balducci filed an "adversary proceeding" in the MCI bankruptcy, seeking declaratory judgment against Bryant.

"This Court should not fall prey to his antics," attorney Michael Richman of New York pleaded for Langston and Balducci.

Richman wrote that Bryant could have objected to the settlement 28 months earlier.

"Instead, has waited until a few short weeks prior to the general election for the Lieutenant Governor post he so desperately desires to stage a transparently political and legally devoid attack on attorney fees," Richman wrote.

Because the state was a party to the settlement agreement, he wrote, the state is bound by the terms of the agreement.

"Plaintiffs further assert that the Attorney General had the authority under Mississippi law to enter into the Settlement Agreement which provided that MCI pay the attorney fees directly to the Plaintiffs," Richman wrote.

He argued that if a court directed the funds to the Legislature, the Legislature would have to pay Langston anyway, under the contract that Hood signed.

In fact, Richman reasoned, enforcement of the contract might require the Legislature to pay Langston more than $17 million.

Normally an attorney general would defend a state executive in a lawsuit, but Bryant had to hire outside counsel because Hood would not represent him.

Bryant retained Arthur Jernigan and Craig Geno, both of Ridgeland, Miss. and Andrew Kramer of New York.

Kramer filed an answer for Bryant on Nov. 2, recommending that Judge Gonzalez abstain from hearing the matter in favor of the courts of Mississippi.

In case Gonzalez should decide to hear it, Kramer filed a $14 million counterclaim.

He alleged that Langston and Balducci "illegally received public funds which must immediately be returned to the State of Mississippi, with interest."

He wrote, "...no contract can supersede the requirements of Mississippi state law."

He figured that Langston and Balducci made at least $2,800 per hour.

On Nov. 6, voters reelected Hood and picked Bryant for lieutenant governor.

Since Nov. 29, when the grand jury indicted the Scruggs team, Hood has downplayed his ties to the attorneys.

Sid Salter of the daily Jackson Clarion-Ledger wrote Dec. 12 that, "Hood should find it increasingly difficult to distance himself from Langston, Balducci and others who find themselves stuck in the web of the Scruggs probe."

Salter wrote, "Langston has been Hood's largest campaign contributor."

Judge Gonzalez has not ruled on Bryant's request for transfer to Mississippi.

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State of Mississippi
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Jackson, MS 39201

Mississippi Attorney General
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Jackson, MS 39201

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