Scruggs didn't deny State Farm attorney's allegations

Steve Korris Aug. 4, 2008, 1:20am


OXFORD, Miss. (Legal Newsline) - If famed plaintiffs' lawyer and admitted felon Richard "Dickie" Scruggs of Mississippi committed all the crimes he didn't deny in a July 22 deposition, he will never get out of prison.

Scruggs pleaded the Fifth Amendment rather than incriminate himself, so State Farm Insurance attorney James Robie of Los Angeles accused Scruggs as he questioned him.

Tables have turned in Mississippi for Scruggs, who once held State Farm in an iron grip. He led a team of lawyers who sued State Farm over Hurricane Katrina claims.

Now, with Scruggs set to begin a five-year federal prison sentence for conspiring to bribe a judge, State Farm appears to be seeking the origins of the suits he filed.

The attorney for State Farm deposed Scruggs over a Katrina lawsuit filed by Thomas and Pamela McIntosh.

Robie questioned Scruggs most aggressively about the Rigsby sisters, who were given $150,000 consulting jobs with the Scruggs Katrina Group after taking confidential documents from State Farm.

The Rigsbys worked at E.A. Renfroe & Co., which worked with State Farm on Katrina claims.

Robie unleashed a an attack on ABC, NBC and The Associated Press, asking Scruggs if he sent them copies of court documents that judges had sealed.

In 2006, a ABC News' "20/20" program portrayed the Rigsby sisters as whistleblowers who caught State Farm cheating Katrina victims.

Among questions to which Scruggs pleaded the Fifth Amendment:

-"Was it your custom and habit, Mr. Scruggs, to release sealed court documents to news agencies as part of your program to prosecute litigation?;

-"You had a strategy to find an insider to steal documents, a strategy to use the legislature, a strategy to use the judicial officers of Mississippi, and a strategy to use the press in order to put State Farm into an extremely uncomfortable position and pay you money. Isn't that a fact?; and

-"Isn't it a fact that you met with George Dale and Lee Harrell at the Mississippi Department of Insurance in December of '05 and threatened to ruin a campaign against George Dale if he didn't propose a program forcing State Farm to pay a half billion dollars into a fund for you to administer?;

Robie also asked Scruggs if he arranged to fly to Bloomington, Ill., headquarters of State Farm, and have someone deliver an empty box to him so he could fabricate a story that an insider gave him documents.

"Isn't this entire story a fabrication designed to put State Farm in a bad light and to pursue your litigation strategy of using the press to promote your litigation?" he asked. "Isn't it a fact, Mr. Scruggs, that you urged the Rigsbys to recruit other people working on the State Farm Katrina claims to steal documents and furnish them to you?

"Isn't it a fact, Mr. Scruggs, that you and (Mississippi) Attorney General (Jim) Hood engaged in a joint program to exert improper criminal charges against State Farm in order to extract civil settlements from my client?"

Robie also posed dozens of questions about fee and indemnity agreements with other law firms, hinting at violations of attorney ethics.

Scruggs, who was scheduled to report to federal prison in Ashland, Ky., Monday, first made a name for himself in asbestos cases, representing shipyard workers. After that, his work led to the 1998 Tobacco Master Settlement Agreement, which has an estimated worth of $246 billion for the 52 participating territories and states.

After 2005's Hurricane Katrina, he grouped together a handful of law firms to create the Scruggs Katrina Group. The group represented insurance policyholders who believed their insurance companies were misrepresenting the amount of damage done to their properties by wind (covered by the policy) and water (covered by a federal program).

More than 600 cases were settled early in 2007, earning the SKG $26.5 million in attorneys fees. John Griffin Jones filed suit against Scruggs, claiming his firm was shortchanged when the money was divided.

Scruggs admitted that he gave the go-ahead for attorney Timothy Balducci to offer $50,000 to Lackey for a ruling that would have sent the dispute to an arbitration panel. Balducci pleaded guilty in November to the scheme, and his business partner Steven Patterson, a former state Auditor, soon followed.

Lackey contacted the FBI soon after Balducci's first mention of a bribe. Scruggs agreed to a maximum prison sentence of five years, pleading guilty to a conspiracy charge while the other five were dropped.

Zach pleaded guilty misprision of a felony, meaning he knew about the scheme but did nothing to prevent it. He must report to the Pensacola facility on Aug. 15.

Biggers fined each $250,000 and ordered them to pay the costs of their incarcerations.

Dickie recently filed suit against another law firm over attorneys fees.

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Mississippi Attorney General
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Jackson, MS 39201

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