Editor's note: The following story is a corrected version of an earlier article that contained several inaccuracies.
JACKSON, Miss. - Worried a state-run criminal investigation might interfere with his payday, indicted trial lawyer Richard "Dickie" Scruggs may have attempted to sway Mississippi Attorney General Jim Hood's decision to prosecute State Farm Insurance Cos.
An FBI report released this week says Scruggs offered $500,000 to two of his alleged co-conspirators in a judicial bribery scheme to attempt to convince Hood not to indict State Farm on criminal charges regarding Hurricane Katrina claims because Scruggs feared it would put an end to a possible settlement with his Scruggs Katrina Group.
"(State Farm) was not going to settle the civil cases with the (Scruggs Law Firm), if the company was going to be indicted by the Attorney General's office," FBI agent William Delaney wrote.
"(Scruggs) asked (Steven Patterson) to speak with Attorney General Jim Hood since (Patterson) and Hood had a long-standing relationship. (Scruggs) offered to pay Patterson Balducci $500,000 if they could get Hood to relent on indicting SFIC."
Hood dropped his criminal investigation in Jan. 2007, the same time 640 SKG suits were settled. It earned the SKG $26.5 million in attorneys fees, while State Farm gave Hood $5 million for investigative costs.
"I made my decision that there was insufficient evidence to uphold a conviction of State Farm on evidence we had at the time, based upon the advice of a career prosecutor who started in this office in the early 1970s," Hood said in a statement. "I am too hardheaded to be influenced by outside forces -- I do what I think is right for the working people of Mississippi."
Those attorneys fees, meanwhile, became the subject of a dispute between Scruggs and one of his business partners. Federal investigators allege that he attempted to bribe Lafayette County Circuit Court Judge Henry Lackey with $40,000 for a ruling compelling arbitration in the dispute.
Patterson and his business partner, attorney Timothy Balducci, have pleaded guilty to the alleged scheme. It is Balducci's testimony that is the basis of Delaney's report.
"(Balducci) accompanied (Patterson) to a meeting with Hood, and Hood later agreed not to indict SFIC," the report says.
Balducci and Joey Langston represented Scruggs on another fees dispute. Langston has pleaded guilty to attempting to bribe Hinds County Circuit Court Judge Bobby DeLaughter with influence for a federal judgeship.
Scruggs and two members of his firm (son Zach and Sidney Backstrom) are scheduled to go on trial March 31 and face maximum sentences of 75 years.
In a case brought by State Farm against Hood, Hood testified that Scruggs never threatened to support another candidate in the 2007 election if he did not do what Scruggs wanted.
Scruggs and Langston have contributed a combined $440,000 to the Democratic Attorneys General Association, which gave the exact amount to Hood. Langston's firm, at which Balducci formerly worked, has also given more than $100,000 directly to Hood, and Scruggs, prosecutors say, has given Hood $44,000 directly.
Hood said last week that filing state charges against any of the players in the alleged schemes would be like prosecuting a family member and has deferred that option to local district attorneys.
Balducci has also told federal prosecutors that a Birmingham man named P.L. Blake has been Scruggs' "bagman" and has been paid with money from a large tobacco settlement that helped Scruggs gain national notoriety.
The Tobacco Master Settlement Agreement has an estimated worth of $246 billion to the 52 participating states and territories, with $1.4 billion going to attorneys fees. A 2003 audit of Scruggs in the asbestos fees dispute showed a net worth of approximately $200 million.
"(Balducci) met Blake when (Balducci) represented (Scruggs) on some tobacco settlement cases regarding attorneys fees," Delaney wrote. "Blake is paid approximately $1 million per year out of attorneys fees which are controlled by (Scruggs).
"Blake receives the money directly from (Scruggs). (Balducci) does not know why Blake receives money from the Tobacco Settlement fund."