Junior Scruggs joins dad in pleading guilty

By John O'Brien | Mar 21, 2008

Dickie Scruggs

OXFORD, Miss. - Zach Scruggs became the last of five to plead guilty to a judicial bribery scheme involving Hurricane Katrina attorneys fees Friday, one week after his father did the same.

The plea followed a flurry of motions and additions to his legal team and will cost him his law license. He pleaded to misprision of a felony, meaning he knew of the scheme but did not participate in or report it. Richard "Dickie" Scruggs, the trial lawyer who famously took on the tobacco industry in the 1990s, had pleaded guilty March 14.

"I'm here today to accept full responsibility for my acts and prepared to accept the full consequences, both from this court and the Mississippi Bar," Zach Scruggs, 33, said at his plea hearing, according to a report in the Biloxi Sun Herald.

"We, as members of the Bar, have high standards we have to live up to. And it's not just enough that we engage in ex parte contact or unethical contact, we have a duty to prevent others from doing so. And I failed to do so in this particular case."

The scheme involved attorney Timothy Balducci offering $50,000 to Lafayette County Circuit Judge Henry Lackey in exchange for a ruling compelling arbitration in a dispute between Scruggs and a former partner over more than $26.5 million in attorneys fees.

Balducci and his business partner, former state Auditor Steven Patterson, were the first to plead guilty. Balducci wore a wire to several meetings with the Scruggses and Scruggs Law Firm attorney Sidney Backstrom, who also pleaded guilty last week.

After all the pleas, Zach Scruggs maintained there was nothing on the tapes that implicated him, creating a controversy over Balducci's use of the term "sweet potatoes" to mean money for a bribe. The crime to which he admitted carries a three-year maximum prison sentence.

Dickie Scruggs faces a maximum five-year sentence. He 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. Attorneys earned $1.4 billion in the settlement.

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.

Lackey contacted the FBI soon after Balducci's first mention of a bribe. The members of the former Scruggs Katrina Group have renamed themselves the Katrina Litigation Group and continue to represent more than 1,100 Mississippi policyholders.

Attorney Joey Langston pleaded guilty in January to offering consideration for a federal judgeship to Hinds Circuit Judge Bobby DeLaughter in another attorneys fees dispute involving Scruggs. The Government had planned to introduce evidence of similar acts from that situation during Scruggs' scheduled March 31 trial.

It is alleged Scruggs wanted to use his brother-in-law, then-Sen. Trent Lott, to help DeLaughter get a federal job. After what has been described as a "courtesy call," Lott recommended someone else.

The Mississippi Commission on Judicial Performance has recommended DeLaughter be suspended while the facts of the case are sorted out. After a special master recommended Scruggs pay $15 million to his former asbestos partner, DeLaughter ruled that Scruggs only owed $1.5 million.

Zach Scruggs recently hired former Mississippi Attorney General Mike Moore as counsel. Moore had hired Dickie Scruggs for the tobacco case.

"I hope that the profession and the Mississippi Bar will learn from and benefit from my failure, and that it will - my actions here today will improve the Mississippi Bar Association for the better," Zach Scruggs said Friday, according to the report. "And may God save this Court and our honorable profession. Thank you, Your Honor."

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