Tobacco partners suing Scruggs

by John O'Brien |
Sep. 17, 2009, 4:41pm


TUPELO, Miss. (Legal Newsline) - Two of disgraced plaintiffs attorney Richard "Dickie" Scruggs' former business partners are suing him, claiming part of the money owed to them from a tobacco settlement was used to further one of Scruggs' judicial bribery schemes.

Lee Young and Charles Mikhail filed their suit in Mississippi federal court Sept. 9 seeking compensation for what they feel is being withheld unfairly from their quarterly payments. Scruggs agreed to pay the two 5 percent of his firm's net gain from a national tobacco settlement in 1999.

Scruggs has pleaded guilty to two judicial bribery schemes, receiving 7 1/2 years in prison. He reduced Young's and Mikhail's payments as he fought lawsuits from former asbestos litigation partners William Roberts Wilson and Alwyn Luckey, who made a claim on Scruggs' tobacco earnings, the suit says.

"On information and belief, Plaintiffs were forced, through a deduction from their Jan. 2007 quarterly payments, to contribute money which, unbeknownst to them, was not represented to be by Defendants (a legitimate tobacco-related expense) but as payments made to further illicit a criminal scheme to unethically and illegally influence a judge," the suit says.

"At no time did Defendants inform Plaintiffs nor give Plaintiffs any reason to believe that Scruggs was using portion of Plaintiffs' tobacco fees to improperly influence a judge."

Their payments were also reduced when Scruggs paid his attorney, Joey Langston, $3 million for his work in the Wilson case. Of that amount, Langston paid former Hinds County District Attorney Ed Peters $1 million to influence Hinds Circuit Judge Bobby DeLaughter, who formerly worked with Peters and was presiding over the Wilson case.

Scruggs gained notoriety when his work helped lead to the 1998 Tobacco Master Settlement Agreement, which has an estimated worth of $246 billion for the 52 participating territories and states. Mississippi is not one of them, but has its own separate agreement.

Scruggs' work was chronicle in the 1999 film "The Insider," starring Al Pacino and Russell Crowe.

More than 20 years ago, Wilson, Luckey and Scruggs each had their own stake in a group Scruggs started to file asbestos cases. Wilson and Luckey eventually sold their interests in more than 2,300 asbestos cases in agreements that were interpreted differently by all parties, and the two filed suit against Scruggs. Wilson filed his in 1994, and it dragged on for 12 years.

Luckey was awarded $17.5 million in his dispute with Scruggs after a trial in front of U.S. Magistrate Judge Jerry Davis. His claim for a constructive trust on Scruggs' tobacco earnings failed, however.

But Wilson received only a $1.5 million payment because DeLaughter's interpretation of the contract showed no remaining balance owed to Wilson, and that a trial would have been merely for bragging rights.

A special master, though, had recommended Wilson be awarded $15 million. Wilson has filed another civil suit over the bribery scheme.

DeLaughter pleaded guilty to misleading federal prosecutors, who have recommended an 18-month prison sentence.

Scruggs also pleaded guilty, adding 2 1/2 years to the five-year sentence he is serving for a separate judicial bribery scheme. He pleaded guilty to offering $50,000 to Lafayette Circuit Judge Henry Lackey for a favorable ruling in a dispute over attorneys fees from Hurricane Katrina lawsuits.

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