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Katrina lawyer at the eye of a storm

Times Staff Writers

He is a legendary trial lawyer, and one of the richest men in Mississippi. His name graces the music building at his alma mater, Ole Miss. He is the brother-in-law of Republican Sen. Trent Lott, and a friend of the Democratic state attorney general.

Attorney Richard F. “Dickie” Scruggs once vowed to use his expertise, stature and money to fight the insurance industry’s alleged mishandling of homeowners’ claims after Hurricane Katrina.

But now he may be fighting for his freedom.

This week, the lawyer was indicted by a federal grand jury, accused of attempting to bribe a state judge presiding over a lawsuit involving millions of dollars in legal fees. He and four other defendants, including his lawyer son, could face up to 75 years in prison if convicted.

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The news is sending shock waves throughout the legal community -- and the state.

On the Mississippi coast, some of Scruggs’ clients were wondering what the news would mean for the scores of pending cases that his law group brought against their insurance carriers.

“I feel like I’m sitting on top of a barbed-wire fence,” said Lyman Cumbest, a neighbor and client of Scruggs who is suing State Farm Insurance. “I don’t know if our lawsuit will continue to be pushed through the court or not.”

Meanwhile, Scruggs’ fellow lawyers were wondering why a man of such wealth would allegedly risk so much for a quibble over a few million dollars.

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“It just boggles the mind,” said Jack Denton, a trial attorney in Biloxi, Miss. “Here is a man who has had an enormous amount of success, who reached a level very few attorneys, if any, have reached. Why would he risk everything over a legal dispute over attorneys’ fees?”

The case was even reverberating in the realm of national politics: The Associated Press reported Thursday that a fundraiser for Sen. Hillary Rodham Clinton (D-N.Y.) scheduled for Dec. 15 at Scruggs’ Oxford, Miss., home had been canceled by her presidential campaign. Former President Clinton had been slated to appear.

Scruggs, 61, could not be reached for comment Thursday. Nor could his defense attorney, John W. Keker. The San Francisco lawyer is storied in his own right. He successfully prosecuted Oliver L. North in the Iran-Contra scandal, and defended Chief Financial Officer Andrew S. Fastow in his Enron trial.

Scruggs originally hired Keker to defend him in another criminal case, in which he has been charged with contempt for allegedly defying the orders of a federal judge. An arraignment date in that case has not been set.

On Thursday, Scruggs wrote a letter to the judges overseeing his Katrina litigation with State Farm, claiming that he “did not intend to let down or hinder any of the families” he was representing.

But Don Barrett -- a lawyer and co-founder of the Scruggs Katrina Group, the attorneys representing policyholders in the storm-related litigation -- filed a separate letter. He said that “in light of all that has happened,” the remaining firms would end their association with Scruggs and form another group to prosecute cases.

Scruggs grew up in a modest home in Pascagoula. After graduating from the University of Mississippi’s law school, his first significant case was representing shipyard workers who had been exposed to asbestos.

In the 1990s, he came to national attention when he spearheaded the assault on the tobacco companies, winning nearly $250 billion from the industry. Colm Feore portrayed Scruggs in the 1999 Hollywood courtroom drama “The Insider.”

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His aggressive assault on big industries, often on behalf of people of modest means, has earned him respect, fear and criticism. After he helped bring numerous lawsuits against nonprofit hospitals in 2004, hospital officials said that defending themselves was distracting them from the job of treating uninsured patients. Scruggs said it was the uninsured patients he was standing up for. His lawsuits alleged that the hospitals were overcharging uninsured patients for medical services.

The indictment, filed in federal court in Oxford, alleges that Scruggs; his son and law partner, David Z. Scruggs; and three other lawyers conspired to bribe Mississippi Circuit Judge Henry L. Lackey with at least $40,000 cash. In exchange, they allegedly hoped for a favorable ruling in the case over $26.5 million in disputed legal fees. The money was part of an $80-million settlement the Scruggs group won on behalf of hundreds of homeowners.

Each defendant has been charged with defrauding the federal government and wire fraud.

According to the indictment, one of the accused lawyers, Timothy R. Balducci, visited the judge, who was cooperating with federal authorities, on numerous occasions. He brought the money in three separate trips.

On May 9, the indictment says, Balducci allegedly said to the judge: “The only person in the world outside of me and you that has discussed this is me and Dick [Scruggs]. . . . We, uh, like I say, it ain’t but three people in the world that know anything about this . . . for over the last five or six years there, there are bodies buried that, that you know, that he and I know where. . . . “

David Rossmiller, an Oregon attorney who has been following the complicated cascade of post-Katrina litigation on his website, insurancecoverageblog.com, said Scruggs is “a brilliant man -- he’s a master of fact, a master of law, a master of psychology.”

But now, Rossmiller wondered whether people would begin reevaluating “how this amazingly successful man got to be so amazingly successful.”

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richard.fausset@latimes.com

jenny.jarvie@latimes.com


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