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Bribery case brings down legal legend

Dickie Scruggs took on Big Tobacco, then Big Insurance after Katrina.

March 15, 2008|Richard Fausset, Jenny Jarvie and Henry Weinstein, Times Staff Writers

A brother-in-law of former Sen. Trent Lott (R-Miss.), Dickie Scruggs moved in powerful circles. The legendary lawyer flew around on a private jet and gave lavishly to political candidates and the University of Mississippi, which named a music building after him.

The case that proved to be Scruggs' undoing came after Katrina struck the Mississippi Gulf Coast in August 2005. Thousands lost their homes, including Scruggs, whose beachfront house in Pascagoula was obliterated.


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He and other lawyers formed the Scruggs Katrina Group and began signing up residents who felt that insurance companies had improperly denied their claims. The group reached an $80-million settlement with State Farm, one of the largest insurers on the coast, but ended up back in court over the disbursement of the legal fees.

In November 2007, federal prosecutors named Dickie Scruggs, Zach Scruggs, Backstrom and two other men in the scheme to bribe Circuit Judge Henry L. Lackey. Their goal, prosecutors said, was to get Lackey to rule in their favor in the legal-fee dispute.

Things apparently went wrong from the beginning. Lackey reported a "bribery overture" to federal officials, then worked undercover to help investigators expose the scheme.

Two of the men pleaded guilty and began cooperating with prosecutors. One of them, attorney Timothy R. Balducci, told the FBI he paid Lackey the bribe on instructions from Scruggs and Backstrom.

Soon after Scruggs was charged, Democratic presidential contender Hillary Rodham Clinton canceled a fundraiser at his Oxford home. Scruggs' law firm withdrew from the remaining Katrina cases.

Scruggs' actions were inexplicable because the amount of money at stake was a pittance compared to his wealth, said New York University law professor Stephen Gillers, a legal ethics expert.

"You ask why would someone do this . . . to risk so much for so little. . . . Because they think they can," Gillers said, noting that Scruggs was hardly the only lawyer to have run afoul of the law -- merely one of the most famous to do so.

Scruggs' indictment, he said, was one of several situations, including the fall of Spitzer, that prompted him to come up with a new definition of cognitive dissonance: "You know it's true, but you still can't believe it."

James R. Robie, a Los Angeles attorney who is representing State Farm in dozens of Katrina-related cases, speculated that Scruggs "became completely intoxicated by power."

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