There’s a lot of news in the motion Zach Scruggs filed. The most interesting is surfacing because Zach has filed a bar complaint against Tony Farese. In his response, Farese filed affidavits of prosecutors David Sanders (now a Magistrate Judge) and Bob Norman, along with an affidavit of Joey Langston. The purpose of all of the affidavits is to establish that Joey Langston was never a witness against Zach Scruggs (and, presumably, there was therefore no conflict for Tony Farese to take on Joey as a client). What Zach uses those affidavits for is to suggest that prosecutor Tom Dawson mislead the court about Langston’s testimony; Zach quotes transcript where Dawson says that Langston would implicate both Zach and his father in the Wilson case, and quotes Judge Biggers ruling denying Zach’s severance motion saying the evidence was against both Dickie and Zach Scruggs. Zach states in his motion that the threat of facing this evidence was what pushed him into a guilty plea, and cites the book Dawson wrote with Alan Lange as saying exactly that.

The memorandum attached to that motion, included here, outlines the news.

Among the many attachments to the motion are the affidavits from the Farese bar complaint, the New Yorker story “The Bribe,” excerpts from the galleys to Curtis Wilkie’s books, a section of Dawson and Lange’s book, and lots of testimony and wiretranscripts.

Bill Minor has a column based on having seen the galleys of Curtis Wilkie’s book about Scruggs, and has enough news in it to suggest the book is going to be very interesting.  What Minor is writing about is the moment when Scruggs was working toward a settlement with State Farm, and Jim Hood was not signed on.

You may recall that in January of 2007, Steve Patterson and Tim Balducci went to dinner with Jim Hood as a part of the effort to get hood where Scruggs wanted him to be.  Patterson and Balducci started their law firm out with a promise from Scruggs they’d be paid $500K for that meeting, and one of the things driving them through the Summer of 2007 was whether they’d get that money.

It’s pretty clear that Hood and Scruggs were not always on the same page during all that.  There is evidence that suggests they weren’t working hand-in-glove in ways similar to Scruggs’s work with Mike Moore; on the other hand, I’m not buying Minor’s conclusion (based on Wilkie’s book) that Hood was a “constant thorn in Scruggs’s side” during the State Farm negotiations.  But either way, Minor describes some interesting detail-filing from Willie’s book.

At one point, Wilkie writes, Scruggs threatened to call a press conference attended by several high-ranking public officials (including his brother-in law, Sen. Trent Lott, a plaintiff in the lawsuit) and announce that Hood was the only obstacle standing in the way of getting a $89 million settlement of homeowners’ claims plus $26.5 million for Scruggs’ lawyer group. The announcement obviously would be damaging to Hood’s political career.

Actually, Hood had launched both a criminal investigation and a civil lawsuit against State Farm over its refusal to make allowance for water damage as well as wind damage by Katrina to policyholders’ residences, the same issue the Scruggs group would raise in their lawsuit.

The sticking point for State Farm in its negotiations with Scruggs was that it would not go forward as long as Hood held a criminal case over their heads. Wilkie writes that a heated meeting took place in a private room at Jackson’s airport in January, 2007 involving Scruggs and Hood as well as Booneville attorney Joey Langston and his onetime associate Steve Patterson. The latter two were picked by Scruggs as emissaries to soften up Hood on his insistence to pursue a criminal case against State Farm.

A few days later, Wilkie writes, Hood drove (Gov. Haley Barbour had denied him use of the state plane) to Memphis to meet with three high State Farm officials. At the Memphis meeting, the Wilkie book continues Hood reached a settlement of his civil suit by which the insurance company would pay Hood’s office $5 million as reimbursement for its expenses in the investigation and set up an apparatus to deal with unresolved claims by Coast homeowners.

While on his Memphis trip, Wilkie writes, Hood spoke by cell phone to an assistant about the status of the criminal investigation and was told he had little evidence to pursue criminal indictments. Having reached the settlement with State Farm on his civil suit, before he left Memphis Hood informed State Farm officials he would discontinue his criminal case, Wilkie writes. That opened the way for the Katrina lawsuit settlement.

Ironically, it was State Farm’s $26.5 million legal fee settlement that later was the thread that sent Scruggs to prison. Johnny Jones, one of the lawyers in Scruggs’ Katrina group brought suit against Scruggs over the share Scruggs offered him for his considerable work on the lawsuit.

Jones’ lawsuit, put in the hands of a Lafayette County judge, proved Scruggs’ undoing when the nationally noted attorney was linked to a $40,000 bribe offered the judge to rule in Scruggs’ favor. Scruggs, who pleaded guilty, was sentenced to five years in federal prison. Scruggs picked up an additional two year sentence for conspiracy in another fee-splitting case that wound up before Hinds County Circuit Judge Bobby DeLaughter. When DeLaughter was found to be involved in a complicated peripheral case, he also was given federal jail time.

h/t YallPolitics

Patsy Brumfield, who has apparently seen a pleading not yet visible on Pacer, reports that Zach Scruggs is about to file to set aside his guilty plea, taking a potshot a his first laywer, Tony Farese, and arguing that legal developments– presumably the Minor case in the Fifth Circuit (which held that there had to be a nexus between federal funds and bribery for a federal court prosecution) and the Skilling case in the U.S. Supreme Court (which held that “honest servies” prosecutions that do not involve straight-up bribery don’t pass constitutional muster).

I’d heard for over a week something was up, and today Kingfish at Jackson Jambalaya told me that his lawyer sources had seen a notification off EFS that something had been filed.

For those who haven’t followed this closely or from the beginning:  Zach Scruggs was indicted with his father, Sid Backstrom, Steve Patterson, and Tim Balducci for an effort to bribe Judge Henry Lackey in the case Jones v. Scruggs. Balducci, who did the heavy lifting in the bribe attempt, is nearing the end of a sentence on his guilty plea, as is Patterson, and Zach Scruggs and Backstrom are out.

Zach Scruggs was initially represented by Tony Farese, who shortly thereafter showed up representing Joey Langston (who had been Zach’s dad’s local counsel).  The day before Langston entered a (closed court) guilty plea about yet another case involving Dickie Scruggs, Farese had Zach sign a waiver so Farese could continue to represent Langston.

Lots of eyebrows were raised about that waiver.  But in any event, Zach got new counsel, and after a lot of fencing back and forth, entered a guilty plea to misprision of a felony– that he knew of a felony going on and did something that helped actively conceal it.

I can understand arguments that the Minor case may have an impact, because there is no clear nexus between what Judge Lackey was being asked to decide and federal funds.  On the other hand, I can’t imagine how the issue about Tony Farese has any impact, because Zach Scruggs clearly had separate independent counsel long before entering the plea.  And Skilling provides no comfort in a case involving a straight-up bribe.

But then there’s this:  Judge Biggers will be deciding this issue.  And apparently, Zach Scruggs’s counsel will be some of the same folks present at his guilty plea.  I’m not sure I’d want to appear before that particular judge saying “My client is innocent!” after doing a guilty plea for that client.  And one also wonders whether reopening this will work out– if the plea is set aside, I’d assume we’ll see a really scary superseading indictment.  But I’m guessing we won’t be going there…

Here’s what Brumfield reported:

Zach Scruggs says new evidence and legal developments show he’s innocent of federal charges that sent him to prison in a judicial bribery scandal that rocked Mississippi’s legal world.

Scruggs, 36, of Oxford today filed a request the U.S. District Court to give him a hearing to prove his innocence and to throw out his 2008 conviction. He said a recent U.S. Supreme Court decision wipes away the crime to which he insists he had no choice but to plead guilty.

In March 2008, Scruggs pleaded guilty to not reporting that he knew about a crime, which was an illegal conversation with the judge in a legal-fees lawsuit over Hurricane Katrina insurance cases. The government said the chat led to a scheme to deprive the public of Circuit Judge Henry Lackey’s “honest services.”

Recently, the U.S. Supreme Court narrowed the honest services law to pertain only to bribery and kickbacks, which Scruggs and others say is not what he pleaded guilty to.

In the new court filing, which will be posted electronically Thursday, he also accuses:

- Tony Farese, prominent Ashland lawyer, of secretly negotiating a plea bargain with prosecutors for then-Booneville plaintiffs attorney Joey Langston’s cooperation against Zach and his father, Richard Scruggs, while Farese was Zach’s attorney in late 2007.

- The U.S. government and the FBI of creating the judicial bribery scheme, which led to indictments against him, his father, a law partner and two others Nov. 28, 2007. And prosecutors, who allegedly lied to the court that Zach Scruggs was part of another judicial bribery accusation involving Judge Bobby DeLaughter of Hinds County.

- Judge Henry Lackey of Calhoun City of allowing himself to be used by the government for months to set up the attempted bribery, rather than deciding whether the lawsuit against Scruggs and others should go to arbitration or let another judge decide.

Zach Scruggs “committed no federal crime,” the motion states. “Indeed, as will be explained, he is actually innocent of all charges.”

Senior U.S. District Judge Neal B. Biggers Jr., who presided over the case called Scruggs 1, will decide the merits of the new request.

Farese strongly denied the allegations against him and expressed concerns that they are public while the focus of a confidential complaint to the Mississippi Bar Association.

“I deny the allegations made against me by Zach Scuggs in the bar complaint,” Farese wrote in a statement to the Daily Journal. “Zach Scruggs is a young man who had everything, but is now a convicted felon who cannot accept responsibility for his own criminal conduct. He has nothing but time and money to try to blame others for his unethical and illegal acts.”

Farese also insists he acted ethically “at all times” as attorney for Zach Scruggs and Langston.

What remains of Wilson v. Scruggs is in the Federal District Court for the Northern District of Mississippi.  As I’ve posted earlier, Wilson has settled with Scruggs and Langston but continues to pursue Patterson, Peters, and Balducci (the last filed a pleading admitting liability but asserting other defendants were primarily liable).  The case is before Judge Hittner of Houston because of recusals, and Steve Patterson filed a motion to dismiss Wilson’s claim.  I thought I’d posted about it but apparently had not– the only thing I can find about it on the web has the document along with a post touting the mighty force of the advocacy in Patterson’s motion to dismiss as “dismantling” Wilson’s RICO claim.

Well, Judge Hittner rules on motion and the effect of that mighty dismantling force is…

… not much.  He’s read it, he’s considered it, and out it goes.  Motion denied.  Oh, and also, counsel:  Send us those filings in 14 point type from here on in.  Judge Hittner, as is his usual practice at least in these Mississippi cases, gets straight and directly to the point.

The order is here.

I posted about the original filing of this case on Folo.

http://www.clarionledger.com/assets/pdf/D0152201219.PDF

Hinds County Circuit Judge Winston Kidd has ruled against State Auditor Stacey Pickering in Langston/Balducci/Quin MCI-WorldCom outside counsel legal fee case.

In the ruling, Kidd holds that $14 million in outside counsel legal fees paid to former Booneville attorneys Joey Langston, Tim Balducci and Billy Quin (then of the Lundy & Davis) firm were not state funds and granted a summary judgement sought by the Attorney General’s Office.

Current Republican Lt. Gov. Phil Bryant, while serving as state auditor in 2006, filed suit to get the $14 million back – claiming the legal fees belonged to the state and must under law be appropriated by the Legislature. Current Republican State Auditor Stacy Pickering carried on the Bryant lawsuit.

In 2007, the outside counsel issue became secondary in the old Kirk Fordice-Mike Moore battle over the state’s tobacco lawsuit when Republican Gov. Haley Barbour successfully challenged the Jackson County Chancery Court order that funneled settlement funds to the Partnership.

The state Supreme Court said the diversion of funds from the appropriations process was illegal – which killed the Partnership while angering House Democrats and public health advocacy groups who saw the Partnership as an effective public health initiative.

The outside counsel battle became even more convoluted when Langston and Balducci entered guilty pleas in the judicial bribery scandal that ruined Scruggs.

Recall that the first substantial public evidence that Ed Peters had “come in” and become to some degree a government witness was a forfeiture action filed between Christmas and New Years in 2008, in which the Government alleged that he had surrendered to them $425,000 that remained of his million dollar fee for helping Joey Langston and Tim Balducci get to Judge DeLaughter in the fee dispute between Roberts Wilson and Dickie Scruggs.  After the suit was filed, Roberts Wilson jumped in, asserting that these ill-gotten gains should have been his, because they came from Scruggs and would have been money paid to Wilson if the Wilson v. Scruggs case had been resolved honestly.

The suit was initially before Judge Biggers, who recused himself because he had issues before him in Scruggs I. A Texas federal judge was appointed to take this and other civil cases relating to Dickie Scruggs in the Northern District, and this case was set for trial later this Spring.

Today, a consent judgment was entered in the forfieture case.  By its terms, $280K of the money will be paid to Roberts Wilson, and the remaining $145K will go to the United States Treasury.   This has to be viewed as a good result for Wilson.

Here’s the US v 425000 consent judgment