Scruggs Reports to Prison

From the Associated Press:

ASHLAND, Ky. — Anti-tobacco lawyer Richard "Dickie" Scruggs has reported to a federal prison in eastern Kentucky.

Prison spokesman Larry Whitman says Scruggs entered a federal prison in Ashland this morning. He is beginning a five-year sentence for conspiring to bribe a judge with $50,000.

Scruggs was one of two people to plead guilty to the charge. Prosecutors say Scruggs wanted a favorable ruling in a dispute over $26.5 million in legal fees from a settlement of Hurricane Katrina insurance cases.

In the 1990s, Scruggs used a corporate insider to take on tobacco companies in lawsuits that resulted in a $206 billion settlement. That case was portrayed in the 1999 film "The Insider" that starred Al Pacino and Russell Crowe.

Scruggs Sentenced

Within the past week three prominent attorneys in the Scruggs judicial bribery scandal were sentenced to prison terms.

Richard "Dickie" Scruggs was sentenced to the maximum sentence of 5 years in prison.

His son Zachary Scruggs was sentenced to 14 months in prison.

Sidney Backstrom was sentenced to 28 months in prison.

Detailed coverage on the sentencing hearings can be found here and here.

The sentencing hearing transcripts can be found here (h/t Folo).

Lawyers Barred in Katrina Litigation

Article from Forbes.com:

Judge bars lawyers in Katrina case
04.04.08, 10:52 PM ET

NEW ORLEANS (AP) - Citing ethical breaches, a federal judge Friday barred a group of Mississippi attorneys once affiliated with a well-known tort lawyer from representing any policyholders in lawsuits against State Farm Fire and Casualty Co. over Hurricane Katrina damage.

U.S. District Judge L.T. Senter Jr. in Gulfport, Miss., also disqualified two key witnesses in the lawyers' cases from testifying against State Farm or their former employer, a firm that helped the Bloomington, Ill.-based insurer adjust Katrina claims.

Senter's rulings cited improper payments that Richard 'Dickie' Scruggs, who pleaded guilty last month to conspiring to bribe a judge, made to Cori and Kerri Rigsby.

After suing State Farm for denying policyholders' Katrina claims, Scruggs touted the Rigbsy sisters as whistle-blowers and said they were helping him build cases against the insurer.

Scruggs hired the sisters as consultants and agreed to pay them $150,000 apiece after they gave him reams of internal State Farm records that they secretly copied while they were employed by E.A. Renfroe & Co., an Alabama-based firm that State Farm contracted.

Senter said that there was no legitimate reason for those payments and that the sisters' consulting work was a 'sham.' Payments to non-expert witnesses are limited by law, Senter said.

'The payments Scruggs made to the Rigsby sisters bears no reasonable connection to any work they performed or to any expenses they incurred in testifying,' the judge wrote. 'These payments were clearly improper.'

Scruggs withdrew from representing dozens, if not hundreds, of policyholders in cases against State Farm after he was indicted on judicial bribery charges in November 2007.

Members of the Scruggs Katrina Group formed a new legal team -- the Katrina Litigation Group -- to continue working on many of those cases.

However, Senter said all members of the original Scruggs Katrina Group are responsible for Scruggs' breach of ethics because they were aware of the payments to the Rigsby sisters and did nothing to stop them.

Senter's prohibition applies to lawyers from the Barrett Law Office, Nutt & McAlister, the Lovelace Law Firm and Hesse & Butterworth and also applies to any cases against Renfroe.

Senter's order doesn't specify how many policyholders are affected by his rulings, but he gave them at least 45 days to hire new lawyers or risk having their cases dismissed.

The judge also said the documents that the Rigsby sisters gave Scruggs can't be used as evidence unless the plaintiffs lawyers can show they were obtained through 'ordinary means of discovery.'

State Farm spokesman Phil Supple said the company is 'very pleased' by Senter's ruling.

'State Farm has always been interested in resolving these claims and has willingly participated in mediation, legal settlement negotiations and the (Mississippi Insurance Department) claim re-evaluation program,' Supple said. 'Judge Senter's ruling today changes nothing -- we are still willing to work with our customers to resolve our differences and move forward.'

Don Barrett, lead attorney for the Katrina Litigation Group, and a lawyer for the Rigsby sisters didn't immediately return calls for comment Friday evening.

Scruggs, whose brother-in-law is former Sen. Trent Lott, R-Miss., made millions from asbestos and tobacco litigation. His work with a corporate whistle-blower in the tobacco litigation was portrayed in the 1999 film 'The Insider.'

Scruggs pleaded guilty last month to conspiring to bribe Circuit Judge Henry Lackey for a favorable ruling in a dispute over $26.5 million in attorneys' fees from a mass settlement of Katrina suits. He faces up to five years in prison and will lose his law license.

State Farm had accused Katrina Litigation Group lawyers of other ethical violations, such as using the threat of criminal prosecution by Mississippi's attorney general to coerce State Farm into settling claims.

'While the other ethical misconduct alleged by State Farm and Renfroe are substantial, the payments to the Rigsby sisters are, in and of themselves, sufficient to warrant disqualification,' Senter wrote.

Bad Day for Scruggs

Yesterday was not a good day for Richard "Dickie" Scruggs.

The Judge in his bribery case ruled against all of the defendants' motions setting the stage for a trial to begin next month.

This post from the Wall Street Journal Law Blog has all the details.

The WSJ Law Blog also provides this FBI memo.

The memo details allegations that Scruggs paid two associates to influence the current Attorney General of Mississippi in his investigation into State Farm Insurance.