Scruggs guilty plea – but will he cooperate?

The unusually short plea agreement says nothing one way or the other about cooperation. (Scruggs’ law partner Sid Backstrom also pled guilty today, and his specifies that he will cooperate. The Clarion-Ledger is reporting that Scruggs’ son, David Zachary Scruggs, will get deferred prosecution, though he’ll have to surrender his law license. [CORRECTION/UPDATE: The C-L did briefly report that, but it turned out to be inaccurate, and they quickly deleted it from their web site article. Evidently Zach Scruggs is heading for trial, as things stand.–RHP 3/18/08]

A great many people in Mississippi and national politics are undoubtedly waiting with bated breath to learn whether Scruggs plans to cooperate. A lawyer in the office of John Keker, Scruggs’ lead counsel, declined all comment.

Earlier this year, federal prosecutors in Los Angeles concluded a plea deal with class-action impresario Bill Lerach which did not require him to cooperate–a deal also negotiated by Keker–but such deals are rare.

In this morning’s plea, Scruggs admitted conspiring to pay a $40,000 to bribe to state circuit judge Henry Lackey of Oxford last year, who was presiding over a fee-dispute case filed against him by a law firm that had once been part of his Scruggs Katrina Group. That was a joint venture that brought cases for policyholders who suffered damage in Hurricane Katrina.

But Scruggs has not yet revealed what, if anything, he knows about another alleged attempt to corruptly influence a judge, which prosecutors contend occurred in early 2006. That incident involves a still sitting judge in Jackson, a former district attorney there, and, in a bit part, Scruggs’ brother-in-law Trent Lott, the former U.S. Senator. None of those individuals has been charged with wrongdoing and all have denied committing any.

But if Scruggs were to ever start talking, the area of greatest interest to any historian, certainly, would be the unexpurgated story of his most famous case–the assault upon the tobacco industry in the mid-90s. Scruggs’ multifaceted campaign in that case–including lawsuits, public relations campaigns, and political pressure– culminated in a series of settlements under which cigarette makers agreed to pay the states about $246 billion over 25 years, and to pay the plaintiffs attorneys more than $13 billion. Scruggs’s share of the fees reportedly came to more than $850 million.

On the other hand, even if Scruggs witnessed anything untoward in that campaign, and even if he were willing to tell prosecutors about it, prosecutors might be barred from pursuing it at this point by statutes of limitations.

Why would anyone think something untoward might have occurred? As a result of fee-dispute litigation relating to the tobacco case, it has come to light that Scruggs is still paying significant shares of his attorneys fees from that case to farmer and grain storage businessman P.L. Blake, whose role in the litigation remains unclear. (Under the tobacco settlement, attorneys fees are parcelled out over about a 25-year period, at a rate of between $500 million and $750 million a year.)

Scruggs and Blake testified in 2004 and 2005 that Blake provided oral political intelligence to Scruggs, though neither could recall concrete examples. From 1993 to 1998 Scruggs had paid Blake loans totalling about $785,000 in increments of $5,000 to $25,000 per month.

In the first year after the tobacco settlements were concluded, Scruggs paid Blake $10 million, out of which Blake paid back Scruggs’ earlier loans with interest. (Scruggs wired the $10 million to his friend Joey Langston, who then wired the money to Blake, though neither Scruggs, Langston, nor Blake could recall why they did it that way in their depositions).

Scruggs then started paying Blake $468,450 per quarter, at which rate the total paid out to Blake would eventually approximate $50 million. (Stories about the Blake payments have previously appeared in David Rossmiller’s Insurance Coverage Blog, the New York Times, and the Wall Street Journal.)

Correction: Earlier version had spelling error, caught by commenter Ed of Topeka, KS. Thanks, Ed.