Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

What better first name can an enigmatic figure related to the Dickie Scruggs scandal have than “P.L.” Tom Freeland over at the Northern Mississippi Commentor blog, here, tells us that P.L. Blake has retained his services in the continuing federal investigation in the Northern District of Mississippi. Interestingly, Tom, who runs an exceptionally well informed blog, had reported earlier this Spring that Blake was a target of the federal investigation. As detailed earlier, Blake, a former Mississippi delta farmer now living in Birmingham, was paid $50 million by former tobacco litigation millionaire Scruggs for clipping newspapers and assessing policital activity. The hiring of local counsel by Blake indicates that things are heating up and that an indictment may be reasonably imminent.

Interestingly, Tom reported earlier this week that Scruggs’ San Francisco attorney, John Keker, was in Oxford Mississippi this week. Tying Blake into the underlying case of Scruggs I - the attempted bribery of Judge Lackey - would seem to be problematic. Complicating the scenario for the government, Scruggs has already testified in civil depositions about Blake’s involvement in the tobacco litigation, but, call me crazy, it seems like $50 million is a lot to pay for someone to keep their proverbial ear to the ground and clip a few newspapers. This one should be interesting.

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Much has happened in the Dickie Scruggs landscape since I last blogged on this topic last year, not the least of which is the changing world in the blogosphere: Tom Freeland, formerly of folo, now has his own blog here and after a lengthy hiatus, David Rossmiller of insurancecoverageblog.com, has now appeared back on the scene.

At any rate, here’s the latest in the Scruggs II investigation in the Northern District of Mississippi,: Bobby Delaughter, a Hinds County, Mississippi Circuit Court Judge was indicted, along with Dickie Scruggs, in January of this year in a mail fraud scheme related to the Wilson v. Scruggs case pending in front of him. The indictment, quite frankly, describes some pretty damning over acts: 

• That Judge Delaughter accepted a secret, ex parte communication from the Scruggs legal team, essentially reversing his earlier ruling, and accepting, almost verbatim, a scheduling order favorable to Scruggs;
• That Judge Delaughter secretly provided the Scruggs legal team with an ex parte advance copy of a court order in the Wilson case by electronically mailing the same to Ed Peters, an attorney who had not made an appearance in the case, but who ultimately was paid$1,000,000 for the services rendered for his ex parte contacts with Judge Delaughter;
• That from August 2005 to August 2006 Peters had a number of ex parte meetings with Judge Delaughter designed to influence the judge to shade his ruling in favor of Scruggs;
• And, that during that same time frame Judge Delaughter secretly communicated with the Scruggs legal team through Peters.

Now, last week, Delaughter’s attorneys filed a couple of motions to dismiss, the most notable of which was the motion to dismiss the honest services mail fraud counts, alleging that: 1) the government failed to allege a state law violation as required by the Brumley Fifth Circuit precedent, 2) the government failed to allege bribery or material nondisclosure (this borders on the frivolous in light of the factual allegation a Judge was previewing rulings via email to a non-party attorney), 3) the mailings were required by state law, and 4) the honest services statute is void for vagueness as applied.

Interestingly, Delaugher’s counsel was the same counsel in the Sorich case, a political patronage case out of Chicago, in which Justice Scalia recently issued a stinging rebuke to the Supreme Court for failing to take cert. A copy of Sorich’s motion is dismiss is here, and a link to a Chicago Tribune article about the courtroom flair of Mr. Durkin can be found here. My take, however, is that this is a reasonably simple case and that looking at the four corners of the indictment, it does allege a crime, and quite frankly, a crime that goes to the heart of having a fair and impartial judiciary.

Here Judge Delaughter, apparently for nearly a year, was in frequent contact with an attorney, Peters, who had not filed an appearance in the case, but who was being paid $1 million by Scruggs and his counsel in the Wilson civil litigation. All the while, Judge Delaughter was supplying that attorney with previews of rulings, even emailing one order to Peters. I mean, seriously, under those facts, who can legitimately argue that the judicial process in Hinds County Mississippi was not completely bastardized.

The only part of this motion to dismiss that might have some legs is whether the mailings were compelled by law, and, therefore, under binding precedent, they can not form the jurisdictional basis of the mailings. My guess - the prosecution will supersede to cure that defect.

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Zach Scruggs will be sentenced today at 10:00 a.m. before Judge Biggers. Recall that when this case was first indicted, Zach Scruggs was the number two guy on the indictment, which generally signals the government’s belief that he was number two in culpability. However, just prior to trial, the government dismissed the indictment, and let Zach plead guilty to misprision of a felony – basically taking steps to conceal his knowledge of and the existence of a felony.

The plea agreement for Zach is a rare breed in federal court – a plea where the government recommends a probated sentence. However, that recommendation is not binding on the court.

The thing that is surprising here as I’ve said before in these posts is the defendant’s lack of candor and acceptance of responsibility in entering his plea. I know plenty of judges who would reject Zach’s plea for failing to acknowledge his guilt because here is what Zach said at his guilty plea:

“I ' d like to start out by telling the Court, and the public, that I had no knowledge that Tim  Balducci bribed Judge Lackey in connection with this arbitration order. I didn' t conspire to bribe Judge Lackey in connection with an arbitration order, and I would have stopped it had I known. However, I did have some knowledge that Tim Balducci had a close personal relationship with Judge Lackey, and that he used that personal relationship to have improper ex parte contacts with the judge regarding the order.”

These words ring hollow to me, and I think, Zach loses yardage before his sentencing judge by minimizing his conduct.

Zach’s attorneys filed a sentencing memo today that does a good job of fleshing out the factors that distinguish Zach’s case from that of his former co-defendants. In the sentencing memo, his counsel argues that Zach admitted to “misprision of a felony; that is, he failed to alert authorities and the firm’s registered counsel that Tim Balducci was attempting to personally and improperly influence Judge Lackey through the benefit of his personal relationship with the judge.” Can anyone help me out here - who was this "registered counsel" for the Scruggs firm?

Apparently, the probation office disagreed with the government’s assessment of Zach’s culpability because Zach’s attorneys spend most of the sentencing memo pointing out the factual and legal distinctions in Zach’s plea. They persuasively argue that the government has taken a tiered approach to sentencing with Zach’s conduct being at the low end of that tier. It will be interesting to see how Judge Biggers reacts to the government’s view of Zach’s case and whether he will accept the government’s recommendation of a probated sentence.

Candidly, based on Judge Biggers’ earlier comments regarding this case, I can’t see him deciding that a probated sentence is an appropriate disposition for a case that involves judicial bribery where the underlying case was a dispute involving over twenty million dollars.  Zach's going to have a bad day in court and it will be a sad epilogue to his legal career.

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I had the pleasure of visiting extensively with Tom Freeland over at the Folo Blog this weekend in follow up to the Scruggs sentencing and it was interesting to get the local take on the sentencing.

A transcript of the sentencing hearing is available here.

The government took no real position at sentencing other than to state that any sentence imposed was within the court’s discretion.

John Keker, Scruggs' attorney, to his credit, relied upon his sentencing memorandum submitted to the Court, and really made no extensive comments.

One of the big questions for the general public, is did Scruggs get the benefit of his plea bargain in this case, and the answer to that is a resounding yes. Judge Biggers calculated the sentencing guideline range at 108 to 135 months, but the maximum term of imprisonment for the conspiracy charge Scruggs pleaded to limited his sentencing exposure to 60 months imprisonment. In my view, 60 months was the only sentence Scruggs could fairly receive given the severity of the conduct – judicial bribery in a case where millions were at stake.

I’ve been to more sentencings in federal court, both as a prosecutor and as a defense attorney, than I care to remember, but the judge's comments directed at Scruggs is one of the lengthiest denunciations of a defendant’s conduct that I’ve ever seen.

Interestingly, Judge Biggers stated that he was not considering any of the other crimes evidence regarding the Joey Langston plea, although the jduge did remark that Scruggs "bribed a judge, corrupted a judge, in another case in another court.”  However, the judge said that was probably something Scruggs would have to answer to later.

Judge Biggers noted that this case was really not about so much the amount of money that was given to Judge Lackey of the state court, but that it was about the effect of that bribe, of what the purpose of it was, to corrupt the ruling and the actions of the circuit court. 

Maybe someone else can answer this question, but why was Scruggs so intent on getting this case out of the local court system into an arbitration panel? Wouldn’t a guy named Dickie Scruggs want his people deciding his case?

As has been reported extensively, Judge Biggers commented that he saw how easily and quickly Scruggs entered into the bribery scheme, and it made him think that this, perhaps, was not the first time Scruggs had engaged in bribery because he did it so easily.

The judge also commented that Scruggs had committed a reprehensible crime which is one of the most reprehensible crimes that a lawyer can commit - the corruption of the rule of law which he' s sworn to uphold.

Scruggs’ co-conspirator, and former law partner, Sid Backstrom, received a sentence of 28 months, less than the 30 month maximum sentence that was part of the plea agreement. Judge Biggers remarked that he was impressed with Backstrom’s level of remorse.

I’ve commented on several occasions that the defendants in this case seem obsessed with minimizing their criminal conduct, all the more incredible given the gravity of the offense to which they pleaded guilty – judicial bribery.

So, how much time will Scruggs actually serve? He will serve 85% of the 60 months, which is 51 months. He will spend the last 6 months in a halfway house under Bureau of Prison's pollcy, so Scruggs will do 45 months in a federal prison camp, presumably in Pensacola, Florida.

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The more I’ve reflected on Scruggs’ Sentencing Memo filed on Wednesday, the more incongruous it seems. No doubt Scruggs is ably represented. His counsel has submitted scores of letters lauding the good works Dickie has done over the years; however, recall that the government had filed a notice back in January that they were going to seek to introduce 404(b) evidence of other crimes that Scruggs had committed.

In that notice, the government informed Scruggs that there was another attempt to corruptly influence a judicial proceeding, referring to the search warrant application for the Langston Law Firm and the information, factual basis, and plea colloquy in United States v. Joseph C. Langston, Case No. 1:08CR003. And, the entire fiasco concerning the Rigsby sisters in the false claims case in front of Judge Acker in the Northern District of Alabama, so ably reported by Dave Rossmiller, just points to a way of doing business by Dickie that is disturbing in the extreme.

Much has been written about the fall of Dickie Scruggs. I will not weigh in on that debate, but he certainly held the court and judicial system in low esteem and terribly corrupted the system through which he made an extraordinary living, and through which, he at one time did some good.

However, given the pattern of the corruption of the system, the government can more than counter the letters about Dickie’s good acts. I am thankful that we’ve finally moved away from searching sentencing equality (there is none) in a numeric based sentencing system that was wildly flawed, but I can’t conceive of any way that Judge Biggers gets below 60 months for Mr. Scruggs. A sad epilogue for a meteoric legal career.

I look forward to discussing with Tom Freeland of the Folo Blog his personal observations regarding the sentencing hearing. Tom has done an extraordinary job blogging about this case seasoned with local flavor. And, kudos for Tom in getting access to the sentencing in a shout out to his blog from Judge Biggers in this Order.

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Yesterday, June 25, both Scruggs and the government filed their sentencing memorandum (available here and here). First, maybe it’s just me, but when five lawyers from San Francisco have to sign your sentencing memo and they have collectively included 81 footnotes, then methinks you are on the losing side. 

Continuing a pattern we’ve seen in this case of minimizing any criminal conduct, Scruggs’ lawyers stake out what the case is not about, arguing that:

• During the March 2007 meeting at the Scruggs Law Firm, Scruggs only asked that Balducci “go see Judge Lackey and see if Judge Lackey would be amenable to move the case to arbitration,” and Scruggs specifically cautioned Balducci that “he was not asking [him] for anything illegal.”
•  Both Balducci and Patterson testified that they do not—and did not—think a crime was contemplated at the March 2007 meeting.
• Balducci did not meet with Judge Lackey in March 2007 to bribe him or to offer him any kind of quid pro quo, and Balducci did not intend his offer of the “of counsel” position to Judge Lackey as an incentive or bribe for Judge Lackey to rule in favor of arbitration.
• Between early May and mid-September 2007, Judge Lackey and Balducci were in repeated contact but during that time Balducci never said or suggested that Scruggs would give or offer anything to Judge Lackey in exchange for an order sending the Jones case to arbitration.
• During that same time period, Balducci repeatedly told Judge Lackey that he was not trying to influence Judge Lackey improperly and that Judge Lackey should decide the arbitration motion according to the law.
• It was not Scruggs—or even Balducci—who first proposed a payment in exchange for a favorable ruling on the arbitration motion.
•  Balducci told Judge Lackey three times on September 27, 2007, that Scruggs was not aware of the payment arrangement.

So, what does Scruggs eventually concede he did wrong – “He agreed and conspired to pay a bribe to Judge Lackey, a Mississippi Circuit Court Judge. In furtherance of the conspiracy, Scruggs agreed to and did furnish funds to be paid to Judge Lackey in exchange for a favorable order, and he prepared false paperwork to cover up the existence of the criminal conspiracy.” Memo, p. 27 Well, so, someone in this thing finally admits to some wrongdoing.

Another thing, I find a little offensive about Scruggs’ Sentencing Memo, he ends by imploring the court that there are two innocent people that will bear Scruggs’ punishment – his wife and daughter. While no doubt true, I’ve heard dozens of federal and state court judges reject that argument with the simple admonition that the harm to the family is inflicted by the defendant, not the court.  My guess – Judge Biggers won’t be swayed by this pedestrian argument. He’s heard it and rejected it too many times already.

Scruggs argues that the probation office has incorrectly calculated his sentencing guidelines at the whopping guideline of 168 to 210 months (remember the maximum sentence is 60 months). Bizarrely, Scruggs' well footnoted Memo argues that the actual guideline sentence is 46-57 months, but then later argues he should be sentenced to the lower end of the range of 30-37.

Now, the real battle ground here, is what is the value to Scruggs, or as the government argues, what loss Scruggs intended by the bribe. The government, in written work that is at the very top of the game (although they need to learn some word processing keystrokes in typing “(c)”, as opposed to “©”, which appears at least three times in there papers), argues that the question is really what loss Scruggs intended through the bribery scheme, which the government calculates at millions of dollars, which still brings the sentencing guidelines range in above the statutory maximum sentence of 5 years.

My take, Judge Biggers will sentence Dickie to 60 months – the sentence the government seeks - and be well within his discretion to do so. Backstrom, truly a footnote in this proceeding, who has the benefit of an 11(c)(1)(c) plea, will receive a sentence of half of Scruggs’ sentence, 30 months.

There’s never any victory or jubilation in seeing the demise of someone like Scruggs, who has done good work, but his day of judgment awaits.

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Scruggs co-defendant and former partner, Sidney Backstrom, who plead guilty on March 14, 2008  to the count one conspiracy charge of the Scruggs indictment, is scheduled to be sentenced on June 27, 2008 and has filed his objections to the Presentence Report (PSR).

Now, first, the filing of objections to the PSR is unusual in and of itself. And, I have to say, that the work that went into these objections is less than what I’d expect of someone representing an attorney in a federal criminal case.

The factual basis from Backstrom’s plea alleges that:

• as a member of Scruggs’ Law Firm, he sent a proposed order in the Jones v. Scruggs civil case to Timothy Balducci that was then faxed to Judge Lackey. 
• then, on September 21, 2007 Balducci placed a four minute phone call to the Scruggs Law Firm and discussed the $40,000.00 bribe with Backstrom. 
• On October 18, 2007 Balducci called Backstrom and told him that he had delivered a copy of “those papers we’ve been waiting on” referring to the order obtained by the bribe.
• And, after Balducci was flipped, he wore a body wire against both Backstrom and Zach Scruggs and engaged in a conversation about the order.
• Finally, on November 13, 2007 Balducci and Backstrom engaged in a conversation about the bribery scheme and the benefit of a favorable order for the Scruggs Law Firm.

Backstrom has filed objections to both the factual accuracy of the report and to the sentencing guidelines calculation:

• First, he objects because the probation officer has used $5.3 million benefit to the defendants as the amount of loss pursuant to U.S.S.G. 2B1.1, contending that rather than the 18 level increase that results from the $5.3 million benefit (the amount the PSR claims that Scruggs saved by corruptly bribing Judge Lackey), the appropriate amount for consideration is the amount of the bribe, which would result in an enhancement of only a 6 level increase.
• Second, Backstrom contends that no role in the offense enhancement should apply because he was neither a manager, nor supervisor of criminal conspirators, but rather a “worker who takes on the yeoman task of getting work out.” ¶ 30.

In Backstrom’s plea agreement, the government agreed to recommend a “sentence not to exceed one-half (1/2) of the sentence imposed on his co-defendant, Richard Scruggs, which will not, in any event exceed 30 months incarceration.” If there is an 18 level increase in Backstrom’s guideline range, then any sentence he faces will, according to the sentencing guidelines, wildly exceed 30 months.

More importantly, Backstrom in his objections has continued a bizarre display of disputing the facts which form the basis of his guilty plea. I’m certain that this conduct can’t sit well with the district court. For instance, in his objections, Backstrom says he didn’t draft and email the proposed order that was faxed to Judge Lackey. ¶ 38-39. Then, Backstrom has a lengthy argument that the “credible evidence” shows that the September 21, 2007 phone conversation between Balducci and Backstrom did not occur. ¶ 48.

The importance of these objections is a defendant can lose the benefit of his bargain by denying his guilt. In other words, in federal court, you don’t get to say, I’m guilty, but I didn’t really do anything wrong, which seems pervasive among these defendants. It’ll be interesting to see how both the government and the court react to this sort of shenanigans.

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As reported in this Clarion Ledger story, the Department of Justice is reportedly looking at bringing RICO charges against Dicky Scruggs related to the bribery of Judge Bobby DeLaughter in the Wilson v. Scruggs case. As previously noted here, Joey Langston has already plead guilty to offering Judge DeLaughter a bribe in the form of a United States District Court judgeship.

What is particularly interesting in the context of a federal investigation and subsequent guilty plea,  is that Scruggs’ plea offers him no protection in the ongoing investigation in the Wilson case.

Scruggs and his co-defendants, including his son, Zach, are all pending sentencing. I expect that the presentence reports for Scruggs and the others will be forthcoming any day now. That will, no doubt produce a number of filings. The docket in this case has been exceedingly silent for almost 2 months, but I expect we will shortly see a number of sentencing memoranda. I’m particularly interested to see if Zach Scruggs, for instance, will receive a downward adjustment for acceptance of responsibility given his post plea statements that he really didn’t do anything wrong.

If the government is, in fact, pursuing RICO charges against Scruggs and others, we can expect that that case will not be brought for many months.

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The Scruggs trial (see earlier post here) was to begin Monday, March 31 and as we all know all of the defendants have entered guilty pleas either to Count One of the Indictment, or to a Criminal Information (Zach Scruggs and Joseph Langston (who was not named in the original Indictment)).

A reader friendly scorecard of the pleas and potential sentences demonstrates that in a criminal prosecution grounded in a judicial bribery case where the underlying case involved a $26.5 million fee dispute, the defendants have entered plea agreements that are pretty favorable.

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