Convicted Mississippi Lawyer Scruggs wants Testimony Sealed

July 30, 2008

Convicted Mississippi attorney Richard “Dickie” Scruggs and his son want to prevent their sworn testimony in a Hurricane Katrina lawsuit from becoming public and “undermining the presumption of innocence” if they face criminal charges in the future.

Scruggs and his son, Zach Scruggs, report to federal prison next month on charges related to a judicial bribery scheme that toppled some of the most powerful attorneys in Mississippi.

Federal investigators, meanwhile, are looking into at least one other case in which Richard Scruggs and his son have been accused of misconduct. Because of that ongoing investigation, the Scruggses want a federal judge to seal testimony that was taken under oath last week in a civil case involving Hurricane Katrina damages.

They submitted the videotaped testimony last week under questioning from attorneys for State Farm Fire & Casualty Co. and Alabama-based E.A. Renfroe & Co., a firm that assessed storm damages for the Bloomington, Ill.-based insurer, according to court records.

The company attorneys “alleged activity of a criminal nature against both of the Scruggses,” according to a motion filed July 25 by an attorney representing Richard and Zach Scruggs.

Richard and Zach Scruggs invoked their Fifth Amendment right against self-incrimination and refused to answer the questions, the motion said.

“The dissemination of the Scruggses’ deposition testimony may seriously prejudice their Fifth Amendment right against self-incrimination in any future criminal proceedings by unfairly portraying them as asserting a constitutional privilege to conceal misconduct and by undermining the presumption of innocence,” according to the motion.

The deposition arose in a civil lawsuit brought by Scruggs on behalf of Thomas and Pamela McIntosh, a couple whose Biloxi home was damaged by the 2005 hurricane.

Richard Scruggs claimed E.A. Renfroe, which provided storm assessments for State Farm, produced conflicting damage reports to fraudulently deny claims.

Both companies denied wrongdoing. Still, the case grabbed national attention when Richard Scruggs announced that two Renfroe employees, whom he called “whistleblowers,” had hundreds of company documents that proved fraud.

The claim was significant. Richard Scruggs is the same tort lawyer who successfully used a “whistleblower,” or corporate insider, to win billions in lawsuits from tobacco companies in the 1990s. This time, however, things did not work out that way.

U.S. District Judge L.T. Senter Jr. in Gulfport disqualified the sisters as witnesses in lawsuits that storm victims filed against State Farm because Scruggs paid the sisters “improper” salaries of $150,000 a year. Senter also removed other attorneys who had been part of the Scruggs Katrina Group from the case.

It’s not clear what the attorneys for State Farm and E.A. Renfroe asked during the deposition. Paul B. Watkins Jr., an Oxford attorney representing Richard and Zach Scruggs, said the court documents “speak for themselves” and declined to discuss the matter.

A State Farm spokesman did not immediately respond to a message. State Farm’s attorneys wanted the deposition to be made public, but agreed to keep the information under wraps until a federal judge decides if it should be sealed, according to court records. The judge did not immediately rule on the matter.

The Rigsby sisters and the documents they took from Renfroe have been a legal headache for Scruggs. When U.S. District Judge William Acker in Alabama told him to return the records last year, he instead gave them to Mississippi Attorney General Jim Hood.

Acker said Scruggs defied his court order and appointed special prosecutors to pursue contempt charges. Those charges were eventually dismissed.

Richard and Zach Scruggs were indicted Nov. 28 along with several associates and accused of conspiring to pay a state judge $50,000 for a favorable ruling in the unrelated fee dispute case. They pleaded guilty in March. Richard Scruggs was sentenced to five years. His law partner, Sidney Backstrom, got 28 months.

Zach Scruggs was given 14 months for knowing about the scheme and not reporting. He has to turn himself in by Aug. 15.

Prosecutors are now looking into allegations in a dispute over fees from asbestos litigation. A former Scruggs associate has claimed the men tried to influence Hinds County Judge Bobby DeLaughter by promising that Scruggs’ brother-in-law, former U.S. Sen. Trent Lott, would help the judge get appointed to the federal bench. Scruggs’ former attorney in that case, Joey Langston, pleaded guilty and is working with investigators. No one else has been charged.

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