Lawyer Suggests Scruggs got Witness Help from Former Mississippi Senator

August 1, 2008

An insurance company’s attorney suggested during a sworn deposition that former Mississippi U.S. Sen. Trent Lott urged witnesses to give false information in a Hurricane Katrina lawsuit, according to court records.

The implication was made last week during a deposition with Lott’s nephew, Zach Scruggs, who represented the former Mississippi Republican senator after his Pascagoula home was destroyed by the 2005 storm. Zach Scruggs is the son and law partner of disgraced former attorney Richard “Dickie” Scruggs, Lott’s brother-in-law.

“Has it been your custom and habit in prosecuting litigation to have Senator Lott contact and encourage witnesses to give false information?” State Farm Fire & Casualty Cos. attorney Jim Robie asked, according to a transcript of the deposition.

“I invoke my Fifth Amendment rights in response to that question,” Zach Scruggs responded.

Bret Boyles, with Lott’s lobbying firm, the Breaux-Lott Leadership Group, said July 30 the former senator was unavailable for comment.

State Farm accused Richard Scruggs during a separate deposition last week of orchestrating an elaborate ploy after Hurricane Katrina to make it appear that the company was covering up fraud in its handling of homeowners’ claims.

Both Richard and Zach Scruggs, who report to federal prison in August on charges stemming from an unrelated bribery case, invoked their Fifth Amendment right against self-incrimination on every question.

Richard Scruggs’ attorneys had wanted to keep the depositions secret. They said public knowledge that he refused to answer the questions could undermine “the presumption of innocence” if he faces criminal charges in the future. A federal judge released the transcript July 29.

Messages left with the Scruggses’ attorneys were not immediately returned. A State Farm spokesman declined to comment.

The depositions were taken as part of a lawsuit that was once considered the centerpiece of Scruggs’ Katrina litigation. He was poised to attack insurance companies with the same “whistleblower” strategy he used in the 1990s to win billions of dollars from tobacco companies.

This time, however, things fell apart for Scruggs. The two sisters who came forward as his “whistleblowers” have been disqualified as witnesses because Scruggs paid them $150,000 a year. The sisters, Cori and Kerri Rigsby, worked for Alabama-based E.A. Renfroe & Co., a firm that provided storm assessments for State Farm.

Scruggs filed a federal whistleblower lawsuit on behalf of the sisters, claiming that they had information that State Farm was fraudulently blaming Katrina’s wind damage on water in order to pass the costs along to National Flood Insurance Program.

Robie asked Richard Scruggs if he got information about the NFIP from Lott or U.S. Rep. Gene Taylor, a Mississippi Democrat, whose home on the coast was also damaged by the storm.

“As a matter of fact, the information that was furnished by Senator Lott’s office and by Representative Taylor’s office comprised a significant portion of the claims that State Farm and Renfroe have defrauded the federal government … has it not?” Robie asked.

Richard Scruggs took the Fifth.

Taylor did not immediately respond to a message left at his Washington office.

State Farm lawyers also suggested that Richard Scruggs directed the Rigsby sisters to steal State Farm documents. The lawyers suggested that Richard Scruggs then allegedly told Mississippi Democratic Attorney General Jim Hood to subpoena the documents as part of a criminal investigation.

“General Hood subpoenaed the document, State Farm couldn’t produce it, and you were able to report to the press that they were shredding or deep sixing or destroying evidence that you knew they didn’t have; isn’t that a fact?” State Farm attorney Jim Robie asked during the deposition.

“I respectfully decline to answer based on my Fifth Amendment privilege,” Scruggs replied.

State Farm accused Hood of using the threat of criminal charges to pressure the Bloomington, Ill.-based insurer to settle civil claims with attorneys like Scruggs, who donated heavily to Hood’s campaigns. In a statement July 30, Hood said after Katrina, his job was “to safeguard and protect the rights of the policyholders who lost everything in the storm. My actions were, and still are, to make sure that these big corporations do not take advantage of hardworking Mississippians — that they are held accountable.”

Scruggs negotiated a multimillion dollar settlement with State Farm, but that eventually led to his downfall when he and other lawyers began fighting over the money. Scruggs was indicted in November along with his son and several associates and accused of conspiring to bribe the judge $50,000 for a favorable ruling in the bitter legal battle over how to split the money. Scruggs pleaded guilty and was sentenced to five years. Zach Scruggs got 14 months for knowing about the crime and not reporting it.

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