Scruggs Nation, Day 23: the wire part II

Prosecutors filed a response yesterday to the defense motion for a continuance, and this document contains what looks like to me a very strong indication that Tim Balducci did not begin cooperating with investigators until November 1, when he delivered the last $10,000 installment of the alleged $40,000 bribe.

Click here to see a copy of the government’s responseAnd click here to see a copy of the indictment, so you can follow the play-by-play.    

The government’s response says as follows:

On December 17, 2007, the government made available to the defense a September 27, 2007, recording of a conversation between Timothy Balducci and Circuit Judge Henry Lackey, together with videos of Balducci and Judge Lackey on October 18, 2007, and November 1, 2007. Also included in the discovery on that date were surveillance photos from September 27, 2007, and November 1, 2007. Additionally, the government provided to the defense certain documents related to expense transmittals from the Scruggs Katrina Group.

Now, there would be no point at all that I can see to taping a meeting of Judge Lackey and Balducci on November 1 if Balducci had already begun cooperating.  As I mulled over the sequence of events listed in the indictment, that meeting on November 1 stuck out like a sore thumb, and I posted about this earlier this week.  Why would Balducci bother to deliver the $10,000 if both he and Lackey were wise to the fakeness of the transaction?  You will note that, among all the sums mentioned in the indictment, only a final extra $10,000 that Balducci apparently asked for after delivery of the full $40,000 is not mentioned as being delivered to Lackey, and the obvious implication of that is that Balducci was put up to claiming the judge was demanding more money above the original $40,000, so more evidence could be gathered.  That last part seems clear, but what of the drop-off of the other $10,000 earlier in the day November 1?

One commenter to my post said the meeting was probably real — the FBI confronted Balducci after it was over and showed him the surveillance tapes, and then sent him to Oxford with a body wire to go talk to Backstrom and the Scruggses.  This was a very, very good analysis, but not having any experience "flipping" or "being flipped," I was skeptical: I imagine that if I was confronted like this, I might be too shaken to pull off a good acting job with my co-conspirators, might start muttering to myself about "the damn FBI," or say something stupid like "I can’t believe we thought we could pull this off, we should have known it would never work."  Maybe I would start some Nixon-like sweating, or break out in involuntary twitching.  Maybe if someone asked me what took me so long to get there I might blurt out defensively "Well, traffic was a bitch and getting busted is a real time-killer too!  Just wait and see."  I also wondered whether the FBI would care to send Balducci in without more prep time — maybe an encounter session with a few felons from other cases who had flipped, some film room time to watch some "how to" videos, maybe bring in a stress coach, physical therapist or motivational speaker to keep him loose.

But from the description in the government’s new filing, it does indeed appear that is just what they did.  This theory is supported by another section of the new filing that talks of evidence of consensual recordings involving Balducci, Backstrom, Dickie Scruggs and Zach Scruggs.  Because the indictment mentions Balducci meeting with all three on November 1 after he returned from Lackey’s office, this is a logical time for the consensual recordings to have been made.

Incidentally, that last sentence quote above from the government’s filing talks of expense transmittals from the Scruggs Katrina Group.  I assume that refers to the allegations in the indictment that Dickie Scruggs created phony documentation purporting to pay Balducci for jury instructions and jury consulting in an effort to cover up the true purpose of the payments to Balducci. They are alleging he paid out of SKG funds? Whoa! If I was in the SKG and someone used common funds and the name of my organization for alleged bribe money, I would be even more steamed than when I heard about the alleged bribes in the first place.




Filed under Industry Developments

20 Responses to Scruggs Nation, Day 23: the wire part II

  1. Roger

    1) What does the government expect to learn in their request for “reciprocal discovery under Rule 16?”
    2) The government seems very confident (almost cocky?) of their case (straight forward and not very complex–not deserving any additional continuances?)
    3) The government has not yet even seen the evidence seized in the raid on Scruggs’ office (it’s still in the taint team process). So they apparently think it will just produce icing on the cake, if anything. The indictment was already (obviously) a done deal before the search.

  2. iwannaknow

    dickie apparently expensed the payments to the rigsby sisters as a joint venture expense. i have seen posts that he expensed the legal fees to defend himself in the alabama contempt proceeding. and his past practice is to expense anything related to past ventures that he perceives as being for the benefit of the “group”, ie, pl blake paymnents, legal fees to defend real or perceived attacks on the group or its recoveries (fordice, wilson, luckey). in a civil context, under mississippi law each venturer is a “partner” and jointly liable for actions of any “partner” acting on behalf of the venturer. jones has alleged that in jones v. scruggs, and he is correct. but criminal law probably wouldnt extend that far – there would have to be knowledge sufficient to find a conspiracy. the entity itself could be charged, but for what purpose?

  3. Memphis

    Not only did they put the bribe money in the expense reports but also two payments of $150,000 in Jan of 07′ for the Rigsby sisters as “consultants”

  4. iwannaknow

    if a defendant asks for discovery under rule 16 it is mandatory he reciprocate. i am not sure the government expects anything. but it is now entitled to have pretrial whatever the defendants have, icluding identity of witnesses, experts, and documents. i would expect some experts trying to discredit the government evidence or that it was out of scope of authorized wiretap. who knows? i agree government seems confident

  5. Jim

    For all you legal minds. How far can this thing run? As evidence is uncovered can it lead to investigations into other areas? How far can they go back? Is it possible the IRS will get involved regarding expensing and taxes–did P.L. Blake pay taxes? In other words how long are the legs on this monster?

  6. Around Town

    As to the last 10K payment – my understanding is that the Balducci shakedown was like a movie scene. Last payment delivered to the Judge, who then says “I’d like to introduce you to some of my friends…” (or something similar). In walks the FBI.

  7. Justus

    HMMMM? According to a part of the quote of the government’s response above: “the government provided to the defense certain documents related to expense transmittals from the Scruggs Katrina Group”.
    Now, the operative phrase is “FROM the Scruggs Katrina Group”! It didn’t say from Scruggs’ office!! So was it sent from the offices of Nutt-McAlister, since they handled the money and had to approve the expenses? And, also, TO WHOM was it sent – was it sent as some sort of billing or expense statement from the Nutt-McAlister offices to the SKG clients as a deduction from their settlements? Makes you wonder who all is involved, doesn’t it?

  8. anonymous

    Re comments concerning the government’s confidence level: when in the last 7 years has there been any correlation between confidence and competence?

  9. jim

    RE: expense money
    Maybe they sent it to P.L. Blake and it went from Nutt to Scruggs to Langston to Blake then back to Balducci to the good judge.

  10. Memphis

    You got to read this if you havent seen it yet Rossmiller.
    Click Here

  11. David Rossmiller

    Memphis, I saw you were trying to link the Legal Newsline story regarding Courtney Schloemer. For some reason link attempts don’t work in my comments section, I will speak to Lexblog about fixing this, I know it must be annoying. As for the story, believe me, I heard about it earlier today.

  12. MSlawyer

    I wonder if Courtney ran that e-mail by her boss, Jim Hood. I certainly hope the Miss. Bar is investigating whether she has violated the rules of professional conduct. She can try to put lipstick on that pig all day long, but her statements quoted in Brian Ford’s notes are just appalling.


    On Y’all Politics, it says Courtney is only 3 years out of law school (age 27?) She writes very well in rebuttal to David’s arguments. I, for one, would like to see him respond.

  14. Fred

    I have to admit I’m a little sympathetic to Courtney’s position after reading her statement. There’s nothing in the notation in the deposition which indicates that she was prosecuting the case specifically to help the civil cases. And even if we are to assume that her boss Jim Hood is doing so, she’s just carrying out his orders while likely earning a modest salary to do so.
    Also, the situation with the Katrina litigation is not black and white, but shades of grey. Just because some of the plaintiffs lawyers are allegedly crooks doesn’t mean that State Farm is lily white in this whole matter. Disregarding how they were obtained, the Rigsby documents certainly don’t portray State Farm in a good light.
    And give me a break with trying to drum up an ethics complaint, mslawyer- it’s easy to say that when you’re hiding behind an anonymous username and talking about a real lawyer who seems like a decent person.

  15. Justus Kneads

    QUESTION: Was it LEGAL or ETHICAL for Courtney to DISCUSS an ONGOING GRAND JURY INVESTIGATION with Derek Wyatt, Brian Ford, Dickie Scruggs, or anyone else who was not with the Attorney General’s Office? Brian Ford’s notes certainly indicate that Courtney discussed it with them. I understood that grand jury investigations were supposed to be highly confidential, and that everyone who breached that confidentiality, including the speaker and recipient of such confidential information, was subject to CRIMINAL PENALTIES. But I guess not if Courtney can talk to those guys about it. Maybe the target or subject of such grand jury investigations, instead, has a civil remedy for such breaches of confidential information – anyone know?

  16. Greg

    Your blog is definitely a good read, and as a non-lawyer, I can’t really keep up with the lawyer speak. I would like to discuss personal character though… Today’s post, your suggestion that you would crack under the pressure of wearing a federal wire reflects your character. However, if you were able to successfully (at least in your own mind) bribe (at least one) judge–then lying and deceit may be more of a second nature.
    Point blank: If someone is capable of trying to rob justice through a 40k bribery of a 250 mill settlement, I doubt they’ll have all that tough a time turning on their partners. Stated succinctly, there is no honor among thieves.
    (Note: All alleged subjects are innocent until proven guilty in a court of law.)


    Justus Kneads: Ms Schlmo does not practice in federal court. In state court, lots of information gets out. That being said, it is interesting that the federal grand jury investigation of state judge Bobby DeLaughter is now common knowledge and regularly reported in the media.

  18. observer

    From reading the news article in the CL, it sounds like Judge DeLaughter was the source of the news that he got served with a federal grand jury subpeona. I say this, knowing Delaughter is a former prosecutor and should know better. I can’t think of a good reason for him to do so, so I am left with the conclusion that he disclosed it for a bad reason (i.e. a warning to those who already know the truth).
    As far as it being leaked out by the feds. There is little reason for the feds to let other people know that someone is going to be a grand jury witness for them before they actually testify. That is just asking for someone to attempt to influence a witness’s testimony beforehand, in the best case, (or worse, in the worst case). If a federal agent or prosecutor leaked out a grand juror’s name, and he got killed, that agent or prosecutor would be in a world of hurt.
    I’ll also bet that Ms. Schloemer has already been taken to the wood shed for her post and that we won’t be hearing from her again.

  19. Justus

    COWBELL and OBSERVER: There may be some confusion about the State grand jury issues and the Federal grand jury investigation, and ya’ll seem to know a good bit about the grand jury matters. So, perhaps one or both of you know the details to clear it up since I haven’t kept up with all of the ancillary (“secret”) grand jury proceedings on either level.
    Cowbell, I may have misread it, but in your 9:51 comment above you seem to imply that grand jury matters in Mississippi are not subject to confidentiality and non-disclosure requirements, and that that Courtney was somehow discussing federal grand jury matters anyway, instead of State of MS grand jury matters.
    But, although I could be mistaken, my understanding from a reading of the Brian Ford notes, and from Courtney’s recent rant about David Rossmiller, was that:
    (A) Courtney, Brian Ford and Derek Wyatt, discussed Ford’s then-upcoming testimony before a State of Mississippi grand jury that was considering some type of criminal indictment against State Farm and/or its officers that had been initiated by the Mississippi AG’s office. Like I said, I could be mistaken, but that was my understanding from everything that I have read on here.
    (B) Courtney, Brian Ford, Derek Wyatt, and perhaps others, agreed that a criminal conviction would aid the civil lawsuits. Presumably, they meant a criminal conviction against State Farm or a State Farm officer relating to the grand jury investigation about which Courtney and others discussed. Based upon what was known at that time, it seems almost impossible that they were discussing a criminal investigation or possible conviction against SKG partner Scruggs by the Feds that came to light in November.
    (C) Courtney, in her recent dialogue and rant against David Rossmiller, stated that her justification for wanting Derek Wyatt/SKG/Scruggs to delay employment of Brian Ford, was so that she would NOT HAVE TO DISCLOSE TO THE GRAND JURY that Brian Ford was a “PAID CONSULTANT” for SKG, thereby avoiding a revelation and disclosure to the State of Mississippi grand jury that might taint Brian Ford’s “GRAND JURY TESTIMONY” as being bought and paid for in the eyes of the grand jury. I would presume that Courtney would only be presenting information to a State of Mississippi grand jury, and not a federal grand jury, since she was an attorney with the MS AG’s office.
    So, that leads to two questions regarding Cowbell’s comment above from 9:51 p.m., that maybe someone can clear up:
    1. In Brian Ford’s notes and in Courtney’s recent rant about D. Rossmiller, were Ford and Courtney, respectively, referring to a State of Mississippi grand jury proceeding against State Farm, or were they referring to one in federal court? Obviously, because of the timing of Brian Ford’s notes, it wouldn’t seem logical or plausible that they were discussing the current ongoing Federal investigation of Scruggs/SKG would it?
    2. If they were referring to a State grand jury proceeding against State Farm, as it appears, aside from any possible ethical violations arising from disclosure and discussion, don’t Mississippi statutes mandate the confidentiality and secrecy of those grand jury proceedings, and wouldn’t a violation of that confidentiality and secrecy lead to criminal penalties?
    I may be mistaken, but I sure thought that the confidentiality and secrecy of “all” grand jury proceedings, including those by the State of Mississippi, were protected by statute, and that it was a crime to breach that confidentiality. Additionally, it seems that Courtney’s apparent plan (concluded from reading her rant and Brian Ford’s notes) to conceal from the grand jury, the fact that Derek Wyatt/SKG/Scruggs had either already made or were in the process of making with Brian Ford a “DEAL” to compensate him as a consultant, would have been less than full disclosure to the grand jury of what information she had obtained by way of her investigation and discussions.
    I don’t know much of anything about grand juries or what was or was not Courtney’s obligation and responsibility with regard to maintaining confidentiality of a grand jury investigation or disclosure or non-disclosure to the grand jury. She may have acted entirely appropriately under the law. Can someone clear this grand jury thing up?

  20. observer

    I’m not sure what you are asking.
    A federal grand jury, and a state grand jury, operate under very similiar rules.
    But, they are different entities, in different juridictions. An assistant attorney general for the state of Misissippi, will be presenting informaton to, and working with, a state grand jury. An assistant United States attorney, will be working with a federal grand jury.
    The purpose of grand juries is twofold. One, to investigate violations of criminal law, and two, to charge persons with violations of criminal law, when they find evidence of probable cause that a person, or entity, has committed that violation.
    That doesn’t mean that both couldn’t be investigating the same thing at the same time, as they could. It’s not even double jeopardy to be charged with violations of state and federal law for different offenses from the same facts and circumstances.
    And, yes, the deliberations, and investigations, of grand juries, both state and federal, are supposed to be secret. That doesn’t mean that what they do can never be disclosed. It does mean that there are rules on how, when, and to whom, those disclosures can be made.
    And, for some indictment 101 in this matter. Scruggs, and the other four defendants are indicted in federal court for conspiracy to commit bribery and related substantive counts. State Farm in under investigation by attorney general Hood, in state court, (but his investigation, has been temporarily stayed by an order of a federal court, at State Farm’s request, in the only instance that I am personally aware of where the subject of a state investigation, has been able to obtain a federal order to stop the investigation, another interesting twist in this most interesting story).
    I know all that explanation probably will result in more questions than answers. Don’t feel bad. I have been a lawyer for a long time, and I have to read a lot of this stuff two or three times before I have it straight.