The Fall of the House of Zeus

by Curtis Wilkie

  ALSO BY CURTIS WILKIE

  Dixie: A Personal Odyssey Through Events That

  Shaped the Modern South

  Arkansas Mischief: The Birth of a National Scandal

  (with Jim McDougal)

  Copyright © 2010 by Curtis Wilkie

  All rights reserved.

  Published in the United States by Crown Publishers, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York.

  www.crownpublishing.com

  CROWN and the Crown colophon are registered trademarks of Random House, Inc.

  Library of Congress Cataloging-in-Publication Data

  Wilkie, Curtis.

  The fall of the house of Zeus / Curtis Wilkie.—1st ed.

  p. cm.

  1. Scruggs, Dickie. 2. Lawyers—Mississippi—Biography. 3. Judicial corruption—Mississippi—History I. Scruggs, Dickie. II. Title.

  KF373.S342W55 2010

  340.092—dc22

  [B]

  2010004503

  eISBN: 978-0-307-46072-1

  See this page for photograph insert credits.

  v3.1

  For Nancy

  Contents

  Cover

  Other Books by This Author

  Title Page

  Copyright

  Dedication

  Principal Characters

  Preface

  Chapter 1

  Chapter 2

  Chapter 3

  Chapter 4

  Chapter 5

  Chapter 6

  Chapter 7

  Chapter 8

  Chapter 9

  Chapter 10

  Chapter 11

  Chapter 12

  Chapter 13

  Chapter 14

  Chapter 15

  Photo Insert

  Chapter 16

  Chapter 17

  Chapter 18

  Chapter 19

  Chapter 20

  Chapter 21

  Chapter 22

  Chapter 23

  Chapter 24

  Chapter 25

  Chapter 26

  Chapter 27

  Notes

  Author’s Note

  Acknowledgments

  Photograph Insert Credits

  About the Author

  Principal Characters

  The Defendants

  Dick Scruggs, wealthy trial lawyer and engineer of groundbreaking tobacco lititgation

  Zach Scruggs, his son and law partner

  Sid Backstrom, junior partner in the Scruggs Law Firm

  Tim Balducci, ambitious lawyer who envisioned a superfirm

  Steve Patterson, former state auditor, Democratic chairman, and Balducci’s partner

  Joey Langston, prominent lawyer specializing in criminal defense and plaintiff lawsuits

  Bobby DeLaughter, state judge and former prosecutor who helped convict assassin Byron De La Beckwith

  Their Antagonists

  Johnny Jones, Jackson lawyer who sued Scruggs Katrina Group

  Grady Tollison, Oxford attorney who represented Jones

  Alwyn Luckey, former Scruggs partner in Asbestos Group

  Roberts Wilson, former member of Asbestos Group

  Charlie Merkel, Clarksdale attorney who represented both Luckey and Wilson in lawsuits against Scruggs

  George Dale, state insurance commissioner driven from office by Scruggs

  Henry Lackey, state judge who reported improper approach by Balducci

  The Prosecutors

  Jim Greenlee, U.S. attorney in Oxford

  John Hailman, prosecutor who initiated the investigation before retiring

  Tom Dawson, chief deputy in U.S. Attorney’s Office

  Bob Norman, who took charge of the Scruggs case after Dawson’s retirement

  The Defense Lawyers

  John Keker, San Francisco attorney representing Dick Scruggs

  Mike Moore, former Mississippi attorney general and close friend of Scruggs who represented Zach Scruggs

  Frank Trapp, Jackson attorney representing Sid Backstrom

  Rhea Tannehill, Oxford friend and attorney for Backstrom

  Tony Farese, attorney who first represented Zach Scruggs, and then, Langston

  The Players in “The Force”

  Trent Lott, Scruggs’s brother-in-law and onetime Republican majority leader in the U.S. Senate

  Tom Anderson, Lott’s longtime associate in Washington

  P. L. Blake, a figure in their Mississippi network

  Ed Peters, former district attorney in Jackson

  Pete Johnson, former state auditor

  The Political Figures Outside “The Force”

  Jim Hood, attorney general of Mississippi

  Danny Cupit, former Democratic chairman and influential Jackson attorney

  Joe Biden, former U.S. senator from Delaware, now vice-president of the United States

  The Judge

  Neal Biggers, senior U.S. district judge in Oxford

  The Wife, Mother, and Sister-in-Law

  Diane Scruggs, Dick’s wife; Zach’s mother; Trent’s sister-in-law

  The Chancellor

  Robert Khayat, leader of the University of Mississippi for fourteen years

  “Abide in silence,” the cloud-gatherer Zeus said, “and obey what I say, for now all the gods of Olympus will be of no avail when I come closer and lay my invincible hands upon you.” His queen, Hera, was afraid, and she sat down in silence, wrenching her heart to obedience, and the gods in heaven were troubled in the House of Zeus.

  —Homer’s The Iliad

  PREFACE

  Along with much of Oxford, I was savoring the news that Ole Miss had secured the services of football coach Houston Nutt, five days after Thanksgiving 2007, when that headline was overtaken by a breaking story with greater significance. Rick Cleveland, a sports columnist for Jackson’s Clarion-Ledger in town for Nutt’s press conference, called me to say, “Your buddy’s been indicted.” I could find the first, sketchy details on his newspaper’s website: Dick Scruggs had just been arraigned in federal court on charges of bribing a judge.

  The news of the indictment of Scruggs, a take-no-prisoners trial lawyer of international repute, a power player in state and national politics, and a major benefactor of the University of Mississippi, was shocking. My initial reaction was similar to that of others who knew Scruggs. As John Grisham told The Wall Street Journal, “This doesn’t sound like the Dickie Scruggs that I know. When you know Dickie and how successful he has been, you could not believe he would be involved in such a boneheaded bribery scam that is not in the least bit sophisticated.”

  In the two decades since Scruggs first drew blood from the asbestos industry and then brought Big Tobacco to its knees in litigation that produced hundreds of millions of dollars for himself and his clients, he had developed powerful enemies. At the time, he was locked in an epic struggle with his most formidable opponent to date—the American insurance industry—in a series of bristling lawsuits growing out of Hurricane Katrina. Though he had backed a few Republicans (most notably his brother-in-law, Mississippi senator Trent Lott), Scruggs was best known for his support of Democratic candidates. Upon learning of his indictment, there were celebrations in the corridors of chambers of commerce and Republican headquarters across the country.

  Scruggs’s indictment came while Mississippi was recoiling from Lott’s announcement, only the day before, that he would resign from office. As a Republican leader in the Senate, Lott was one of the most influential men in Washington. If Lott’s resignation and Scruggs’s arrest were coincidental, it strained credibility.

  As the investigation widened to draw in other important figures, the story grew e
ven more intriguing. The chief U.S. attorney, Jim Greenlee, called it a “Greek tragedy.”

  In nearly forty years as a newspaper reporter, I had covered the civil rights movement, eight presidential campaigns, and numerous overseas conflicts. Even though I had retired at the conclusion of the 2000 election and become a member of the faculty at the University of Mississippi, it occurred to me that this might be the story of my lifetime.

  Two months after the first arrests in the case, with a trial quickly approaching, I dropped Dick a note telling him of my interest in writing a book. “I appreciate that you have to be guarded in anything you say regarding the case, but at some point I would hope we could talk about it,” I wrote. “I still remember your candor and cooperation when we first met ten years ago and I was working on a story for The Boston Globe that dealt with the Luckey-Wilson case.” Ten years later, the repercussions from that case were factors in Scruggs’s current dilemma. In the intervening years, Dick and I had both moved to Oxford, and I had gotten to know him better.

  A couple of days after I sent him the note, he called. It was a gray and wintry Sunday. My wife and I were on our way to a Super Bowl party to watch the local hero, Eli Manning, lead the New York Giants to the NFL title. Scruggs was a big football fan, and we talked a bit about the game that would begin in a couple of hours. Then he said, “I got your letter.”

  “Hey, Dick,” I told him, “I’ve always operated on the presumption of innocence” as a journalist dealing with defendants in criminal cases.

  “Hell, I do, too,” he blurted. But his laugh carried no humor. He said he was reluctant to talk about the case now. Maybe at some point down the road.

  Oxford is a small town, and we saw Dick and his wife, Diane, at a dinner party a few days later. No one mentioned his case, though it hovered over the table conversation like a spectral presence. Afterward, I got a note from him. “Although you don’t need my ‘permission’ to write on this sordid affair, I just don’t feel right about the appearance of exploiting it.” Since he grew up in a south Mississippi county adjacent to my childhood home, he attributed his sense of awkwardness to: “Maybe it’s a Lincoln County thing?” To put me off further, he added, “Enjoyed Saturday night at the Boones’ with you and Nancy. A book needs to be written about how you got Nancy to fall for you.”

  Without any assurance that Scruggs would ever talk on the record with me, I began my book project, following newspaper and magazine accounts, interviewing individuals involved in the case, gathering court documents, collecting information that had never been made public. Drawing on old Mississippi connections, I interviewed dozens of people on all sides of the ugly conflict.

  Meanwhile, the Scruggs story went through several convulsions over the next few months.

  It became increasingly apparent to me that this was a remarkable story of personal treachery, clandestine political skullduggery, enormous professional hatred within the legal community, a zealous prosecution—all with ramifications that extended to high levels in Washington.

  In the summer of 2008, Dick’s only son and junior law partner, Zach, who faced prison himself, began to talk with me. He spoke, for hours, of the villainy he felt the federal government had committed during its investigation. He talked, too, of many other things.

  One day Zach and I went to lunch, and Dick joined us. It became clear that Dick now wanted to give me his perspective. We began a series of long interviews. Sometimes at his home, sometimes at mine. One day, he sat in our living room and talked, while I took notes, from midmorning until evening. He made many jocular asides, but as darkness began to gather us in gloom, he sighed and said, “My life is over.” He and Zach and others with whom I talked went off to prison. I made visits to them in confinement. I continued to talk to others: prosecutors, defense attorneys, judges, lawyers, political leaders, academic lions, close friends of Scruggs as well as implacable enemies. I found that I had tapped into an extraordinary outpouring of emotions. In the spring of 2009, Scruggs was returned to the Lafayette County jail in Oxford to appear before a grand jury, and I got together with him again. As I was leaving the room where we met, he folded his hands and asked, “When all this is over, are you going to be able to tell me how I got mixed up with these guys?”

  I have tried.

  CHAPTER 1

  In the summer of 1992, a time when fortune first began to bless him with riches, Dick Scruggs received a disturbing call from his close friend Mike Moore, the attorney general of Mississippi. Moore reported that he had learned of a plot against the two of them by members of a political network that had been dealing influence throughout the state for decades. The powerbrokers were said to be indignant over a lucrative arrangement between Scruggs and Moore that enabled Scruggs, a private lawyer in the Gulf Coast city of Pascagoula, to collect $6 million in contingency fees while representing the state as a “special assistant attorney general” in legal actions against the asbestos industry.

  Scruggs and Moore, regarded by the old guard as upstarts, had succeeded after a similar plan by members of the network had failed a few years earlier because of a shortfall in state revenue. Among the members of the cabal, Moore told Scruggs, were State Auditor Steve Patterson and Ed Peters, the Hinds County district attorney with jurisdiction in Jackson, the state capital. These men and their allies not only were disgruntled over Moore’s contract with Scruggs; they had determined it was illegal and planned to indict Scruggs—a move that would also serve to short-circuit Moore’s climb to political prominence.

  Despite his emergence as a leader in asbestos litigation and his alliance with the attorney general, Scruggs was still naïve in the practice of backroom politics in Mississippi. When he heard that he was likely to be indicted, fear ran through him like a fever. His head throbbed at the outrageousness of the accusation, and despair gnawed at his gut. He found himself frightened and unsure where to turn.

  Scruggs knew that he faced formidable forces representing an amalgamation of old Democrats and new Republicans, the survivors and descendants of a mighty political apparatus once controlled by the late senator James O. Eastland. Working the phone, he reached out to other sources for help.

  As a major donor to the state Democratic Party, Scruggs made a late night call to Jackson attorney Danny Cupit, an operative with broad connections in party affairs. “They’re out to get me,” Scruggs wailed, blaming his dilemma on hostile politicians and professing his innocence. To Cupit, it sounded as though Scruggs was weeping. He offered to make some calls on Scruggs’s behalf.

  Instinctively, Scruggs also phoned his brother-in-law in Washington, Republican senator Trent Lott. The lawmaker listened while Scruggs complained about the perfidy of the charges being prepared against him. Lott made no promises—for this seemed to be the work of squabbling Democrats back home—but he assured Scruggs he would do what he could.

  Others provided counsel—recommendations of good criminal defense lawyers and expressions of support—yet Scruggs remained uncomfortable. And lately he had grown accustomed to comfort. He had recently become a man of consequence in Mississippi, even before his fortieth birthday, when he hit a big lick—as lawyers like to call any sizable fees won in damage suits. With his new wealth, Scruggs had bought a sailboat, a luxury car, an airplane, a home with a view of the gulf, and he had begun to use his money to dabble in politics.

  Scruggs seemed driven by a lust to become a winner, a characteristic often developed in childhood by smart but poor boys, and now he had to consider that the life he had built for himself and his family might be wiped out. An indictment could prove him unworthy for his wife, Diane, a local beauty who had been considered too regal for him when they were in high school. Criminal charges against Scruggs would also besmirch his son, Zach, on the threshold of his freshman year at Ole Miss, and the Scruggses’ younger, adopted daughter, Claire.

  Scruggs’s downfall appeared to be coming at almost the same warp speed as his rise in the legal profession.

  · · ·


  After treading in the backwaters of the state bar as a young lawyer specializing in bankruptcies, Scruggs had a breakthrough in the 1980s, after he devised an innovative way to attract a multitude of clients claiming to suffer from exposure to asbestos. In Pascagoula, the shipbuilding city where he lived, asbestos litigation had become something of a local industry itself. Thousands of workers had passed through the giant Ingalls Shipbuilding facility since World War II, producing countless vessels that helped keep the U.S. Navy afloat. Over the years, the work force at Ingalls had used asbestos to wrap the pipes, reinforce the boilers, and protect the engines of the ships they built. Eventually, it began to dawn on some of them that their jobs had come at a price: inordinate numbers of the shipyard workers were succumbing to mesothelioma, an illness that could be traced directly to handling asbestos.

  Scruggs missed out on the first wave of damage suits filed in Mississippi in the 1970s in connection with asbestos. But after setting up a clinic in 1985 that provided free medical diagnoses for those who felt they might have contracted mesothelioma, he was able to enlist hundreds of clients. Then he figured out a way to consolidate these cases into one blockbuster lawsuit so ominous that the asbestos companies were willing to pay millions in settlements negotiated outside the courtroom in order to avoid the possibility of even greater losses in a trial.

  By 1992, Scruggs stood out as a paradigm in his profession, a plaintiff’s lawyer representing the powerless masses, whether they were humble shipyard workers in Pascagoula or ailing consumers bringing product liability complaints. Scruggs and his colleagues around the country called themselves “trial lawyers,” and they thought of themselves as the new guardians of the American public, stepping into a vacuum created by a lack of government regulation. During twelve years of Republican rule in Washington, a time when Big Government had been turned into anathema, the teeth had been pulled from regulatory agencies. Big Business had been given an advantage, and it seemed that the only place to hold industry accountable was in the courts.