The Fall of the House of Zeus

by Curtis Wilkie

  Diaz narrowly won the election with 51 percent of the vote to retain his seat, but an altogether different battle was just beginning that would keep him suspended for much of the term.

  The Republican Party had regained control of nominations to the federal judiciary with George W. Bush’s victory in 2000. So, by the next year, the Bush administration was able to offer some solace to the Mississippi GOP and its business constituency, still smarting from Diaz’s election and the loss by the party’s nominee for a congressional seat, Dunn Lampton. It appeared to fit into a national plan. As GOP theoretician Ben Ginsberg observed, “Republicans began to wield the RIP (revelation, investigation and prosecution) weapon against Democrats.”

  In a move approved by the state’s two Republican senators, Trent Lott and Thad Cochran, Lampton was named U.S. attorney for the southern district of Mississippi. And Lampton, along with the representatives of the Public Integrity Section of the U.S. Department of Justice, soon launched an investigation of Democratic activities, looking into loans that had been given by trial lawyers to candidates for state judgeships. After news of an investigation of Minor and Scruggs was leaked to The Clarion-Ledger in Jackson, Democrats quickly noted that Lampton and Starrett were childhood friends and that Minor had once won a substantial judgment against one of Lampton’s relatives. It was also obvious that Minor’s father had long been the scourge of the Republican Party in Mississippi. Scruggs, of course, had his own Democratic credentials.

  Well before the investigation resulted in indictments, the probe was being denounced by Democrats as a Republican witch hunt.

  Scruggs was accustomed to guaranteeing loans for political candidates—and in some instances, never being repaid. Minor had a similar history. In 1996, before Steve Patterson was drummed out of the state auditor’s office, Minor wrote Scruggs about a debt owed by Patterson. “Trustmark demanding payment from me on the note that I guaranteed on Steve Patterson in which you said I would not have to pay,” Minor said in a somewhat jocular letter. “I realize you have been looking for an opportunity to retaliate for my recommendation on Copytel stocks, but this is not funny. Seriously, do you know whether Steve Patterson has raised any money and can retire this note or are we stuck with it?”

  A few years later, there were problems with the Diaz loan, but Scruggs was not particularly upset until his friend Attorney General Mike Moore called in 2002 to tell him of the investigation. “You’ve got some explaining to do,” Moore said, and he set up an appointment for Scruggs to speak with the U.S. Attorney’s Office in Jackson.

  Scruggs told the prosecutors of complications involving the transaction. The note, which had been signed by Jennifer Diaz instead of her husband, had not been repaid. After the couple split following the election, she had demanded that Oliver Diaz’s name replace hers on the note. This created a legal question, Scruggs said, because state law prevented a sitting justice from raising money to retire an old campaign debt. When he discussed the difficulty with Minor, his friend suggested staging a fund-raiser to pay off the debts owed to them. No fund-raiser was held, and Scruggs appeared stuck with the loan. Exasperated, he paid it off himself.

  “I was kinda in a catch-22,” Scruggs later told a grand jury. “I couldn’t help raise the money to pay it, but if I paid it off myself, then I was in violation. But I owed the money. So what do you do? So I just paid it off, rather than try to pass the hat, which I felt like it was too late to do.”

  In July 2003, two months after Scruggs was called before the grand jury—and four months before Republican Haley Barbour would challenge Governor Musgrove in statewide elections—the U.S. attorney announced the indictments of Diaz, his former wife, two other state judges, and Minor in connection with loans. Scruggs was not indicted.

  During his grand jury testimony, Scruggs was asked about other loans arranged by Minor that had ensnared the two other Gulf Coast judges named in the indictment, Wes Teel and John Whitfield.

  Scruggs said he loaned $27,500 to Teel, a chancery judge, at Minor’s request in February 2000, to help bail the judge out of “some financial emergency of some sort.”

  “For whatever reason, either Paul didn’t have the money or didn’t want to guarantee the note or give him the money, loan him the money,” Scruggs testified. “He wanted me to do it, I said: I’ll do it, but only with a promissory note, and I want to be paid back.”

  Scruggs said he had never appeared in court before Teel and knew of no cases Minor had pending before the judge. “Generally speaking,” he said, “trial lawyers don’t go into chancery court very often.”

  Teel’s loan was paid back within two months, he said.

  During his grand jury appearance, Scruggs was also asked about a $100,000 note that Minor held for Whitfield, a circuit judge who routinely heard civil litigation. Scruggs testified that Minor had asked him to substitute his name for Minor’s on the note. He inferred from their conversation, Scruggs said, that Minor “had a case before the judge or something coming up that would have looked bad … I think the reason he called me was because he didn’t think it was proper.”

  Scruggs refused, he said, because “I just was not going to play that game. I did it for Teel before because I didn’t think Paul would have many cases, if any, in chancery court. But I knew he had a lot of cases in the circuit court,” where Whitfield presided.

  Scruggs asked the prosecutors to let him elaborate on his answer. “The main reason I didn’t guarantee that note, that $100,000—whatever it was—note that Paul asked me to guarantee for Judge Whitfield, was because I didn’t want to make Paul’s problem my problem. I didn’t want to get involved in that transaction.

  “Another reason is,” he continued, “I thought I’d get stuck with it financially. Paul sometimes doesn’t pay his debts and I didn’t want to have to look to him or the judge for that money.”

  Scruggs testified without seeking immunity, which meant that he left himself open for possible prosecution on anything he said. The prosecutors seemed satisfied that Scruggs had been truthful. Minor’s defense attorneys, inspecting Scruggs’s secret testimony later, also concluded that nothing he said had been particularly damaging to Minor.

  But intimations of a broken friendship were apparent.

  Near the end of Scruggs’s three hours before the grand jury, Lampton, the federal prosecutor, asked about Minor’s reputation as a “judge maker.” Scruggs might have been describing himself with his answer.

  “Paul aggressively plays the political game,” Scruggs said. “He thinks he has to do that, I think, to counter organizations like the chamber of commerce that come in with large sums of money and try to influence elections, judicial and otherwise. The governor’s race is one of those places, and when vacancies occur on the bench the governor is the one that makes the appointment for the interim seat.”

  Minor often leaned on Democratic governors “to appoint people who were trial lawyer–friendly or consumer-friendly,” he said. “I have never heard Paul characterize himself as a ‘judge maker’ or words to that effect. But he does—everybody knows that he is very active—and he is not the only one. There are lots of lawyers who are active on both sides of the aisle in asking the governor to make judicial appointments. Paul plays it—you know—is very aggressive in doing that.”

  Minor and Scruggs were no longer speaking to one another at the time of Scruggs’s testimony. But differences over loans had not been responsible for the breach. Their long relationship had been ruptured by a very personal incident.

  Several of Minor’s friends, including Scruggs, had become increasingly worried about his heavy drinking. Minor slurred words after a couple of glasses of wine, and his condition deteriorated when he went beyond social consumption. He had barely escaped serious injury in two auto accidents attributed to alcohol—once when he drove himself off the road.

  Scruggs had grown alarmed during their America’s Cup trip to New Zealand, when Minor stayed drunk for the first three days of the journey.
One evening Minor woke from a jagged afternoon nap on the yacht insisting that it was 8:00 a.m. It was actually twelve hours earlier.

  Later, in the summer of 2002, following an incident at Minor’s beach house in Destin, Florida, Scruggs was asked by Minor’s friends to talk with him. Minor had cut his nose after falling at a party, and there were fears that he would eventually hurt himself badly.

  After consulting with a former partner of Minor’s and another Gulf Coast lawyer, a recovering alcoholic who had undergone treatment, Scruggs brought in a representative of the state bar association who dealt with lawyers with drug and alcohol problems. Once an appointment was lined up at the Betty Ford Center, a well-known California clinic offering rehabilitation from drug and alcohol dependency, the group arranged an intervention.

  Scruggs and two others went to Destin to discuss their concerns with Minor, persuading him to check into the clinic. Accompanied by his wife, Minor boarded a plane Scruggs made available for the trip to Rancho Mirage. They got as far as the clinic when the intervention went awry.

  When Scruggs called the center to make sure that Minor had checked in, he learned that Minor had departed. He reached Minor, who told him there was no reason to check into the facility on a weekend. He assured Scruggs he would do it on Monday. He never did. That was the last Scruggs heard from Minor.

  Minor, like many targets of an intervention, was resentful over the action. He broke off communications with his old friend.

  A year later, as he came under investigation, Minor charged that Scruggs was being protected by Senator Lott, and his attorneys argued that the case against Minor was the latest example of political prosecutions encouraged by Bush’s White House.

  CHAPTER 8

  Despite the riches that came with the tobacco settlement, Scruggs seemed afflicted with a sequence of vexing problems that began to engulf him.

  His share of the tobacco settlements gave him an annual income projected at $20 million over a twenty-five-year period. But the good life it should have brought him was spoiled by contentious events that took place outside the courts of law.

  He had been exceedingly generous to his hometown of Pascagoula, providing local charities with large gifts. Yet his most visible donation, the purchase and restoration of the antebellum Longfellow House for use as a community reception hall on the beach, had become the source of a squabble almost comic in its ferocity. Scruggs had bought the 150-year-old mansion for $200,000 in 1993 with money he had accumulated in asbestos litigation, and during the decade he spent another $1.2 million to have it renovated. His wife, Diane, personally supervised the work of craftsmen as they installed expensive woodwork and fine glass to return the building to its former grandeur.

  Instead of winning gratitude, however, the project aroused resentment among neighbors of the Longfellow House. Foremost among the opponents were Joe Colingo, a Pascagoula lawyer who had been retained by R.J. Reynolds during the tobacco battle, and Terry Carter, the head of the local chamber of commerce. Colingo bore a particular dislike for Scruggs. Eight years older than Scruggs, he was part of the Singing River crowd that had once frolicked on boozy weekends. But they had become rivals in the tobacco case, and there was another reason for antipathy. Colingo’s wife, Johnette, had grown up in the beachfront home that the Scruggs family now occupied, and it was annoying to see Scruggs ensconced there. Carter, meanwhile, served as the voice for business interests in Pascagoula; thus, he had obvious motivation for his animosity toward the anti-business trial lawyer.

  After the old house was reopened in 1997, objections by Colingo, Carter, and others led the Pascagoula City Council to impose limits on outdoor functions at the site. Scruggs not only challenged the legality of the decision, but also chose other ways to get even. He bought a home in the upscale neighborhood where his opponents lived and encouraged a rumor that he intended to move his housekeeper into it. He also built a concrete wall, nine feet high, in the rear of the Longfellow House property, which blocked his adversaries’ view of the Mississippi Sound.

  The spat, which festered for more than a year, reached a critical mass in the spring of 1999 upon the occasion of the wedding of Scruggs’s niece Tyler Lott, the daughter of Senator Lott. One afternoon, as workmen prepared outside lighting for the reception, they were startled by the landing of several dog turds that had been pitched over the wall. Peering over the obstruction, workers saw Carter, the chief of the chamber of commerce.

  “What in the hell do you think you’re doing?” one of them shouted.

  “Fuck you!” Carter retorted, and shoveled another load of dog shit over the wall.

  The workers reported the incident to Scruggs, who filed charges against Carter. In response, Carter claimed it was an accident, that he had meant to fling the considerable droppings of his St. Bernard elsewhere. He was fined $170 for malicious mischief and forced to write a note of apology to Scruggs: “I deeply regret and sincerely apologize,” he said, “for the unfortunate incident involving the dog poop shoveled from my yard … My conduct was inappropriate as a good neighbor.”

  But the shenanigans didn’t end there. Two days after the dog shit episode, electricians at the Longfellow House experienced a visitation. A Jeep Cherokee with several passengers drove onto the property and an argument ensued about noise from a radio being used by the workers. During the verbal exchange, the driver of the Cherokee pulled a pistol and, according to one of the workmen, threatened “to kill every fucking one of you.” As workers cringed behind trees, the foreman used his pickup for cover and feverishly punched digits on his phone. First 911; then Scruggs’s number.

  “Mr. Scruggs,” he wailed, “I’m running out of trees to hide behind.”

  The driver of the Jeep was identified as Colingo. The passengers included his wife and his son-in-law, Dr. Mark Lyell, whose home had lost its water view when Scruggs built the wall.

  The electricians filed charges against Colingo. In a countermove, Colingo pressed charges against the workers, claiming that their menacing behavior had put him “in fear of imminent serious bodily harm.” Scruggs threw his weight behind the electricians, hiring an acoustics technician to determine if the radio had really been a nuisance and a private investigator to look into Colingo’s record. He also asked for an injunction to prevent Colingo from coming to the Longfellow House, and underscored this action by placing armed guards on the grounds.

  To save the dignity of the Lott wedding, one of Colingo’s law partners and Attorney General Mike Moore intervened. Colingo agreed to apologize, and the reception finally took place, amid great gaiety, without further interruption.

  As a goodwill gesture, Scruggs invited Colingo and Carter to lunch. He dismissed the misunderstanding as an example of the unruly Gulf Coast life that a local editor, Ira Harkey, once described as conduct befitting “sons of the beach.” But Pascagoula was too small a place to mend a feud. And a long account of the incident in The Wall Street Journal, headlined “Mississippi Madness,” provoked snickers across the nation and did nothing to soothe hard feelings.

  Scruggs’s overreaction to the Longfellow House disagreement and his impulse to hire technicians, investigators, and security forces regardless of cost were typical of his freewheeling style. Faced with a problem, he tossed money at it. He gave away thousands of dollars to friends, with no thought of ever being repaid, and he became the most conspicuous of consumers, buying vacation homes and yachts and jets and fancy automobiles with the recklessness of a Saudi prince.

  Much of his spending had commendable purposes, however, and a lot of it was done anonymously. After a childhood friend from Brookhaven asked for help in reducing his credit card bills, Scruggs dispatched an accountant to check on the situation. When it was found that the friend owed $90,000, Scruggs covered the debt.

  He paid for field trips for schoolchildren and established scholarships for college students. He supported virtually every charitable organization in the area. Once, after hearing a tale of woe from a Pascagoula wa
itress, serving him lunch, he sent his secretary back that afternoon with a $1,000 check for her.

  In a startling act of generosity, he telephoned his high school homeroom teacher, Robert Khayat, who had become chancellor of the University of Mississippi, and said, “Coach, Diane and I want to give you forty million dollars.”

  Khayat was stunned by the offer, one of the largest gifts ever offered to the school. Scruggs left it to Khayat’s discretion to see how the money would be used. Khayat was pursuing a Phi Beta Kappa chapter for Ole Miss, so he recommended raising salaries for the liberal arts faculty. Scruggs agreed to send $1 million a year for the twenty-five-year life of the tobacco distribution, and he asked his friend David Nutt, who was sharing the tobacco wealth, to give another $5 million.

  Scruggs admired Khayat, the son of the late Gulf Coast “Godfather.” He was pleased over Khayat’s stewardship of their alma mater, his ability to transcend political differences in the state in order to unify the school’s alumni base. He was also proud of Khayat’s eloquence in East Coast settings, where the chancellor defied the southern stereotype of bigotry and ignorance. His former coach seemed well on his way to restoring the school’s reputation, tattered by the desegregation crisis in 1962 and handicapped by the state’s poverty, and Scruggs wanted to help.

  He created a $100,000 scholarship fund in honor of Diane’s cousin Andy Mullins, one of Khayat’s deputies. He set up another scholarship program for children of Ingalls’s employees stricken with asbestosis. He gave $1 million to the athletic association and served as chairman of a drive to raise funds to build an indoor practice facility for the football team and a similar building for basketball. He pledged another $5 million for the construction of a new law school. He even gave the school possession of Longfellow House, which was worth $3 million when it was sold for tax purposes.