The Fall of the House of Zeus

by Curtis Wilkie

  Though Scruggs did not ask for the honor, Khayat unilaterally named the music department the Diane and Dick Scruggs Hall and renamed an adjacent building Nutt Auditorium.

  During their talks about money and Ole Miss, Khayat became aware that Scruggs was effectively operating out of control. As happy as he was over the gifts to Ole Miss, he was concerned for his friend. Scruggs seemed to be squandering his fortune, spending some of it rashly. Khayat thought he knew of just the man to rescue him.

  Rex Deloach was a certified public accountant who had been Khayat’s savior at Ole Miss, helping the chancellor extricate the school from financial distress a few years earlier. Deloach was the same age as Khayat, but came from a different environment. He had grown up in the impoverished Delta community of New Africa and gone to college not at Ole Miss but at Delta State and Memphis State. Despite his lack of pedigree, Deloach became managing partner of the Memphis office of Arthur Andersen, a national accounting giant. He retired before the company’s ruination, and moved with his wife, Ruthann Ray, another accountant, to an estate of woods and rolling meadows outside Oxford. He had expected to spend his retirement years riding horses from his stable or traveling to faraway places—until Khayat implored him to come work at Ole Miss.

  Acting as the university’s chief financial officer, Deloach became known to some departmental potentates as Doctor No. He did away with personal domains controlled by various bureaucrats and consolidated control of the school’s budget in the Lyceum, the administrative headquarters. The managers of campus stores and food services were replaced, and the businesses began to turn a profit. With construction stalled on a new business school, Deloach helped Khayat appeal to a prosperous donor for $16 million to ensure completion of the project.

  Khayat regarded Deloach as a financial miracle worker. To repay Scruggs for his generosity to Ole Miss, the chancellor wanted to introduce the lawyer to Deloach, thinking he could stabilize Scruggs’s books.

  Their first meeting was not a propitious one. Khayat invited Dick and Diane to dinner at the chancellor’s home with Deloach and his wife. However, the date was a Saturday night after a basketball game in Oxford between Ole Miss and Kentucky, and Scruggs changed his plans. He and his wife dropped by the Khayats’ for a half hour of cocktails and chitchat, then left to take Ashley Judd and her boyfriend to dinner at City Grocery, a fashionable restaurant on Oxford’s Square.

  Scruggs had always been a bit starstruck. He had gotten to know Hollywood actors Al Pacino and Russell Crowe during the filming of The Insider at his Pascagoula home, and he became acquainted with Judd through his nephew Chet Lott, an investor in Kentucky pizza parlors. Knowing the actress was a rabid Kentucky basketball fan, Scruggs sent his jet to Kentucky to bring her party to the game.

  But he followed up Khayat’s suggestion later by inviting Deloach to Pascagoula to have a look at the operation of his law firm. When he arrived in the summer of 1999 the accountant was appalled by what he saw. Although Scruggs’s law partners were fixed for life with income from the tobacco settlement, the firm was hemorrhaging money with a payroll of more than fifty people—paralegals, secretaries, runners—all who had little to do. The excesses at Scruggs’s firm were so obvious that one partner joked about erecting a sign for passing motorists: “Honk If You Don’t Work for Dick Scruggs.” Some of the lawyers came in no earlier than noon, checked their messages, and departed early.

  Scruggs had taken up a somewhat indolent lifestyle himself. He and Diane took frequent vacations to exotic locations. Deloach discovered that Scruggs owned a racing sailboat and three yachts, fully crewed, at far-flung ports around the world. The gem of Scruggs’s fleet was the 120-foot-long Emerald Key, recently refurbished at great expense and docked in the South Pacific, served by a crew of seven awaiting Scruggs and his guests for the America’s Cup competition off New Zealand. Scruggs also owned the 112-foot Claire Elizabeth, named for his daughter. The boat was based in the Bahamas, where Scruggs had bought a home to replace one he used to own in Key West. The smallest of his yachts was a mere ninety-one feet long. It was used for cruising the waters off Pascagoula and was valued at $6 million.

  To get to his destinations, Scruggs owned one jet outright and held one third interest in two others.

  While Deloach was in Pascagoula, inspecting Scruggs’s books, his host asked him to come to the Longfellow House. When the CPA arrived, he found Scruggs, decked out in a seersucker suit and a sporty straw hat of the type once fancied by southern gentleman, seated in a new Bentley convertible, sales price $300,000.

  Scruggs was finding all sorts of ways to spend his millions.

  The law firm needed radical surgery, so Deloach recommended a form of triage: Scruggs should clean house, fire all of the unproductive lawyers and staff members, and pare the office down to a handful.

  Characteristically, Scruggs did not want to deliver the bad news. For all of his litigation prowess and his recent tiff with Colingo and Carter, he often shrank from confrontation. Psychologists associate a childhood spent in stormy or broken households with an adult reluctance to engage in unpleasant arguments. When Scruggs avoided personal clashes, as he often did, he seemed to fit the drugstore psychoanalysis of a “child of an alcoholic parent.” Whatever the reason, Scruggs went off to the South Pacific to follow the chase for America’s Cup on the high seas and left the dirty work to Deloach.

  Among those who were there, it became known as the “Mardi Gras massacre,” and Deloach, tall, thin, and looking the part of a bloodless accountant, earned a new nickname, T-Rex the Grim Reaper.

  He began the day by meeting with the firm’s newest hire, a young lawyer named Sid Backstrom, whose childhood had been as checkered as Scruggs’s. Backstrom’s parents divorced when he was four, and he lived with his mother in Cajun country in South Louisiana through her turbulent remarriage to a musician-carpenter. Backstrom’s father, a graduate of Ole Miss law school, wound up a respected judge in Pascagoula, but heavy drinking dogged him to the end of his life. Backstrom graduated from LSU and chose to attend law school there because he expected to practice in Louisiana, where the Napoleonic code still prevails in legal matters.

  He was an intern at a Baton Rouge law firm when he first saw Scruggs, who flew over from the Mississippi coast to complete a piece of business in 1994. Because of his asbestos settlements, Scruggs already had a reputation as a corporation slayer, and the Baton Rouge lawyers were atwitter over his presence. Appearing knowledgeable and courageous, Scruggs lived up to his advance billing. Impressed, Backstrom told his father of the visit, and the judge responded, “Oh, yeah, he’s the real deal.”

  Backstrom hoped he might find a place with Scruggs, and after he practiced for a few years in New Orleans, his father made the connection for him. Judge Backstrom often saw Scruggs at lunch in Pascagoula, and the judge learned of a possible opening for his son in the firm.

  Young Backstrom came to see Scruggs several times, but it was not until the fourth visit that Scruggs suddenly asked, “Are you coming to work for me?” He offered a salary of $75,000 and a percentage of any awards Backstrom might be involved in winning. Though the terms were vague, Backstrom’s hiring was sealed with a handshake. He felt Scruggs was an honest man, and he and his family moved to the Gulf Coast in the summer of 1999.

  Less than six months later, Deloach appeared in Backstrom’s office at the start of the morning. “I’m here for Dick to let everybody know they’re retiring today,” Deloach told him. “You are not. You can keep your stuff here, but I want you to leave the office right now. If you say anything, you’re gone, too.”

  Eleven lawyers, including some of Scruggs’s close friends, were purged that day, along with fifty support personnel.

  When Scruggs returned from New Zealand, he rehired a few people. But his firm had been reduced to a core including him, his loyal secretary Charlene Bosarge, Backstrom, and a couple of clerical assistants.

  Another significant change soon took place in Scruggs’s life,
but few knew of it. In May 2000 he underwent back surgery for a herniated disk. A second operation followed in June. To deal with the pain, he was given a prescription for Fioricet. Scruggs found that the drug not only relieved his discomfort but infused him with an extraordinary sense of well-being.

  Because Fioricet was a barbiturate rather than a narcotic—Scruggs was allergic to narcotics—he rationalized his use. He began to take the pills often, even after the pain from the surgery had ebbed. His intake of ten to twelve pills a day increased; he began to rely on the drug.

  To satisfy his craving, he asked his employees to obtain prescriptions in their names. The drug would be ordered impersonally, online through bulk distributors, and turned over to Scruggs.

  When the drug took hold, Scruggs’s cares receded. After the turmoil of asbestos and tobacco, Fioricet delivered a feeling that all was well.

  Scruggs was approaching his sixtieth birthday, and he entertained the thought, as many aging men do, of moving on to something new. One grand possibility seemed within his reach: to become an American ambassador. He had the right political connections. He had supported the new president, George W. Bush, in 2000, and his brother-in-law, now the Senate majority leader, was one of the most influential men in Washington. Scruggs could count on bipartisan help, for he often hedged his bets and usually gave more to the Democratic Party. Because of his jet-set travels and professional experience overseas, he felt worldly enough. He was at ease with the rich and powerful, and with his charm he felt he could represent his country better than some of the boobs who were given ambassadorial appointments to reward their political contributions.

  His desire to become an ambassador grew as strong as his earlier yearnings to make the big lick. South America became the heart of his ambassadorial affections; he even settled on Ecuador as his next home. Surely, he figured, Trent Lott could deliver that for him. After all, Lott had arranged for Tom Anderson to serve as ambassador in the Caribbean during the Reagan years.

  With the title, Scruggs could enjoy the honorific “Ambassador” for the remainder of his life. It was an attractive thought, and the appointment seemed certain.

  Scruggs began taking Spanish lessons. Confidently, he purchased a sixteen-seat Gulfstream, a luxury jet with the capacity to fly from the Gulf Coast to Quito without refueling. He even chose the figures to be painted on its tail: DS 368. The numbers referred to the $368 billion the tobacco industry had put up to settle their case. The DS, he said, did not stand for Dick Scruggs, but for “dollar signs.”

  At the beginning of the Christmas season in 2002, Lott attended a one-hundredth birthday party for Senator Strom Thurmond of South Carolina. Before abandoning the Democratic Party and becoming a talisman for the “Southern Strategy” that lured segregationists into the Republican Party, Thurmond had been the presidential candidate of the racist States’ Rights Democratic Party, known as Dixiecrats, in 1948. Mississippi was one of four Deep South states to give Thurmond its electoral votes. In the flush of the moment, more than a half-century later, Lott toasted his ancient colleague and remarked, “I want to say this about my state. When Strom Thurmond ran for president, we voted for him. We’re proud of it. And if the rest of the country had followed our lead, we wouldn’t have had all these problems over all these years.”

  In the ensuing storm of criticism, Lott gave up his position as majority leader within two weeks, and Scruggs’s dream of becoming an ambassador died.

  South America was no longer an option. But the time had come, Scruggs thought, to leave Pascagoula. For all of his childhood memories and current friends, the place had become too close for comfort for him. His friend George Shaddock, a local lawyer, knew of animosities that Scruggs had stirred, and he had warned him, “Get out of town. You’ve got a target on your back.” A desire for a change of venue, a clean plate, played into Scruggs’s thinking.

  He wanted his son Zach to join his law firm, and he realized that Zach’s wife, Amy, opposed living on the coast. Even though her hometown, Jackson, and Pascagoula occupied the same state, the cities were worlds apart. The Gulf Coast beat to a different rhythm, celebrated a culture that sometimes seemed indifferent to the pressures of ordinary life.

  Oxford represented an obvious compromise. Dick and Diane already owned a condominium on University Avenue, a couple of blocks from the campus, and were often joined there by Zach and Amy. They had been spending more and more weekends in Oxford, attending Ole Miss sporting events. They found that Oxford offered concerts that played nowhere else in Mississippi, and that many of their friends were also moving to the thriving college town in North Mississippi. The Scruggses’ close friends from their Pascagoula days, Marla and Lowry Lomax, planned to build a permanent home in Oxford, and many others had weekend places near the campus. In the years since Dick had attended law school, residential sites in the town had exploded into some of the hottest properties in the Deep South. The prices were driven by hundreds of alumni, nearing retirement age and prosperous beyond any belief they might have dared imagine in college, who wanted to come home to Ole Miss.

  The amazing migration, which began in the 1990s, transformed the town. Though it was still known as William Faulkner’s home, it was no longer Faulkner’s town. The farmers who peddled produce on the square, their country contemporaries who whittled idly on cedar sticks in the front of the courthouse, the Gothic characters who peopled Faulkner’s novels—all were gone, replaced by newcomers who had far more than a dime in their pocket. The feed-and-seed and hardware businesses, the five-and-dimes, the turn-of-the-century pharmacies with soda fountains, had given over their storefronts to trendy shops featuring apparel for students. City Grocery retained its name, but it had been converted into a restaurant offering New Orleans cuisine, a menu so impressive that its owner would win a prestigious James Beard Award. Square Books occupied a corner once held down by Blaylock Drugs, and it had grown into one of the preeminent independent bookstores in the country; its owner, Richard Howorth, was the town’s mayor. A progressive Democrat, Howorth personified Oxford’s unique character in the otherwise conservative hills.

  The public schools were happily integrated, and none of the private “seg academies,” such as those sponsored by fundamentalist churches and flourishing in other locales in the area, had gained a foothold in Oxford. Bars, forbidden by Prohibition laws when Scruggs had enrolled as an undergraduate, were open in many spots around the square, and after the sun went down, the town throbbed with the sound of rock bands and folk singers. There was something very satisfying in sitting on the balconies of the bars on the square and sipping a cocktail in the company of friends from college days.

  Dick and Diane talked over the idea of relocating to Oxford with their daughter, Claire, who would attend Ole Miss. For Zach and Amy, the decision to make the move was an easy one.

  In many ways, Zach was more familiar with present-day Oxford than was his father. Though he had been born in Portsmouth, Virginia, while Scruggs served in the navy, Zach had lived in Oxford as a small boy and, more recently, as an undergraduate and law student. He knew all about life on the square, for he had occupied the same second-floor apartment looking out on the courthouse that football player Eli Manning later rented. Amy liked the idea of returning to Oxford because she, too, had attended Ole Miss.

  Zach spent most of his childhood on the Gulf Coast, moving with his family from their first, crowded quarters in his grandfather’s home to a modest house in a blue-collar neighborhood before stepping up to a nicer area. Even before Dick Scruggs became wealthy, he displayed a tendency to shower others with material possessions. One day Zach came home from school and discovered his bedroom bare. His father had given away his son’s bed, desk, chair, and chest of drawers to a boy from a poor home who had been helping the Scruggses with odd jobs.

  It was not until Zach reached the fifth grade, on a day that Dick Scruggs first drove home in a Mercedes, that the boy suspected he had become a child of privilege. His suspicions were conf
irmed after he overheard his father telling Zach’s grandmother Helen of the financial success that asbestos litigation was bringing him. Zach was thrilled when he heard his father say, “I’m going to be a millionaire.” The next year, the asbestos windfall brought the family their first private plane. Trips to faraway places became a reality for them instead of a distant dream.

  When Zach grew older, he was able to enroll in a private school in nearby Mobile. He graduated from high school there, removed from some of the problems that afflicted the public schools in Pascagoula.

  There was little doubt that Zach would go to Ole Miss, but he followed a slightly different path from that of his father. Instead of pledging SAE, he joined Sigma Nu, the fraternity of his uncle and the campus home for many Pascagoula boys. The Sigma Nus were unabashedly political, regularly running brothers for campus offices. Zach liked that. In his senior year he ran for “Colonel Rebel,” the popularly elected equivalent of “Mr. Ole Miss.” He failed to win, but the loss did nothing to dim his interest in politics.

  Zach had a close relationship with his uncle Trent, and he found Republicans appealing. Lott, whose male aides tended to be Sigma Nus, gave his nephew an unpaid position one summer in Washington, and Zach grew intoxicated with the political air he breathed there. After graduation, he returned to Washington and worked for a year on the staff of a North Mississippi Republican congressman, Roger Wicker, an Ole Miss Sigma Nu, a protégé of Lott’s, and an increasingly important part of the state’s conservative network.

  But Zach’s personal politics began to change in law school, when he became disillusioned over Republican attacks on Attorney General Mike Moore, who was like an uncle to young Scruggs. The GOP’s negativity pushed him closer to his father’s Democratic views.