The Fall of the House of Zeus

by Curtis Wilkie

  Scruggs recognized Tollison’s ploy immediately upon reading the letter. It represented the same kind of threat Scruggs had used during litigation many times himself. With such a tactic Scruggs, drawing on his many contacts with the press, was able to ensure that unfavorable publicity fell upon his adversaries when they refused to come to a settlement.

  Unless he agreed to settle the Jones case, Scruggs knew his own name would be sullied this time. Well aware of Tollison’s growing antipathy toward him, Scruggs simply ignored the letter.

  The next move was Tollison’s. On the morning of March 28, an article by the Associated Press appeared in The Clarion-Ledger, a Jackson newspaper that circulated throughout the state. Under a bold headline, the story began: “A Jackson law firm has sued millionaire trial attorney Richard Scruggs for allegedly withholding money it claims it was owed for working on Hurricane Katrina insurance-related litigation.”

  CHAPTER 12

  On the same day that the Associated Press article on the Jones lawsuit appeared, Steve Patterson and Tim Balducci showed up, unannounced, at the Scruggs Law Firm. The pair had completed their break with Joey Langston and were trying to build a caseload that would sustain their new firm. To show they were serious, they intended to establish an Oxford branch, renting a small office once used by Scruggs on the square. But Patterson and Balducci said they had come to see Scruggs about another matter: a product liability case in Kentucky that involved defective masks for coal miners.

  Through Patterson’s political contacts, their new firm had landed a piece of the legal action with lawyers planning to file suit on behalf of the Commonwealth of Kentucky. Patterson and Balducci believed it would enhance their standing if Scruggs joined them, for his role in the tobacco wars was well known in Kentucky. Scruggs had already made one trip to Kentucky with Patterson to get a feel for the case.

  When Patterson and his partner arrived in the reception area of Scruggs’s firm that Wednesday morning, there seemed nothing unusual about setting up an impromptu meeting. The two men were frequent visitors to the office. They gathered around a long table in a conference room with Scruggs, Zach, and Sid Backstrom, and their talk eventually turned to the issue featured in The Clarion-Ledger that morning.

  The conversation changed forever the lives of those five men.

  After disposing of questions about the Kentucky case, Patterson spoke up: “By the way, I saw where that bullshit lawsuit of Grady Tollison’s got assigned to Henry Lackey. Y’all need to hire Tim. Nobody has a better relationship with Henry Lackey than Tim. He’s like a son to him.” Balducci nodded in agreement.

  Zach liked the idea. Although another Oxford firm was already representing Scruggs, he proposed hiring Balducci as an additional attorney of record in the case.

  Balducci responded that it would not be necessary to retain him formally. “Let me just go and talk to the judge. Let him know I’m on the case. I have to go down there anyway. We’ll see what the judge says.”

  Everyone at the conference table agreed on the plan. Balducci would ask the judge, as a personal favor, to send the case to arbitration. Though no one asked Balducci to offer anything to Judge Lackey, there was an underlying recognition that his mission was unethical. He had been asked to make a request, outside the court, to a judge to issue a favorable ruling for Scruggs. It is a practice known by an archaic term: earwigging. And Balducci knew he risked the loss of his law license by doing it.

  Despite that possibility, Balducci telephoned Judge Lackey and asked if he could drive down to Calhoun City to see him. The older man was fond of the young lawyer, and he agreed to a meeting that afternoon. Lackey seemed to be a sympathetic figure. He had helped Balducci through some rough patches early in his legal career. But he was curious about Balducci’s urgency. He wondered if Balducci’s law practice was struggling, if he might be seeking more public defender cases to augment his income.

  Lackey had the appearance of a fatherly country judge. With his shock of white hair, soft drawl, and courtly manners, he seemed eminently approachable—on any legitimate matter. But there was nothing in his background to indicate that he would be amenable to a bit of judicial chicanery.

  For virtually all of his seventy-two years, Lackey had lived in Calhoun City, which really wasn’t a city at all, but an out-of-the-way town with a population of about eighteen hundred. Only forty miles lay between Oxford and Calhoun City, but the two were worlds apart. The little town’s most distinctive feature is a humble square, which motorists on State Highway 9 must circumnavigate. Lackey was born there, left to attend Mississippi College, then returned to help run his family’s Ben Franklin dime store. Several years later, he enrolled in the Ole Miss law school and received a degree in 1966.

  Like most of the residents of Calhoun City—which was named for the ninetieth-century South Carolina demagogue John C. Calhoun—Lackey was a religious man and a conservative. He described himself as a “deepwater Baptist” and served as a deacon in the local Baptist church. He also followed state politics closely and was one of the early Republican converts in the days when Democrats were held responsible for civil rights legislation and the GOP became a refuge for disaffected white Southern voters.

  After a quiet career as a small-town lawyer, Lackey was appointed circuit judge in 1993 to fill a vacancy by Governor Kirk Fordice. He won subsequent elections without opposition and had served on the bench ever since, presiding over criminal and civil cases. He handled a couple of trials that attracted press attention. One involved a lawsuit against the University of Mississippi brought by a former football coach, Billy “Dog” Brewer. A couple of Lackey’s rulings struck the Ole Miss lawyers as strange. He disallowed evidence submitted by the school to support its decision to fire Brewer for committing NCAA violations. Though Brewer’s dismissal was based on interviews with individuals familiar with the football program, the judge disallowed the material as hearsay. Later, Lackey instructed the jury that a burden of proof rested on the defendant, Ole Miss, rather than the plaintiff. Brewer claimed vindication when he won a $250,000 judgment.

  But publicity and controversy rarely followed Judge Lackey. In short, Henry Lackey hardly fit the profile for a man who might dispense an illicit favor for Dick Scruggs.

  Lackey seemed jolly as he ushered his young friend into his personal office. He called his visitor Tim. Respectfully, Balducci addressed him as Judge. Lackey inquired about Balducci’s twins, and after other pleasantries, he learned that Balducci had left the Langston firm to start a practice in New Albany.

  After a few minutes, Balducci got to the point. “Judge, I want to tell you the main reason why I came down here. While I was practicing with Joey Langston I made some mighty good friends, and I made some mighty good money practicing with them.” The “friends,” he explained, were the members of the Scruggs Katrina Group. And now they were under attack in a lawsuit before Judge Lackey. “Some scurrilous allegations” had been made against them in the case that Grady Tollison had filed, Balducci said, and his friends were being unfairly abused. “I only want them to be treated properly,” he said, and suggested that Judge Lackey could accomplish this by disposing of some of the worst allegations in a summary judgment and sending the remainder of the case to arbitration.

  Balducci acknowledged that he had “an interest in the outcome” of the case, even though he was not officially representing Scruggs. If Lackey would be willing to rule favorably, he said, it would “be an advantage to me,” implying that it would set Balducci in good stead with Scruggs.

  When Balducci mentioned Scruggs’s name, he set off a soundless electric charge in the room. In recent years, few names had been more frequently mentioned in legal circles than Scruggs, and the judge could hardly believe it had come up in this context.

  Dickie Scruggs was the very antithesis of Henry Lackey. Scruggs was known as the primary benefactor of the Democratic Party in the state; Lackey was a staunch Republican. Scruggs exuded wealth and fame; Lackey lived a middle-class ex
istence and served in relative obscurity. Scruggs was cosmopolitan; Lackey was country. Although Scruggs lived only a few miles away, the judge had never met the man. Yet there was something distasteful about him. Lackey considered Scruggs a ruthless man who threw his weight around.

  One example leaped quickly to mind, concerning Lackey’s friend George Dale, the state insurance commissioner. Lackey and Dale had served on the board of trustees of Mississippi College. In the Baptist fashion, Lackey referred to him as “Brother Dale.” At the time, Dale was the target of a campaign by Scruggs to drive the insurance commissioner from office. The judge thought it outrageous. Only three days before, the Scruggs Katrina Group had bought full-page advertisements in Mississippi newspapers to ridicule Dale, who was up for reelection later in the year. The ads had gone beyond the bounds of normal criticism, resorting to an ugly caricature of Dale branded with pink lips and a slogan, “Lipstick on a Pig.”

  And now Scruggs had the temerity to send an emissary, the judge’s own protégé, to fix a case.

  Before he left Lackey’s office, Balducci put out another idea. For their new firm, Patterson and Balducci were hiring older lawyers—some had held public office as judges or prosecutors—to act “of counsel.” Their names would be listed on the firm’s letterhead to give it weight. Balducci told Lackey that when the judge decided to step down from the bench, the firm would be honored to enlist him in that capacity.

  As he sorted out the conversation later, Lackey concluded that the offer of the “of counsel” position represented the quid pro quo necessary to make Balducci’s visit a crime.

  Baffled and offended, the judge felt ill after the meeting. A couple of days later, he happened to see Kent Smith, a lawyer who had once practiced with Balducci. Lackey told Smith about the visit and asked, “What kind of character flaw do you think I have exhibited that would make Tim believe I would do something like this?”

  Lackey felt he needed to talk with others. He called a fellow judge, Andy Howorth, who happened to be one of Johnny Jones’s closest friends. Howorth encouraged Lackey to report the overture to authorities. Lackey also discussed the situation with Lon Stallings, a local assistant district attorney. Stallings said his office did not have the capability to pursue the case properly. Stallings also said there might be a problem in taking it to the next level, the state attorney general’s office, because he understood Attorney General Jim Hood had been threatened with defeat in the 2007 election unless he sided with Scruggs in connection with SKG’s State Farm case.

  Lackey was incensed over the power that Scruggs held over public officials, and he wondered where he might turn. On the morning of April 11, two weeks after his meeting with Balducci, the judge telephoned his old friend John Hailman, a prosecutor in the U.S. Attorney’s Office in Oxford, and told him, “Something’s come up and I really need to see you.”

  Hailman was an interesting character, an honest-to-god Renaissance man who made his home in Oxford years before it became a Renaissance community. He had come south from Indiana to play baseball and basketball at Millsaps College and wound up, after a youthful, circuitous journey, speaking French fluently and acquiring an appreciation of wine so sophisticated that he once wrote on the subject for The Washington Post. He developed these talents almost by accident. As a college student Hailman decided he needed some savoir faire after being rebuffed by a Delta girl, he set off for Paris to study at the Sorbonne. Instead of returning home after his year abroad, he stayed to work as an English-French interpreter for Air France. On trips to London, he began spending spare time watching trials in courtrooms at the legendary Old Bailey, and he grew intrigued by law.

  He graduated from Ole Miss law school in 1969 after working part time for legal services programs that were thought by many Mississippians to be the instruments of left-wing devils. Then he clerked for two years for a federal judge overseeing school desegregation cases in the state before he took a job in Washington with John C. Stennis, the more moderate of Mississippi’s two U.S. senators. When Stennis was shot and wounded by a gang of thieves, Hailman spent days at the old man’s side at Walter Reed Army Hospital in Washington, listening to Stennis rail at the slowness of the federal investigators while he helped the senator prepare for the trial of his alleged assailants. When prosecutors convinced one of the defendants to testify against the other two men charged in the case, a tactic that resulted in guilty pleas for all, Hailman thought for the first time that he might like to be a prosecutor himself. That opportunity arose when he was lured from a faculty position at the Ole Miss law school to join the local U.S. Attorney’s Office in 1974. He signed for a two-year stint. By the time Judge Lackey called him, Hailman had been there thirty-three years. He was chief of a criminal division with twenty lawyers, but planned to retire in a few months.

  Hailman had known Lackey for years. He prosecuted some of Lackey’s clients before Lackey became a judge, but that did not damage their relationship. Both men were easygoing, natural storytellers who enjoyed each other’s company. Once Hailman had taken a small delegation from the justice ministry of Oman, visitors attired in ceremonial robes and turbans, to visit the judge, and Lackey entertained the group with folksy observations about the American judicial system. More recently, Hailman had been notified by security personnel about a curious package Lackey had left for him. Upon inspection, Hailman found that it was a fruit jar filled with homemade blackberry wine. The bottle bore a phony label of “Appelation Controlee,” with the claim that the contents had been pressed by virgins and bottled by Baptists.

  When Lackey came to Hailman’s office at lunchtime, the two men talked of wine and legal affairs for nearly twenty minutes until Lackey, visibly agitated, changed the subject.

  “John, I hardly know how to begin, but there’s something really serious that’s bothering me. I’ll tell you right out: a lawyer I’ve been like a father to came to me and offered me a bribe.”

  Lackey described his relationship with Balducci, then gave his account of the meeting with him.

  “John, I wanted to do two things—to throw up and to take a shower. Normally I’d lose my temper, but I was so shocked I didn’t do anything. Tim talked on and on. Finally, I had to say something, so I told Tim: ‘The case is new. I need to read the pleadings.’ ”

  Lackey asked if the conversation with Balducci merited attention as judicial bribery.

  Just as Lackey had been struck by the potential enormity of the case when Scruggs’s name was mentioned, Hailman immediately realized the gravity of what Lackey was telling him.

  Hailman assured Lackey that he had done the right thing to report the meeting.

  As soon as Lackey left the building, Hailman walked down the hall to the office of the man who would soon take his place as head prosecutor, Tom Dawson. Hailman closed the door behind him and said, “You’re not going to believe what I just heard.”

  Dawson proved to be receptive to allegations against Scruggs. When Scruggs had moved to town a few years earlier, Dawson and Hailman had figuratively rolled their eyes. They knew of Scruggs for his exploits as a plaintiff’s attorney, and they felt that he and some of his associates had been skating on the edge of illegal activity with judges and juries. Unsure of exactly what they had on their hands, the two prosecutors set up another meeting with Lackey. If there was to be a case, there had to be evidence.

  “Henry,” Hailman instructed the judge, “it’s important to remember things that happened. Balducci may claim you misinterpreted what he said. Write down now everything you remember each of you saying. And don’t go to another meeting or take another call without a tape recorder.”

  He asked the judge if he was willing to wear a wire.

  Lackey sighed. “Absolutely,” he said, adding, “I knew you’d ask that. I feel horrible.” He expressed the hope that Balducci might back off.

  Hailman persisted. “Play this out,” he told Lackey. “You can’t let it drop.” He instructed the judge about the rules regarding entrapment
, how it was permissible to lay down bait but improper to entice someone to seize it. “Don’t get cute. Don’t question too much and scare them off,” Hailman warned. “Just let him do what he’s going to do.”

  The prospect of dealing with a case that might implicate Scruggs stimulated all kinds of sensitivities in the U.S. Attorney’s Office in Oxford. First of all, it raised concerns about Scruggs’s brother-in-law, one of the most influential Mississippians in Washington. Though Trent Lott’s relations with the Bush administration had been strained in the years since the White House had greased his slide from power in the Senate, he still had plenty of Republican markers to play. There had been suggestions that federal prosecutors in the Southern District of Mississippi had failed to indict Scruggs in the Paul Minor case because of the inhibiting presence of Lott in the background.

  At the top level, the office of U.S. attorney is inherently political, chosen by the president, and acting at the behest of political allies in each state. Jim Greenlee, head of the Oxford office, had been nominated for the job by Republican senator Thad Cochran. Though Cochran and Lott were not close, they generally worked together to find mutually acceptable candidates when vacancies occurred for federal judgeships and U.S. attorneys in the state. Thus, Greenlee had been dependent upon Lott’s approval when he was selected. It was not well known, but Greenlee was part of the extensive political network that could be traced back to Lott’s Sigma Nu house at Ole Miss. Those outside the Sigma Nu sphere laughed at Lott’s allegiance to his college club; it seemed sophomoric for a senator. But it was a very real factor in Lott’s decision making, and Greenlee’s background on fraternity row at Ole Miss had been helpful.

  As soon as Hailman and Dawson took the news of Lackey’s visit to Greenlee, the case was plunged into a thicket of bureaucratic infighting and personal antagonisms that divided the offices of the U.S. attorney and the FBI in Oxford.