Special prosecutors appointed by federal judge William Acker on Friday revealed more details of their case for criminal contempt of court against prominent Mississippi attorney Dickie Scruggs, and recommended he be arraigned and tried as soon as possible. They opened up with both barrels on Scruggs, and they aren’t too pleased with Scruggs’ supporting cast either, including the "whistleblower" Rigsby sisters and Mississippi AG Jim Hood. Click here to read the prosecutors’ brief.
This prosecution of Scruggs, you may remember, has its origins in the civil lawsuit by State Farm contractor E.A. Renfroe against the "whistleblower" Rigsby sisters, Cori and Kerri. They were employed as claims adjusters by Renfroe, and while processing State Farm Katrina claims, took thousands of pages of documents and fed them to Scruggs to assist him in his various legal actions against State Farm. They also gave copies to the FBI and to Hood, who at the time had convened a grand jury to investigate possible criminal activity by insurers in Katrina claims handling.
The suit was brought in the U.S. district court for northern Alabama and wound up before Acker. Last December, he issued an injunction requiring the Rigsby sisters to return their copies of the documents to Renfroe’s attorneys, who, under terms of a protective order Acker imposed, were not to reveal the documents to their client or to State Farm. But, prosecutors allege, Scruggs believed the Renfroe lawyers themselves wouldn’t honor the protective order and he didn’t like the injunction anyway, so he worked with his old friend Jim Hood to get around it. Scruggs believed sending his copies of the documents to Hood was something he could justify doing under the injunction’s exception for discussing the documents with law enforcement — however, it must be remembered Hood did not need these documents because he already had copies from the Rigsby sisters.
Scruggs did in fact send them to Hood, and then apparently sought to get copies of the very documents he had just sent to Hood. Consider another facet of what was going on: Kerri Rigsby said she was unable to return the documents to Renfroe because she didn’t have them, Scruggs did. When she called Scruggs to tell him to send them to Renfroe, he said he didn’t have them either, he had sent them to Hood. Scruggs also has claimed that he was not a party to the Renfroe lawsuit, and so the injunction didn’t apply to him, although he continued an attorney-client relationship with the Rigsby sisters and therefore continued to be their agent with respect to the documents. Perhaps this seemed clever or a masterfully adroit use of the legal system at the time, but in retrospect it looks like just the kind of thing that is likely to get a federal judge mad enough to mount up and come gunning for you. For further discussion of this background, see this post I wrote a few months ago, or go my blog’s search bar and type in "Acker."
Why would Scruggs risk violating the injunction? Here’s how the prosecutors see it, as explained in their brief:
The evidence will prove that Scruggs believed the documents were of value to him, that Scruggs thought Judge Acker wrong to issue the injunction, and that Scruggs did not trust Renfroe’s attorneys to obey the protective order because he had "no doubt" they would not keep the documents secret to themselves as required by Judge Acker. The evidence will prove Scruggs believed compliance with the injunction would be contrary to his economic interests. The evidence will prove that, in substituting his own judgment for that of Judge Acker’s, Scruggs deliberately set out to defy the injunction. The evidence will prove that his plan was to pretend to misinterpret the injunction so as to permit him to ship the documents to a friendly third party. The evidence will prove that Scruggs’ interpretation and actions were a sham to frustrate the Order and further his interests.
The prosecutors say Scruggs and the Rigsby sisters improperly used the documents, in violation of the injunction, in a qui tam whistleblower suit they filed against State Farm, Allstate, USAA and others seeking large attorney fees and damages for supposed violations of the federal False Claims Act relating to Katrina claims. Acker has previously stated his belief that Scruggs wanted to keep the documents out of the hands of State Farm so it would not know what the documents said, while Scruggs continued negotiating with the insurer for large settlements. This strategy would make sense only if the contents of the documents were not particularly harmful, that is, if Scruggs were bluffing, trying to intimidate State Farm into believing they would be truly damaging when they were not.
The brief often treads lightly around Hood, frequently referring to him in vague terms like in the paragraph quoted above, but says the prosecutors intend to introduce evidence at trial of the "remarkably close relationship" between Hood and Scruggs, including Scruggs’ campaign contributions to Hood, and Hood’s efforts to help obtain a settlement involving State Farm that would have netted Scruggs millions in fees. The brief also notes the now much-mocked letter from Hood to Alice Martin, the U.S. Attorney for Northern Alabama who declined to prosecute Scruggs before Acker appointed the special prosecutors. This letter requests that Martin not file charges against Scruggs because he is valuable to Hood as a "confidential informant." Click here for a post I wrote about this letter and to see a copy of it — I think I was the first to publicly reveal it.
The prosecutors’ brief also shows a troubling link between Hood and what could be interpreted as a strategy to play keep-away with the documents — it discusses a position articulated by one of Hood’s assistants at a hearing on the injunction that turning the documents over to Renfroe would endanger Hood’s grand jury secrecy. The Rigsbies then used this argument as a justification for not turning over the documents, after they had failed to assert this as a defense before the injunction became final. The brief does everything but call this a bad faith position on the part of both the Rigsbies and the AG’s office. One thing in Hood’s favor, however. It appears that the prosecutors have evidence Hood advised Scruggs to seek a clarification from Acker of the injunction’s scope and interpretation before proceeding — Scruggs, however, did not do so. The fact that Acker brought charges against Scruggs tells you what his response would have been.
The docket in this case reveals Scruggs has asked the court for permission to file a surreply to this reply. I’ll keep you updated on what happens as this case progresses.