12:15am

Wed December 22, 2010
American Lives

An Attorney's Fall: From Billionaire To Inmate

Originally published on Mon October 22, 2012 10:30 am

Trial lawyer Dickie Scruggs made millions from lawsuits targeting the asbestos and tobacco industries. He was part of a network of powerful businessmen and politicians spanning from Oxford, Miss., to Washington, D.C., who traded favors, influence and money.

How that system worked — and how Scruggs wound up in prison for attempted bribery — is the subject of The Fall of the House of Zeus, a book by journalist Curtis Wilkie, who became friends with Scruggs in college.

"The trial lawyers are considered in some circles as champions of the people who have been screwed over by big corporations," Wilkie tells NPR's Steve Inskeep.

In Scruggs' case, he made a business out of challenging big business. He made a fortune in winning settlements from the tobacco industry — his fees were estimated at $1.6 billion. The money fed an appetite for both power and luxury.

"He was something of a playboy," Wilkie says of Scruggs. "He had several yachts, fully crewed, in locations around the world. He had two jet airplanes — his own hangar — here in Oxford, with two crews to fly him, or his friends."

Scruggs had ties to Mississippi's leading Democrats and Republicans. His brother-in-law is former Sen. Trent Lott, who was then at the head of a powerful political and business network in the state.

At an early point in Scruggs' career, the group helped him out of a jam. And, Wilkie says, it changed his life.

"He told me that he considered it 'the dark side of the Force.' "

Asked what that might mean, Wilkie says, "If you wanted things accomplished in Mississippi, he had to do business with them. And he did."

But Scruggs was making enemies all along the way, Wilkie says, even among his lawyer colleagues. Several lawsuits were filed against him, which lingered on for years.

"Eventually, the criminal case that brought him down involved an attempt to win a favorable decision in one of these lawsuits," he says

And that's where things get a bit murky. But Wilkie says that essentially, an attorney who hoped to impress Scruggs told him he had influence with the judge who was presiding over a case against Scruggs.

But the improper overtures from the lawyer, Tim Balducci, only angered the judge — who was already not a fan of Scruggs, Wilkie says.

The judge reported the incident, and six months of wiretaps ensued. Eventually, FBI agents and a federal prosecutor told the judge to ask for money — $40,000. Balducci paid him, and then sought reimbursement from Scruggs. When Scruggs agreed, he was implicated in bribery.

Right now, Scruggs is serving a sentence in an Ashland, Ky., prison. But he has held on to his money — and continues to make more. As Wilkie says, Scruggs' tobacco settlement fee arrangements will continue to pay him $20 million a year until the year 2025.

Asked if anything has changed in the way Mississippi works, Wilkie says, "I don't think so. It's still pretty much business as usual."

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

LINDA WERTHEIMER, host:

We've been exploring more American lives this week. In our latest round of conversations, we're focusing on people who mix business and politics.

STEVE INSKEEP, host:

We've met a merchant who financed the American Revolution and a funeral home owner who posted bail for Martin Luther King. Both men faced very American conflicts between idealism and pragmatism.

WERTHEIMER: That was true in a different way for a man who made a business out of challenging big business. He is the Mississippi trial lawyer, Dickie Scruggs.

Mr. CURTIS WILKIE (Author, "The Fall of the House of Zeus"): The trial lawyers are considered in some circles as champions of the people who have been screwed over by big corporations. And they certainly have their detractors, but he had many people that he felt he represented.

INSKEEP: Curtis Wilkie wrote about Dickie Scruggs. It's called "The Fall of the House of Zeus," and as the title suggests, the story does not end well. Scruggs had ties to leading Democrats and Republicans. His firm won huge settlements against asbestos manufacturers and tobacco companies, and along the way the Mississippi lawyer made a lot of money.

Mr. WILKIE: He was something of a playboy himself. He had several yachts fully crewed in locations around the world. He had two jet airplanes, his own hangar here in Oxford with two crews to fly him or his friends. So a lot of obvious signs of his own personal wealth too.

INSKEEP: You said fully crewed yachts, meaning he could show up in some port...

Mr. WILKIE: Exactly. The South Pacific, he had, I believe, about 140-foot yacht there for the America's Cup. He had another yacht in the Bahamas, where he has(ph) a vacation home, and he had another yacht in the Mississippi Gulf Coast, where he lived for many years.

INSKEEP: And if you've got a yacht, you need a full-time crew just to make sure things...

Mr. WILKIE: Better to have two or three.

(Soundbite of laughter)

INSKEEP: What made him choose the law?

Mr. WILKIE: I'm not sure exactly. There are so many bright people in Mississippi who tend to go into the law, and sometimes we think why don't they become entrepreneurs and bring more wealth to our poor state. But he's like so many people of his generation. They chose law.

INSKEEP: Seems to have been part of a network of lawyers, politicians, lawyers who were politicians, politicians who were lawyers, and a lot of people who just knew each other awfully well.

Mr. WILKIE: He really got into that in part through the help of his brother-in-law, Trent Lott.

INSKEEP: Trent Lott, who was for a long time the Republican senator, a Republican senator from Mississippi, was even the Republican leader in the Senate.

Mr. WILKIE: That's correct. He was Senate Majority Leader for a while and a very powerful political leader. But Dick at some point in his career, about nearly 20 years ago, got in one jam and was extricated from it. These political interests that were part of what we know in Mississippi as the old Eastland Organization - referring to old Senator Jim Eastland, a famous segregationist senator, who basically controlled politics in this state for years and years. And after Eastland passed from the scene, it was effectively taken over by Senator Lott.

And this is an organization, has its nefarious characteristics, controlled patronage, scratch each other's backs, fix cases, punish their enemies with prosecution, that sort of thing. And Dick fell into that. He called it. He told me that he considered it the dark side of the Force.

INSKEEP: What did he mean by that?

Mr. WILKIE: If you wanted things accomplished in Mississippi, you had to do business with them, and he did.

INSKEEP: As this lawyer, who was your friend for many years, got more and more involved in the very closely connected political world of Mississippi, at the same time he's making more and more money, becoming more and more famous, it sounds like he felt a little uneasy if he was...

Mr. WILKIE: He - at the same time he's making more and more enemies. And some of these enemies are fairly powerful people who did not like trial lawyers in principle, didn't like Dick Scruggs personally, didn't like his style, and I think they were delighted to see him take his fall. And in some cases, you know, they aided and abetted his fall.

INSKEEP: Seemed to be a lot of people who thought he was cutting corners -former partners who felt that he took some of their share of the money, that sort of that thing.

Mr. WILKIE: Oh, absolutely. He was the subject of several lawsuits, and that was the genesis for his - the criminal proceedings against him, is that he had short-changed several of his associates and they sued him. And some of these suits went on and on for years and years. And eventually the criminal case that brought him down involved an attempt to win a favorable decision in one of these lawsuits.

INSKEEP: What did he and his friends do to try to make that lawsuit go the right way?

Mr. WILKIE: Well, this is where it gets very murky. There was another lawyer who's not associated with Dick's firm who was desperate to get Scruggs's support and help, and he said I'll go see this judge because he's a dear friend of mine. He's like a father to me and I'll see if I can't get a favorable ruling. And this man's name is Tim Balducci, went to see the judge and made an improper overture that Scruggs knew about. It was improper, certainly unethical, but it's questionable whether it was criminal.

The judge was incensed. The judge didn't like Scruggs anyway. He reported it to the federal authorities who didn't like Scruggs either, and they set in motion a series of situations to rope Scruggs to bring him in.

INSKEEP: Oh, the sting operation. That's what...

Mr. WILKIE: More or less, yeah. And all these conversations are being tapped by the FBI. I got all of the recordings. It went on for six months. There was never any offer of money to the judge until the judge, at the direction of the FBI and the federal prosecutors, asked for $40,000. And at this point the other lawyer agreed to pay it and then went to Scruggs to get reimbursed. And Scruggs, once he agreed to reimburse, he becomes enmeshed in a criminal case.

INSKEEP: Where is he now?

Mr. WILKIE: He is federal prison in Ashland, Kentucky.

INSKEEP: Does he still have his money?

Mr. WILKIE: Yes. He continues to get $20 million a year until the year 2025 through the various tobacco settlements.

INSKEEP: Twenty million dollars a year?

Mr. WILKIE: Right. He was said to have earned out of the tobacco settlement alone $1.6 billion. He wound up keeping about $500 million.

INSKEEP: Has anything changed in Mississippi or Mississippi politics as a result of this case?

Mr. WILKIE: I don't think so. It's still pretty much business as usual.

INSKEEP: Curtis Wilkie is the author of "The Fall of the House of Zeus: The Rise and Ruin of America's Most Powerful Trial Lawyer." Thanks very much.

Mr. WILKIE: Thank you.

(Soundbite of music)

INSKEEP: Curtis Wilkie's book, "The Fall of the House of Zeus," traces the life of trial lawyer Dickie Scruggs. We also heard this week about Robert Morris, who financed the American Revolution, and A.G. Gaston, a businessman who bailed out Martin Luther King. You can find a year's worth of interviews in our series American Lives, at NPR.org. Transcript provided by NPR, Copyright National Public Radio.

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