On InsureReinsure.com, we strive to provide information about issues involving the insurance and reinsurance world and we rarely deal with criminal proceedings but there are instances, however, when alleged criminal activities become relevant to our industry.
We have blogged regularly about Richard (“Dickie”) Scruggs and the Scruggs Katrina Group, a group of attorneys representing thousands of policyholders in Katrina-related coverage disputes with their insurance companies. (Click here to read one prior Blog post about possible criminal contempt charges against Scruggs.) Yesterday, Dickie Scruggs and several of his colleagues (including his son) were indicted by a grand jury in North Mississippi for conspiring to bribe a state court judge.
According to the indictment, which you can read here, Scruggs offered $40,000 to Judge Henry L. Lackey in the hopes that Judge Lackey would resolve a lawsuit in Scruggs’ favor. The issue being decided by Judge Lackey was a dispute involving the award of $26.5 million in attorneys’ fees for work performed in representing policyholders in Katrina-related coverage disputes.
According to the indictment, Timothy Balducci, an attorney hired by Scruggs, had several discussions with Judge Lackey regarding Scruggs and on September 21, 2007, Balducci agreed to pay Lackey $40,000 cash on behalf of Scruggs and the Scruggs Law Firm for an order favorable to Scruggs and the law firm. On September 27, 2007, Balducci allegedly delivered $20,000 in cash to Judge Lackey and on November 1, he delivered another $10,000 in cash. The indictment also accuses Scruggs and his colleagues of falsely creating documents in an attempt to conceal the bribe.
Judge Lackey contacted federal authorities when he was originally approached about the bribe and, according to media reports, there are tape recordings of at least some of the discussions between Balducci and Judge Lackey.
We will continue to monitor Katrina-related insurance developments, and the interesting criminal developments arising from the insurance developments, and provide updates at InsureReinsure.com.