Judge Joseph Bamberger rubber-stamped a Kentucky fen-phen settlement agreement where plaintiffs’ attorneys cheated class members out of tens of millions of dollars. In the process, his former law partner was paid millions by the settlement, which he used to buy a Florida house with Bamberger, and Bamberger himself received a $5000/month sinecure. At trial of the three lead attorneys yesterday, jurors were shown a videotape where one of the plaintiffs questioned the judge on how low her settlement was and the validity of her release; the videotape shows Bamberger browbeating the plaintiff, but then awarding her an additional $100,000 and a $1200/month life annuity on the condition that she cease talking about the settlement and her objections to it. (Jim Hannah, “Judge dressed down victim”, Cincinnati Enquirer, May 24) (h/t R.U.). For some reason yet undisclosed by prosecutors, Bamberger is on the witness stand rather than in the dock with Gallion, Mills, and Cunningham.
Posts Tagged ‘scandals’
Kentucky fen-phen trial opens
We’ve extensively covered the scandal over charges that attorneys William Gallion, Shirley Allen Cunningham Jr. and Melbourne Mills Jr. siphoned off $65 million or so in settlement money due claimants in the diet drug litigation, using the proceeds to buy, among other things, the Preakness-winning race horse Curlin. Ted notes the latest developments over at Point of Law, as does Carter Wood. (Wolfson/Courier-Journal, WSJ law blog).
More from WSJ law blog: Mills’ lawyer tells jury his client “was hospitalized for an ‘alcoholic seizure’ a month after the case was settled, didn’t take part in any court hearings and was too drunk at the time to be responsible,” while prosecutor says “that Mills ‘sat back and laughed’ when the other two described a plan to overcharge the clients.”
Blogging the Geoffrey Fieger trial
Disbarment possible for Harpreet Brar
The mills of California lawyer discipline grind exceeding slow: five years after the scandal over Brar’s mass-mailing of extortionate demands to small businesses under the state’s unfair business practices act, and after Brar’s jailing for federal tax evasion as well as well as contempt of court for pursuing legal harassment, a state bar judge has recommended that he lose his license to practice. (In the matter of Harpreet Singh Brar, PDF, via CJAC). Earlier here, here, here, here, etc.
Disbar Dickie Scruggs?
Not so fast, he says — the Mississippi Bar didn’t file a “certified copy” of his guilty plea. (Patsy R. Brumfield, “Dickie Scruggs files to dismiss attempt to have him disbarred”, Northeast Mississippi Daily Journal, Apr. 1).
David Rossmiller has ten unanswered questions about loose ends in the Scruggs scandal (Mar. 24) which elicit responses in turn (and more unanswered questions) from NMC and Lotus at Folo (plus an NMC update). These latter bloggers, by the way, have shed their anonymity and stand revealed as Oxford, Miss. lawyer Tom Freeland (NMC) and retired lawyer Jan Goodrich, now of New Smyrna Beach, Fla. (Lotus), now also joined by Jane Tucker.
Is it okay for the University of Mississippi (Ole Miss) to take Scruggs’s money? “It depends on what the felony is…” Chancellor Robert Khayat is quoted as saying (Folo/NMC, Apr. 1; more). Gulfport M.D. Bill Hemeter, in a letter to the editor printed in the Biloxi Sun-Herald (Mar. 19), is claiming prescience: “I sent Chancellor Khayat the book ‘The Rule of Lawyers’ by Walter Olson several years ago, with a warning not to take money from plaintiff attorneys.” Earlier, when Scruggs pled guilty, another university official was heard from:
“My initial reaction is one of sadness,” said Samuel Davis, dean of the University of Mississippi Law School, Scruggs’ alma mater. “I’ve known and been friends with Dick and Diane Scruggs almost 50 years now going back to our days in Pascagoula, and I feel a great sense of compassion for him and his family. And that’s just a very personal reaction. I haven’t really thought about the implications for the legal community or the legal profession.”
Davis, who also directs the Ole Miss Law Center, said not everybody who pleads guilty is guilty and that Scruggs might have had other reasons for the move. If that were the case, Davis said, the reasons likely were good ones.
(emphasis added by an understandably astonished Lotus @ Folo; many, many comments follow).
And from Sid Salter of the Jackson Clarion-Ledger (Mar. 19): “In spite of their insistence that there were no ethical lapses in their behavior on the tobacco suit, [former attorney general Michael] Moore and Scruggs still owe the taxpayers of Mississippi an accounting of the lawyers’ fees and expenses that accrued from that litigation.”
Quoted in today’s Times
I’m quoted on the Melvyn Weiss guilty plea, and on the way certain crooks have successfully been passing themselves off as white knights in press coverage of shareholder and consumer litigation. (Jonathan D. Glater, “High-Profile Trial Lawyer Agrees to Guilty Plea”, New York Times, Mar. 21). For more on Weiss’s plea, see yesterday’s post.
More Weiss reactions include a NY Sun editorial:
Mr. Weiss and his partners made their careers, and their fortunes, casting those they were suing — insurance and tobacco executives, Swiss bankers — as crooks. Some of them may have been, though many were not. Now these lawyers are admitting to the court that they are crooks, too. … Congress has already acted to reform the class-action system from the “first-to-file” system that engendered the Milberg Weiss abuses. But until Congress and the state legislatures act further to reform the civil litigation system, the costs of Weiss’s career will be borne by all of us.
Interviewed by the L.A. Times, Columbia lawprof Jack Coffee (who’s done a lot of work for Milberg, right?) thinks Mel Weiss got a “uniquely good deal” in the plea. Similarly: Greenfield.
Spitzer endnotes
- Well, at least he cleaned up Wall Street; so runs one common valedictory to Spitzer, but Prof. Bainbridge begs to differ (Mar. 13)(and see links at my Point of Law roundup last week).
- “Should Spitzer really go to jail because of the way he took his own cash out of the bank?” asks Larry Ribstein (Mar. 11). And indeed bank “Know Your Customer” regulations, of which I’ve been critical for a good long time, might now come in for much needed scrutiny (Jack Balkin, Balkinization, Mar. 13; see also). One public figure who likewise faced the prospect of a “money laundering” indictment when personal weaknesses led him into surreptitious payments was ideological antipode Rush Limbaugh, Megan McArdle reminds us (Nov. 24, 2003).
- Last week’s New York Times article laying out Spitzer’s big crusade against the sex trade, and his successful push for a law lengthening sentences for “johns”, was powerful enough on its own terms. But isn’t it curious that the Times exclusively and at length quoted the feminist and legal-services groups who worked as Spitzer’s allies in that crusade, while not quoting a single source critical of the harsher penalties? Stephen Chapman has one corrective view [syndicated/Chicago Tribune, Mar. 13].
- Toronto law blogger Garry Wise says that unless Spitzer was diverting public moneys his fall constitutes “just another political lynching by the Monica brigade”, a sentiment I find sufficiently wrong-headed that I’m provoked to jump in with a comment [Wise Law Blog]. P.S. Wise says he was referring not to the governor’s downfall, but to his potential overcharging.
- How’d the press find out that “Client #9” was the governor of New York? All signs point to a prosecution leak — the sort of underhanded tactic that should be left to the likes of, well, the departing governor himself [Frum, National Post]. Plus: Don’t assume that all the ill-advised leaks came from the prosecution side [Beldar]
- Should “Kristen” sue AP and other press outlets for swiping her MySpace pics, she might prove formidable in court: “It’s not often you get a case where there’s someone in the room with a higher hourly rate than the lawyers.” [Steyn @ NRO “Corner”].
- One reader said he had to check Overlawyered to see whether a certain story was true or a parody, so please rest assured: it’s only a parody (Jason Roth, “Spitzer Sues Prostitute Over Sex Addiction”, Save the Humans, Mar. 11).
Scruggs in guilty plea
The WSJ and Mississippi’s WLOX have the news up on Dickie Scruggs’ plea of guilty to conspiracy in the attempted bribe of Judge Henry Lackey. Earlier today, the Journal had an illuminating page-one feature on Dickie Scruggs’s history of fee disputes with other lawyers. YallPolitics‘ server seems to be down at the moment from traffic, but is back up now; in an email alert, YP’s Alan Lange said the surprise plea came three days before the deadline for Scruggs to plead before his approaching trial. Our past coverage is here, or check our Scandals page.
Update 12:18 EST: AP coverage is here (via Rossmiller). Sid Backstrom also pleaded and, per Folo rapid updates, is cooperating with prosecutors. No deal for Zach Scruggs yet. Also per Folo, Scruggs pleaded to conspiracy in the Lackey bribe attempt but did not resolve possible charges in the DeLaughter case, per the government side.
12:44: Now Folo’s server has crashed. Temporary replacement site up here.
1:16: Per Patsy Brumfield at the NEMDJ:
…The government recommended a sentence of five years in prison for Scruggs and 2 1/2 years for Backstrom. They also will pay a maximum fine of $250,000 each and a court fee. …
Before Biggers accepted their pleas, Scruggs and Backstrom admitted in open court that they had done what the government said they had done in Count One – they had conspired to bribe Circuit Judge Henry Lackey of Calhoun City for a favorable order in a Katrina-related legal fees case….
Dickie Scruggs, arguably the most famous plaintiffs’ attorney in the U.S., looked pale and thin but carried himself with a bit more control than his younger colleague at The Scruggs Law Firm, headquartered on the storied Square in Oxford.
The 61-year-old Ole Miss Law School grad and legal giant-killer, as well as Backstrom, likely will voluntarily surrender their law licenses, as has co-defendant Timothy Balducci of New Albany, who pleaded guilty in December although he was wired and cooperating with the government at least a month earlier.
“Do you fully understand what is happening here today,” Biggers asked him.
“Yes, I do,” Scruggs responded.
Questioned about whether he had discussed his decision to plead guilty with his attorney, Scruggs responded, “With my attorney, my wife and my family.”
1:25 p.m.: Rossmiller has an update from a correspondent at the scene. And Folo is up at a temporary site until its server gets back online. Excerpts from Folo’s on-the-scene report:
…* Richard Scruggs is pleading to conspiracy to bribe a state court judge, count 1 of the indictment, with other counts to be dismissed. This was an open plea, that is, no recommended sentence.
* The government expects that he will get the full five year sentence on that count. …
* There was no mention of cooperation by Scruggs. …
* There was an interesting and unusual disagreement with the government’s statement of facts in the plea colloquy. The government stated in its facts for both Backstrom and Scruggs that a conspiracy began in March to corruptly influence the state court judge, and Scruggs spoke to say that he had agreed to earwig the judge but not corruptly influence him in March, and that he later agreed to join a conspiracy to corruptly influence the judge. Sid Backstrom took a similar stance….
[See also WSJ law blog and later NMC post, as well as WikiScruggs on “earwigging” as a Mississippi tradition.]
1:56: Welcome Glenn Reynolds/Instapundit and David Rossmiller/Insurance Coverage Blog readers.
3:18: The Jackson Clarion-Ledger reports: “As part of the plea deal, federal prosecutors agreed to defer prosecution of Scruggs’ son, Zach Scruggs, who agreed to give up his license to practice law.” [N.B.: NMC @ Folo has a very different take, and other sites are also questioning the C-L’s reporting on this point.] Folo at its temporary bivouac has PDFs of the Scruggs and Backstrom pleas and underlying facts, as does David Rossmiller. ABA Journal coverage includes the text of a forthcoming article by Terry Carter on the affair, written pre-plea. Other reactions: Above the Law (“has Scruggs employed bribery as a tactic in other matters — e.g., the tobacco cases that made him famous …?”), Beck and Herrmann (“What a week. First Spitzer, and now Scruggs. What goes around, comes around.”), TalkLeft, Michelle Malkin, NAM Shop Floor (“So what are the odds that this was Dickie Scruggs’ first and only crime during his decades-long career as a trial lawyer?”).
6:27: Roger Parloff wonders whether Scruggs will cooperate, and whether the statute of limitations might have run already on tobacco skullduggery. NMC @ Folo wonders what prosecutors will make of a slew of fresh documents from the Scruggs Law Firm, or whether perhaps such documents have already had an effect. Not so surprising a plea, says Jane Genova at Law and More, but rather “widely expected“.
Whited sepulchre watch
Client #9, also known as Eliot Spitzer, enthusiastically enlisted in a crusade for tougher anti-prostitution laws and specifically for steps to raise the penalties for “johns” who patronized the women involved. The campaign bore fruit, and in his first months as Governor Spitzer signed into law what advocates call “the toughest and most comprehensive anti-sex-trade law in the nation”. Among other provisions, the law “lays the groundwork for a more aggressive crackdown on demand, by increasing the penalty for patronizing a prostitute, a misdemeanor, to up to a year in jail, from a maximum of three months.” (Nina Bernstein, “Foes of Sex Trade Are Stung by the Fall of an Ally”, New York Times, Mar. 12).
Eliot Smurfer
The Money Laundering Control Act of 1986 was meant to criminalize the practice of “smurfing”, or evading reporting requirements on the transfer of large sums of cash by breaking the sums down into transactions below the threshold. (“Smurfs” were low-level operatives who agreed to go into banks repeatedly making deposits slightly below the trigger amount.) Who’d’ve imagined the law would trip up the best-known white collar crime prosecutor of our era? Newsday has the story, which has a Long Island angle:
Spitzer last year had wanted to wire transfer more than $10,000 from his branch to what turned out to be the front for the prostitution ring, QAT Consulting Group, which also uses a number of other names, in New Jersey, the sources said.
But Spitzer had the money broken down into several smaller amounts of less than $10,000 each, apparently to avoid federal regulations requiring the reporting of the transfer of $10,000 or more, the sources said. …
Apparently, having second thoughts about even sending the total amount in this manner, Spitzer then asked that the bank take his name off the wires, the sources said.
Bank officials declined, however, saying that it was improper to do so and in any event, it was too late to do so, because the money already had been sent, the sources said.
The bank, as is required by law, filed an SAR, or Suspicious Activity Report, with the Internal Revenue Service….
Millions of SARs are generated each week and flow into the Internal Revenue Service nationwide, but an analyst at the regional IRS office in Hauppauge [L.I.] noted Spitzer’s particular SAR and singled it out for attention to criminal investigators, the sources said.
The assumption, the sources said, was that Spitzer was being victimized either by a blackmailer or an impostor. The agents also speculated that perhaps the governor was involved in some sort of political corruption, the sources said.
Beldar (writing a day or two ago; note his update and caveats in an excellent post today):
If there were no other organized crime connections, that’s the kind of crime that might well result in a no-prison time recommendation and sentencing calculation for a first offender pleading guilty and cooperating.
AP also covers the smurfing charges, while Scott Greenfield has thoughts on the gradual erosion of financial privacy; I opined on some related matters in Reason a while back. WSJ law blog and Andrew McCarthy @ NRO discuss other charges that prosecutors might conceivably deploy against the governor. McCarthy, incidentally, contends that “innocent people in legitimate cash businesses have no concern” from the reporting requirements, which is not what I’ve heard.
More details from Wednesday’s NYT: It appears bank Suspicious Activities Reports separately directed investigators’ interest to Spitzer’s transactions and to the escort service front, QAT Consulting, and then the two investigations converged. “When he was New York State’s attorney general, Mr. Spitzer himself used the reports [SARs] to make his cases.”
Earlier here.