The Fall of the House of Zeus
By Curtis Wilkie
Hardcover, 400 pages
List price: $25.99
In the summer of 1992, a time when fortune first began to bless him with riches, Dick Scruggs received a disturbing call from his close friend Mike Moore, the attorney general of Mississippi. Moore reported that he had learned of a plot against the two of them by members of a political network that had been dealing influence throughout the state for decades.
The powerbrokers were said to be indignant over a lucrative arrangement between Scruggs and Moore that enabled Scruggs, a private lawyer in the Gulf Coast city of Pascagoula, to collect $6 million in contingency fees while representing the state as a "special assistant attorney general" in legal actions against the asbestos industry.
Scruggs and Moore, regarded by the old guard as upstarts, had succeeded after a similar plan by members of the network had failed a few years earlier because of a shortfall in state revenue. Among the members of the cabal, Moore told Scruggs, were State Auditor Steve Patterson and Ed Peters, the Hinds County district attorney with jurisdiction in Jackson, the state capital. These men and their allies not only were disgruntled over Moore's contract with Scruggs; they had determined it was illegal and planned to indict Scruggs—a move that would also serve to short-circuit Moore's climb to political prominence.
Despite his emergence as a leader in asbestos litigation and his alliance with the attorney general, Scruggs was still naïve in the practice of backroom politics in Mississippi. When he heard that he was likely to be indicted, fear ran through him like a fever. His head throbbed at the outrageousness of the accusation, and despair gnawed at his gut. He found himself frightened and unsure where to turn.
Scruggs knew that he faced formidable forces representing an amalgamation of old Democrats and new Republicans, the survivors and descendants of a mighty political apparatus once controlled by the late senator James O. Eastland. Working the phone, he reached out to other sources for help.
As a major donor to the state Democratic Party, Scruggs made a late night call to Jackson attorney Danny Cupit, an operative with broad connections in party affairs. "They're out to get me," Scruggs wailed, blaming his dilemma on hostile politicians and professing his innocence. To Cupit, it sounded as though Scruggs was weeping. He offered to make some calls on Scruggs's behalf.
Instinctively, Scruggs also phoned his brother-in-law in Washington, Republican senator Trent Lott. The lawmaker listened while Scruggs complained about the perfidy of the charges being prepared against him. Lott made no promises—for this seemed to be the work of squabbling Democrats back home—but he assured Scruggs he would do what he could.
Others provided counsel—recommendations of good criminal defense lawyers and expressions of support—yet Scruggs remained uncomfortable. And lately he had grown accustomed to comfort. He had recently become a man of consequence in Mississippi, even before his fortieth birthday, when he hit a big lick—as lawyers like to call any sizable fees won in damage suits. With his new wealth, Scruggs had bought a sailboat, a luxury car, an airplane, a home with a view of the gulf, and he had begun to use his money to dabble in politics.
Scruggs seemed driven by a lust to become a winner, a characteristic often developed in childhood by smart but poor boys, and now he had to consider that the life he had built for himself and his family might be wiped out. An indictment could prove him unworthy for his wife, Diane, a local beauty who had been considered too regal for him when they were in high school. Criminal charges against Scruggs would also besmirch his son, Zach, on the threshold of his freshman year at Ole Miss, and the Scruggses' younger, adopted daughter, Claire.
Scruggs's downfall appeared to be coming at almost the same warp speed as his rise in the legal profession.
After treading in the backwaters of the state bar as a young lawyer specializing in bankruptcies, Scruggs had a breakthrough in the 1980s, after he devised an innovative way to attract a multitude of clients claiming to suffer from exposure to asbestos. In Pascagoula, the shipbuilding city where he lived, asbestos litigation had become something of a local industry itself. Thousands of workers had passed through the giant Ingalls Shipbuilding facility since World War II, producing countless vessels that helped keep the U.S. Navy afloat. Over the years, the work force at Ingalls had used asbestos to wrap the pipes, reinforce the boilers, and protect the engines of the ships they built. Eventually, it began to dawn on some of them that their jobs had come at a price: inordinate numbers of the shipyard workers were succumbing to mesothelioma, an illness that could be traced directly to handling asbestos.
Scruggs missed out on the first wave of damage suits filed in Mississippi in the 1970s in connection with asbestos. But after setting up a clinic in 1985 that provided free medical diagnoses for those who felt they might have contracted mesothelioma, he was able to enlist hundreds of clients. Then he figured out a way to consolidate these cases into one blockbuster lawsuit so ominous that the asbestos companies were willing to pay millions in settlements negotiated outside the courtroom in order to avoid the possibility of even greater losses in a trial.
By 1992, Scruggs stood out as a paradigm in his profession, a plaintiff's lawyer representing the powerless masses, whether they were humble shipyard workers in Pascagoula or ailing consumers bringing product liability complaints. Scruggs and his colleagues around the country called themselves "trial lawyers," and they thought of themselves as the new guardians of the American public, stepping into a vacuum created by a lack of government regulation. During twelve years of Republican rule in Washington, a time when Big Government had been turned into anathema, the teeth had been pulled from regulatory agencies. Big Business had been given an advantage, and it seemed that the only place to hold industry accountable was in the courts.
In the 1980s and '90s, the trial lawyers waged legal assaults on asbestos and tobacco, defective autos and dangerous chemicals, against careless physicians and deadly medications. In many cases, they won astronomical awards. They also earned a legion of enemies: boosters from chambers of commerce, rival corporate defense attorneys, Republicans protective of business interests, prosecutors suspecting legal malfeasance, even ordinary citizens simply appalled by the size of the judgments. But along the way, men like Scruggs became as rich as the captains of Fortune 500 companies.
Scruggs's success coincided with the ascension of his younger friend Mike Moore, another son of Pascagoula. Though separated in age by six years, the pair got to know each other in law school when Scruggs returned to the University of Mississippi after service as a navy pilot. They were a natural fit: bright, hustling, and progressive their political views. In a state where many of their contemporaries had begun to embrace the Republican Party, Scruggs and Moore were Democrats. Their relationship strengthened after the two men wound up back in Pascagoula, traveling in the same social circles and sharing many of the same interests.
While Scruggs grew wealthy as a private lawyer representing working-class clients, Moore became known on the Gulf Coast as a crusading prosecutor. After winning election as district attorney in Pascagoula, Moore tackled the entrenched system that gave unchecked power to county supervisors and encouraged petty corruption.
At public expense, supervisors often paved lonely back roads or delivered gravel for friends; they awarded contracts in exchange for contributions and effectively sold zoning decisions. The practices were common around Pascagoula, the seat of government for Jackson County, and throughout the rest of the Mississippi Gulf Coast.
The region is close enough to New Orleans to maintain the same loose mores, the same tolerance for official wrongdoing that characterizes south Louisiana. Mindful that energetic prosecutors from Thomas E. Dewey in New York to Jim Thompson in Illinois had parlayed the headlines they won in pursuit of corrupt officials into political dividends that made them governors, Moore built name recognition by challenging the Jackson County bosses.
One of them was the legendary Eddie Khayat, known on the Gulf Coast as "The Godfather" long before Francis Ford Coppola made his sequence of movies with that name. Not only was Khayat the president of the Jackson County Board of Supervisors, but he had long led the statewide association of supervisors, acting as chief representative for their interests in the state legislature. He was the ultimate insider, a fixture in the vast political constellation established by Senator James Eastland.
In Washington, Eastland held power as chairman of the Senate Judiciary Committee; he was noted for bottling up civil rights legislation and blocking the nominations of progressive candidates for federal judgeships. In Mississippi, the senator's organization had tentacles extending to every corner of the state, with contacts in all the county courthouses and well-placed friends in each community. The network teemed with unreconstructed segregationists.
Though Eastland's acolytes—legislators, supervisors, sheriffs and other county officials, judges, businessmen, lawyers—were capable of delivering blocs of votes in any election, the organization did not function like a big city machine, rewarding political loyalty with patronage jobs. Instead, it operated as a confederation of individuals with common, conservative interests.
Eastland's men gathered over coffee at local cafés to consider the merits of various candidates rather than holding regular meetings at political clubhouses. But ultimately they took their cues from Eastland, and following the Sphinx-like characteristics of the senator, who rarely made public speeches, they preferred to carry out their work in private. It was Eastland who intervened when Eddie Khayat first faced indictment for income tax evasion in connection with a kickback scheme in the 1960s. The senator summoned Khayat to a rendezvous in his car, parked on a roadside in south Mississippi.
Eastland was a laconic man, and he had just a few words for Khayat: Go plead nolo contendre, the equivalent of not contesting a criminal charge, but at the same time not admitting guilt. U.S. District Judge Harold Cox would take care of it, Eastland told Khayat. He should not worry about going to jail. Judge Cox was Eastland's close friend. The senator had exacted Cox's nomination as a federal judge from President John F. Kennedy in exchange for Eastland's agreement not to block Kennedy's choice of a prominent black attorney, Thurgood Marshall, to serve on a federal appellate court.
Years later, after Hurricane Frederic ripped across the Gulf Coast in 1979, much of the landscape lay in tatters, and Khayat's constituents called for his services. As usual, he responded. He deployed county workers and public equipment to clear private property, repair private roads, and install culverts contrary to law. It was the old-fashioned approach to government, but the new district attorney, Mike Moore, found it unacceptable and was willing to confront the system. Moore indicted Khayat on eight counts of misusing public property.
By this time, Eastland had retired from the Senate and his organization was diffused. It still existed, but some of the hard-core conservatives looked to a rising young Republican—Trent Lott, a congressman who would soon become a senator—for guidance from Washington, while others still called themselves Democrats and huddled around old guard legislators.
Khayat fought the charges for a while, but in the end, he agreed to plead guilty to a misdemeanor, paid nearly $80,000 in restitution for questionable expenditures, and resigned from the post he had held for more than three decades. The case broke Eddie Khayat as a political leader in 1982, but it sent the district attorney to new heights. By the time he was thirty-five, Moore ran a statewide campaign to win election as attorney general. Looking lean and polished—in contrast to the old-school politicians of the state—he seemed on his way to becoming governor.
Emboldened by success, Moore—like Scruggs—was willing to test new methods of procedure, to challenge ingrained practices. After watching Scruggs beat the asbestos industry into submission, Moore decided in 1988, a year after his statewide victory, to appoint Scruggs "special assistant attorney general." He gave Scruggs authority to file claims against asbestos producers and distributors on behalf of the state.
At first, nothing appeared sinister about the pact. Operating with the official mandate from the attorney general, Scruggs presided over the legal end of a massive "tear-out" project in which asbestos was stripped from scores of public buildings, many of them on college campuses. In the name of the state of Mississippi, Scruggs filed lawsuits against manufacturers of the product and smaller targets, the companies that sold or installed asbestos, to recover the cost of the work. He won $8 million from W. R. Grace Co. alone, and reached settlements totaling nearly $20 million more from such companies as US Gypsum and Owens-Corning Fiberglas Corp.
Under the terms of his 1988 contract with Moore, Scruggs's law firm would be paid on a contingency fee basis, getting 25 percent of all the money recovered for the state. He would also be reimbursed for expenses out of the settlement funds from asbestos producers and distributors. As money poured in for the state, funds were deposited into a trust account in Scruggs's and Moore's names at the Citizens National Bank in Pascagoula. To reimburse Scruggs for expenses submitted to Moore, funds were withdrawn from the same account. The arrangement may have disregarded a state law requiring settlement funds to be deposited into the state treasury. There was also a question of whether the attorney general had the authority to hire someone on a contingency basis without the approval of the legislature.
It might have been a mere oversight on the part of the two men from Pascagoula, but the moves by Scruggs and Moore did not escape the attention of powerful men in the state capital. To some members of the old network, Scruggs was seen as an arriviste who had not properly paid his political dues and who deserved neither his state contract nor the title Moore had given him. Meanwhile, Moore was perceived as a brash newcomer, aggressive, excessively pious, and eager to leapfrog past others with stronger credentials waiting for their own chance to run for governor. If Scruggs was thought to be a bit too slick, Moore seemed a shade too virtuous.
Their critics, after inspecting Scruggs's audacious agreement with the attorney general, found several problems with the document and raised legal questions. Following the practices developed years before by Eastland, the old guard went about their business quietly, without any notice by the press. The move to discredit Scruggs and Moore would not only diminish their stature, it would serve as retaliation for Moore's destruction of Eddie Khayat.
One of the principal figures in the effort was the state auditor, Steve Patterson, a man with political ambitions of his own. Overweight and inclined to enjoy long nights out on the town, Patterson unconsciously mocked Moore's Boy Scout image. He was a classic "good ole boy." Quick with backwoods bonhomie and raunchy jokes, Patterson encouraged friends to call him "Big Daddy," or, more symbolically, to refer to him as "Kingfish," a nod to the nickname of the late Huey P. Long, the populist leader of Louisiana. Patterson felt such a designation would accentuate his ties to the movers and shakers in his state.
Like so many men wedded early to politics, Patterson got his start delivering campaign leaflets and driving candidates around the state in the days when all local politicians were Democrats, albeit conservative ones. One job came directly through patronage; he operated an elevator on Capitol Hill in Washington, a position found for him by the other Mississippi senator at the time, John C. Stennis.
Patterson later served as a foot soldier in the southern campaign of Jimmy Carter during the presidential race in 1976 and enlisted in the gubernatorial campaign of William Winter in Mississippi in 1979. After Winter won election as the first progressive governor in the state's modern history, Patterson was given an office in the state capitol. But he clashed culturally with the bright, well-scrubbed aides surrounding Winter. Patterson was relegated to dealing with the county supervisors, political hacks, and job-seekers who infested the capitol. Winter's idealistic associates thought it a thankless, sometimes dirty task. Yet Patterson made the most of it before being eased out of Winter's orbit. He collected scores of political contacts—many of them from the remnants of the Eastland organization—and went on to become state Democratic chairman in the 1980s.
By this time, the Republican Party had made significant inroads into the old "Solid South" that had once delivered all of its votes to Democrats. The party of Lincoln had been reinvented by Richard Nixon's "Southern Strategy," a plan that made naked appeals to white conservatives fearful of the political rise of blacks recently enfranchised with the right to vote.
As the South morphed into a base for Ronald Reagan, the GOP became attractive to many white Mississippians. In the face of Republican growth, Patterson worked with black leaders to preserve a viable Democratic Party in the state. At the same time, he managed to keep his bona fides with the old guard. Eager to play in national politics, Patterson signed on in 1987 as a regional director in Delaware senator Joe Biden's first attempt to win the Democratic presidential nomination.
After Biden's bid failed, Patterson refocused on the state level and won election himself, as state auditor of Mississippi in 1991. Officially, his responsibilities included oversight of bookkeeping in state agencies; the job also enabled him to peep into transactions involving public money. He was in an ideal position to investigate the Scruggs contract. Besides, he was interested in running for governor and considered Moore a potential adversary.
Patterson soon dispatched a team of agents from his auditor's office to comb through records on the Gulf Coast. They gathered evidence to be presented in a report issued by the state auditor. One document prepared for Patterson stated that "serious doubt exists as to the legality" of the asbestos agreement. Moore would be cited for "a singular lack of accountability." Scruggs would be implicated because his $20,000 contribution to Moore's reelection campaign in 1991 would be considered a payoff to Moore for the asbestos contract. Ultimately, both Scruggs and Moore could be subject to indictment.
To handle the criminal charges, Patterson's group found that Ed Peters, the district attorney in Jackson, was quite willing to present the information to a grand jury. A longtime associate of figures from the Eastland network, Peters could be counted on to prosecute their enemies or protect their interests. Peters had a history of using the weight of his office to inhibit people—sometimes in the pettiest of ways.
Years before, he had threatened Danny Goodgame, the editor of the student newspaper at Ole Miss, after The Daily Mississippian carried a story about price-fixing at local laundries. One of the Oxford laundries was owned by a family in league with the Eastland organization. Though Peters had no jurisdiction in Oxford, he summoned Goodgame to Jackson and informed the student that he could face criminal charges if the paper carried another irresponsible article. Indeed, from the time he was first elected in 1971, Peters used the threat of indictment as a weapon to intimidate those who strayed from the path of the organization.
One evening in 1992, as Scruggs struggled to deal with the case Patterson and Peters were building against him, he received a telephone call at his home from a man named P. L. Blake. "I know what's going on, and I'm going to help you," Blake told Scruggs. "You need to come up and see me."
Blake was cryptic, but Scruggs understood the significance of his call. Blake's name was not recognizable in most households in Mississippi, but among the political cognoscenti he was regarded as one of Eastland's original agents who still had the ability to fix things.
Blake had contacted him, Scruggs believed, at the direction of Scruggs's brother-in-law Trent Lott, who had assumed command of the state's conservative power structure after Eastland's departure from the scene.
Scruggs had first been introduced to Blake a decade before, by Lott's chief aide in Washington, Tom Anderson. Scruggs had been told by Anderson that there was "a friend up in the Delta" who needed help. Blake owned several thousand fertile acres in Mississippi and a group of grain elevators in Texas. But his empire faced bankruptcy and he needed assistance in filing Chapter 11 papers while trying to salvage much of his wealth.
During this period, Scruggs handled mostly mundane bankruptcy proceedings. Still, he was fascinated by the intrigue of politics and eager to become an inside player himself. Scruggs helped resolve Blake's financial problems, and while handling the bankruptcy issues, he became peripherally involved in defending Blake in a criminal case. Blake had been charged with offering officials of Mississippi Bank $500,000 in bribes in order to get $21 million in loans. Scruggs worked with Blake's criminal defense lawyer, a well-connected future Republican senator from Tennessee named Fred Thompson, to whittle down the felony to a misdemeanor. Blake pleaded guilty to the lesser charge and escaped jail.
The hand of the Eastland ring was prominent in the disposition of the case. Blake earned brief notoriety for the scandal, yet he remained an abiding mystery in Mississippi. No one knew how he had gained such wealth. By normal standards, he should have been the stuff of a Horatio Alger tale.
He grew up in a tarpaper shack in a Tallahatchie County village in the Mississippi Delta and worked his way out of rural obscurity on the playing field at Mississippi State. Blake was a standout on State's undistinguished football teams of the 1950s and the leading receiver in 1959, with a total of six passes caught in an era of ground games and strong defense. For a while, Blake played pro ball in Canada before resettling in the Delta as a farmer. Sometime in the 1960s he became prosperous, acquiring loans to buy property while assuming a semblance of importance in Greenwood as an officer in Eastland's army.
Like his patron, Blake lurked in the background. When the legislature was in session, he could be seen patrolling the halls of the state capitol or trading messages after hours with officials in Jackson lounges. He did not seek public office; he did not openly support candidates. The general public had no idea that P. L. Blake represented power behind the scenes. Yet politicians knew he was one of the most important go-to guys in the state.
When David Bowen, a young Delta politician with a Harvard degree, decided to run for Congress in 1972, he was told that Blake's approval was essential to deliver the organization's support. Bowen got it and won the election. Thad Cochran was given the same advice in 1978 when he decided to run for the Senate seat Eastland had yielded: Call P. L. Blake. Cochran talked to Blake on the phone, asked for his help, and secured it. But the two men never melded after Cochran succeeded Eastland. Blake, like many members of the Eastland organization, moved to an alliance with Cochran's rival in the Republican Party, Trent Lott.
Despite his connections, Blake was seldom quoted and rarely photographed. He existed like some sort of enigmatic don in the Delta. Over the years, he bought more land, made substantial investments, lost much of it, yet still lived comfortably in a big house in Greenwood. It was to this place that Blake summoned Scruggs in the summer of 1992.
Though Scruggs had not seen Blake in years, he was familiar with his home. He had spent nights there in the previous decade dealing with Blake's problems. Now it was Blake's turn to reciprocate.
When Scruggs told his wife of the trip, Diane began to wonder what hold Blake might have over her husband, to summon him to travel three-hundred miles to the Delta, To Diane, Blake should have been indebted to Dick; Blake, more properly, should have been the supplicant, rather than the one to hold court. Diane had begun to wonder about some of her husband's associates outside the sphere of their friends in Pascagoula. In his rush to succeed, she believed Dick had taken untrustworthy partners into his law practice while consorting with others who seemed to her a bit crude and reaching.
To Diane, the connections seemed out of synch with her husband's personality. Dick had always exuded a special charm, she remembered, even during their childhood days when he was a fatherless boy and she the daughter of a popular dentist. She became attracted to him after he developed manners that made him seem downright debonair in the years after he went away to college. By the time the two of them returned to Pascagoula as a couple, it was as though he were Pygmalion's Galatea, refined and acceptable to the local mavens.
Yet for all of his social skills, Dick Scruggs now seemed drawn to men bearing the appearance of impropriety. Despite Diane's misgivings, Scruggs flew in his private plane to Greenwood's small-town airport, where Blake met him. "You helped me a lot," Blake told Scruggs. "Now I'm going to help you." After they reached Blake's house in an upscale neighborhood, Scruggs was told to wait in the living room and relax. "Somebody's going to be here in about thirty minutes you need to talk to," Blake said.
Soon Scruggs was astonished to see Steve Patterson arrive. Blake greeted the state auditor warmly, but he also had a few scolding words. Waving in Scruggs's direction, Blake told Patterson, "This is chickenshit stuff. I want you to back off. If you want to go after somebody, go after somebody else." Patterson may have already gotten the message from others, because he did not object.
The case was effectively settled that night in P. L. Blake's living room. Patterson would not only write the district attorney a letter stating that "the auditor has found no evidence of criminal conduct on the part of Mr. Scruggs," but Patterson would also send a letter to Louisiana officials hailing Scruggs for "an outstanding job in [asbestos] litigation on behalf of the people of Mississippi." He recommended that the state of Louisiana hire Scruggs to serve as counsel on asbestos cases.
For his part, Scruggs agreed to reduce his expense claims to the state by $63,000. To cement the understanding, to form a new bond, Blake proposed that the three men go out for dinner at Lusco's, a venerable Greenwood restaurant that featured prime rib, pork chops, and pompano.
With its private curtained booths and hard-drinking clientele, Lusco's was a throwback to Prohibition days, and one of the most popular spots in the Delta. The place sang with the clamor of good times. In drunken food fights, patrons occasionally lobbed rolls over each other's curtains or hurled butter patties to the pressed tin ceiling to see how long they might adhere there before falling on someone's head.
Lusco's represented a picture of joie de vivre, but Scruggs couldn't fully enjoy himself that evening. He had a sense of relief; the criminal charges would never materialize. Still, he had difficulty eating. His stomach knotted with tension as he reflected on the raw power he had just seen exercised. Eastland was six years dead, but his organization lived on, still capable of fixing cases, blocking investigations, finding satisfactory solutions for political allies, and creating insurmountable obstacles for enemies.
Scruggs suddenly felt as though he had become a "made man," like a character anointed by the Mafia. He was not exactly at ease with the role. Drawing from his memory of science fiction films rather than gangster epics, he thought a term from the 1977 movie Star Wars better described these people with whom he was dealing. They constituted, he thought, "the dark side of the Force."¶