Thursday, January 24, 2008

Could Scruggs Lose His Tobacco Settlement Fees?

A reader sent a question asking whether, in light of all the bribery allegations leveled against famed plaintiffs lawyer Dickie Scruggs, the government could seek to forfeit the reputed $1 billion fee he received for his role in the state tobacco litigation that resulted in a $248 billion settlement.  We certainly aim to please here at the White Collar Crime Prof blog, so I will give a shot at answering it.  Forfeiture involves the government taking the "proceeds" of criminal activity, and the current charges against Scruggs do not involve the tobacco settlement or his fees from those cases.  The bribery allegations have involved disputes over attorney's fees, but not regarding the disposition of the underlying litigation.  The current indictment of Scruggs and two other remaining defendants does not contain a forfeiture count, and the alleged offense is an attempted bribe, so there are no proceeds of the criminal activity.  The civil asset forfeiture statute, 18 U.S.C. Sec. 981(a)(2)(A), defines proceeds as "property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense."  While the Sec. 666 charges against Scruggs can trigger forfeiture, they do not allow the government to seek assets that are not generated by the violation, or substitute assets if it is a criminal forfeiture.  Thus, while some might question whether the fees Scruggs received from the tobacco litigation were fair, that money is not directly at risk in a forfeiture action because there is no claim that I'm aware of regarding bribery or other violations in the conduct of that litigation.  The cost of his defense is another issue, and his attorney, John Keker, was viewed by Barry Bonds as being on the expensive side, but then I doubt Scruggs will struggle to pay these costs given the strong reputation of Keker and his firm.  So the short answer is "no" regarding whether the government can seek to forfeit the tobacco fees as part of the current prosecution. (ph)

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