U.S. District Court Judge William Pauley is sending the stateโs $14 million dispute with disbarred attorney Joey Langston to Hinds County. Pauley decided this month to uphold a decision to send the case to Hinds County Circuit Judge Winston Kidd. The fee dispute is connected to WorldComโs $126.2 million tax-fraud settlement with the state in 2005.
The state got $100 million in cash and ownership of WorldComโs downtown property, and gave $4.2 million to the Childrenโs Justice Centerโa proposed medical and legal center in the Jackson Medical Mall, which would offer abused children access to medical facilities, forensic tests and prosecutors. Former State Auditor Phil Bryant, now lieutenant governor, demanded the $4.2 million back from the Childrenโs Justice Center last year, killing the project.
Attorney General Jim Hood demanded WorldCom pay the Langston Law Firm separately, to the tune of $14 million for special assistant fees, after the company refused to turn over WorldCom property in Clinton to the state. The company agreed, but years later, Pickering is demanding the Langston firm return the money to the state.
โIt is illegal for public funds to be spent except upon a two-thirds vote of the Mississippi Legislature,โ Pickering stated in a press release.
Bryant announced he was chasing the $14 million as his campaign for lieutenant governor got underway. Incoming auditor Pickering continued the crusade.
U.S. Southern District Court of New York Judge William Pauley sent the case back to Mississippi, ruling that โany decision on the merits of the claim is left to the Mississippi state court.โ
Langstonโs attorney Fred Krutz said the decision means no more than a change of setting, and that the law still stands in Langstonโs favor. Krutz called the decision โa purely procedural ruling by the New York federal court,โ adding that โno court has ruled on the merits of his claims against Mr. Langston.โ
Krutz went on to define Pickeringโs motivation as political because of the timing of the demand.
โ(This) is solely about politics,โ Krutz said. โYou can understand Mr. Langstonโs surprise when two years after the settlement agreement was approved and around the time that Mr. Bryant announced his candidacy for lieutenant governor, Mr. Bryant demanded that Mr. Langston hand over his attorney fees.โ
Pauley himself was apparently confused by the stateโs late action in demanding the attorney fees, according to a Sept. 19 conversation with Attorney Greg Geno, of Jackson, who was representing the state.
โBut the settlement was pretty clear, wasnโt it, as to how the money was going to go to the Langston law firm?โ he asked.
โIt was, your Honor, but state law says that if lawyers get money itโs to be paid to them from some source other than the Attorney Generalโs hourly rate or contingency fund โฆ it has to be placed with the state legislature,โ Geno said. ำ Who knew that the former lawyers are going to take the money and put it in their pocket and not deposit it with the state?โ
โBut didnโt the settlement agreement specifically provide that the debtors would pay $14 million to the law firm?โ Pauley asked.
โIt did, your Honor, but it did not give them the right to stick it in their pocket and not place it before the legislature,โ Geno replied.
Attorney Billy Quin, who first approached Hood with the information leading up to the WorldCom suit, compared the situation to the state demanding to re-adjust a construction contract after a project was completed.
โLetโs say DOT signs off on a $10 million contract to build a bridge. The bridge is built, they cut the ribbon. Itโs the best bridge in the history of this state, but a couple of years pass and the auditor says we shouldnโt have paid you $10 million to build this bridge. We think itโs more fair if we paid you $1 million, so why donโt you just go ahead and give us back that $9 million, even though you had a contract with DOT. The legislators didnโt sign off on the contract, DOT did,โ Quin said.
Quin added that his comparison fell short because of the sheer benefit the state got out of the WorldCom lawsuit.
Pickering is painting a potential win in this case as a $14 million windfall for the state, though state law suggests the state would actually lose $2.9 million if Pickering successfully annuls the deal between WorldCom and Langston. The state attorney general sets outside attorney fees on a sliding scale, and the Langston firm had initially called for a higher fee than the amount with which Langston walked away in 2005. If Pickering wins, the state will have to pay the outside counsel according to the strict wording of the attorney generalโs contract, which called for Langstonโs firm to receive $16.9 for their service, not $14 million.
Pickering told the Jackson Free Press in August that the payout was the Legislatureโs problem: โThatโs a decision the Legislature will have to work out,โ he said. โThatโs not the auditorโs or the attorney generalโs decision. Our position is that these are public funds and that we must follow state law. I cannot appropriate public funds. A judge cannot appropriate public funds.โ
Langston and Timothy Balducciโanother attorney who aided in the WorldCom caseโpled guilty to bribing judges in 2007, a turn of events not lost on state judges. Langstonโs personal flaws will have little bearing on a state contract signed between Hood and Langstonโs firm, however. If the Legislature attempts to short the firm its contractual due, the attorneys will have a binding document as ammunition in a subsequent lawsuit.
Previous Comments
Folo is blogging this story today, as well as Salter’s more partisan column about it today.
#141010 | Author: DonnaLadd | Date: Nov 26 2008
WorldCom was truly a disaster for so many people. Who would have thought that such a financial criminal giant would have its germ in Mississippi? I thought that all facets of this case were settled. It will be interesting to see how Judge Kidd rules.
#141012 | Author: justjess | Date: Nov 26 2008