Government Responds to Zach Scruggs arguments to undo guilty plea - 061811

8/6/2019 Government Responds to Zach Scruggs arguments to undo guilty plea - 061811

http://slidepdf.com/reader/full/government-responds-to-zach-scruggs-arguments-to-undo-guilty-plea-061811 1/37

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

UNITED STATES OF AMERICA

v. CRIMINAL NO. 3:07CR192

DAVID ZACHARY SCRUGGS

GOVERNMENT’S MEMORANDUM OF LAW AND REPLY TO PETITIONER’S

RESPONSE IN OPPOSITION TO THE GOVERNMENT’S MOTION TO DISMISS1

Comes now the United States of America by and through the United States Attorney for

the Northern District of Mississippi and submits this its reply to Petitioner’s response to the

Government’s Motion To Dismiss, and would respectfully show unto the Court the following

to-wit:

INTRODUCTION AND BACKGROUND

The Court is being called upon to decide whether Petitioner was actually innocent of the

crime to which he pled guilty and the charges in the indictment. Petitioner, through counsel,

would have the Court believe that he was oblivious to the criminality that surrounded him.

However, stipulations of expected testimony and speculative testimony about Petitioner’s state of

mind prove nothing.

Neither the law nor the facts favor Petitioner, so he has commissioned his attorneys to

rewrite the history of this case, making everyone a bad guy except Petitioner. He has encouraged

or at least acquiesced in their misstatements of the law and the facts and their disregard for

For purposes of this reply, the government would incorporate the M emorandum of Law and E xhibits1

attached to its Motion to Dismiss (hereinafter “Govt. Motion to D ismiss”) and will refer to the Petitioner’s

subsequent response as “Petitioner’s Response.” The government will reference all other pleadings in this case by

their document number on the docket.

1

Case 3:07-cr-00192-NBB -SAA Document 392 Filed 06/17/11 Page 1 of 37



accuracy. During the pendency of this litigation, Petitioner has alleged that he was not in the2

room on November 1, 2007, when money was discussed, but on the other hand, if he was, he was

“disengaged” from the conversation. Now, Petitioner opines that he might have been on his

“Blackberry.” There is simply no basis in evidence for those statements. Additionally, at page 6

of his response, Petitioner asserts that he has “expressly denied” any knowledge of the bribe.

While Petitioner may have made that statement at the end of his change of plea hearing or at

sentencing, he has not done so in the form of testimony, under oath and subject to cross-

examination.

Petitioner has repeatedly argued to the Court that he pled guilty because he was afraid

Joey Langston would testify that he was involved in Wilson v. Scruggs. Yet, he waived that

argument when he voluntarily pled guilty and abandoned his renewed 404(b) hearing where he

could have called Langston as a witness to establish what his testimony would be. The evidence

and Petitioner’s own pleading established that Petitioner knew that Langston would not testify he

was criminally involved in the Wilson case, but rather simply aware of it. In reality, the3

pleadings filed by Petitioner’s counsel have been consistently disingenuous - and in reality he

pled guilty because the government offered him an extremely favorable plea agreement. By

pleading guilty he received a government recommendation of probation, whereas a conviction on

For purposes of this reply, the Government would submit Petitioner has repeatedly mis-quoted and mis-2

cited purported evid ence and law but to addre ss each and every inconsistency would require an excruciatingly

lengthy memorandum. Suffice it to say, the Court heard the testimony in this matter, viewed the exhibits and can

decide the applicable law. The Gove rnment is not admitting any purported allegations of fact, re-citations of

evidence or statements of the law submitted by Petitioner.

The testimony of Judge David S anders and Attorney Anthony Farese at the Ma y 9, 2011, hearing and3

Petitioner’s own pleading established that the 404(b) issue had been clarified for Petitioner and his counsel prior to

his plea.

2




the original charges would have subjected him to a lengthy prison sentence. Petitioner was

dismayed that the Court actually sentenced him to confinement.

Finally, Petitioner argues that his plea of guilty is infirm because his attorney, Anthony

Farese, abandoned his ethical obligations when the government used Farese to “co-opt” Joey

Langston to be a witness against him. The evidence and the record as a whole established that

there was no conflict of interest. Petitioner permitted the dual representation and signed a written

waiver. At the time Langston pled guilty, there was no evidence that he would even potentially

be a witness against Petitioner. Petitioner then fired Farese and hired a new team of lawyers.

The new legal team had full knowledge of the evidence against Petitioner, including the potential

testimony of Langston, and advised him to plead guilty. There simply was no conflict and

Petitioner’s decision to plead guilty was provident. Neither Mr. Tony Farese, nor the new legal

team, did anything that adversely impacted Petitioner in a way that would effect the validity of

his guilty plea.

When Petitioner pled to misprision of a felony, he stated under oath that he agreed with

the Government’s factual basis, which clearly established a scheme and artifice to deprive

Johnny Jones of his property. His plea was therefore provident and he knowingly and voluntarily

pled to a crime that is completely unaffected by the Supreme Court’s decision in Skilling .

Regardless, even if Skilling were applicable to Petitioner’s Information, any error in the plea was

harmless, because the Information, Factual Basis and Elements support misprision of an ordinary

wire fraud. Petitioner has also wholly failed to disprove the fact that he joined in the conspiracy

to corruptly influence a Judge and when he learned that money actually changed hands as a quid

pro quo, he took no affirmative act to withdraw from the conspiracy. He actively participated in

3




a discussion regarding how the Judge’s order should read, and that discussion evidenced far more

than a simple earwigging. Simply put, the evidence established that Petitioner knew about the

bribe, was not surprised, and took no affirmative act to withdraw from the conspiracy. Further,

Petitioner is criminally responsible for the acts of his co-conspirators, that is the payment of an

actual bribe. That bribe was both foreseeable and in furtherance of the conspiracy.

ARGUMENT

I. Petitioner has not established and cannot establish his actual innocence of the

charges contained within the Information to which he pled guilty.

Relying on United States v. Skilling , 130 S. Ct. 2896 (2010), Petitioner alleges that the

Court erred in finding that there was a sufficient factual basis establishing his guilt, that is, the

Court erred in finding that knowledge of a bribe is immaterial to charges involving a deprivation

of honest services. Petitioner procedurally defaulted this claim by failing to pursue a direct

appeal. Therefore, he can only avail himself of Skilling if he can prove his actual innocence in

accordance with United States v. Bousley, 523 U.S. 614, 624 (1998). Petitioner has failed to

establish his actual innocence of the charge to which he pled and the remaining charges of the

indictment.

Petitioner’s burden is substantial and one that he has not and cannot meet. Govt. Motion

to Dismiss, p.2. The United States Supreme Court clearly established Petitioner’s burden in

United States v. Bousley, 523 U.S. 614, 624 (1998). Petitioner must prove that, despite a4

presumption of guilt, it is more likely than not that no reasonable juror would find him guilty of

Petitioner filed an additional bench memorandum asking this Court to overrule the United States Supreme4

Court because in his view Bousley does not make sense. Petitioner’s logic fails because there are other interests at

stake beyond those of defendants who think they are innocent. The government has a strong interest and a duty to

prevent defendants, who are otherwise guilty of more serious, foregone charges, from getting a free pass b ecause of

an unexpected c hange in the law, particularly those who pled guilty to misprision of a felony. As a result, the

Court’s ruling made perfect sense in limiting relief to only those few defenda nts who can clearly prove that they a re

actually, factually innocent of all charges.

4




misprision of a felony, as well as the charges in the Indictment. See Govt. Motion to Dismiss,

p.2 (citing Bosley v. Cain, 409 F.3d 657, 664 (5 Cir. 2005).th 5

Petitioner contends that “knowledge” alone is not enough. See e.g. Petitioners Response,

p.23. However, the only element of Petitioner’s misprision of a felony conviction that is even

disputed at this point is knowledge and nothing more. Title 18, United States Code, Section 4,

Misprision of a Felony, requires four elements: (1) that a federal felony was committed; (2) that

Petitioner had knowledge of the commission of a felony; (3) that Petitioner failed to notify an

authority as soon as possible; and (4) that Petitioner did an affirmative act, as charged, to conceal

the crime. See 5 Cir. Pattern Jury Instruction 2.08. There is no question that a federal felonyth

was committed in this case; in fact, there is no dispute that a federal felony was committed in this

case that remains valid despite Skilling . Petitioner’s failure to immediately notify an authority is

undisputed, and the affirmative act of concealment element has been admitted in the Factual

Basis, procedurally-defaulted by Petitioner and ruled upon in the Court’s Summary Judgment

Opinion. See D.E. 371, p.14-23. As a result, the only element that can even be possibly disputed

in this § 2255 proceeding, as it relates to Petitioner’s actual innocence of misprision, is

knowledge. It is Petitioner’s burden and he has wholly failed to prove that it is more likely than

not that no reasonable juror would find that he had knowledge of a felony.

The current record provides two separate bases to support Petitioner’s knowledge of a

felony. First, the evidence admitted at the evidentiary hearing, in addition to the Factual Basis,

Petitioner makes several nega tive references to the gove rnment’s failure to call a witness, as if that should5

prejudice the government in some way. See Petitioner’s Response, p.10 and p.55 First, the government can and did

present evidence through cross examination that proved Pe titioner did know about the bribe, there was no ineffective

assistance of counsel and he did not rely on the “fully aware” comment when pleading guilty. Second, this Court

was entitled to end the evidentiary hearing at any time and chose to end the hearing after Petitioner rested his case.

The governm ent would merely point out that it should not be prejudiced b y the fact that it was not permitted to call a

witness.

5




supports a money/property wire fraud scheme to defraud Johnny Jones which is immune from

Skilling regardless of whether Petitioner knew about the bribe payments to Judge Lackey.

Second, the record demonstrates that Petitioner did not prove that he had no knowledge of the

bribe to Judge Lackey and, thus, Petitioner did not prove that he had no knowledge of an honest6

services fraud that remains valid after Skilling .

Petitioner fell woefully short of proving his actual innocence of misprision of a felony

and, as a result, he may not avail himself of the Skilling decision as a basis for relief. However,

even if the Court did apply Skilling to Petitioner’s Information along with the Factual Basis and

the elements of the offense, it would amount to harmless error because it would not cause a

substantial or injurious effect on the Court’s determination that there was a factual basis to

support Petitioner’s plea. See Brecht v. Abrahmson, 507 U.S. 619, 638 (1993). 7

A. Petitioner Did Not Prove that He is Actually Innocent of Misprision of a Valid,

Money/Property Scheme to Defraud Jones.

After limiting the scope of honest services fraud in Skilling , the United States Supreme

Court remanded the case back to the Fifth Circuit who conducted a harmless error analysis See

United States v. Skilling , ___ F.3d ___, 2011 WL 129085, *1 (5 Cir. 2011). The Court foundth 8

that any error regarding the honest services fraud was harmless beyond a reasonable doubt as the

Indictment contained valid money/property fraud charges. The same is true in the instant matter.

In the present case, the Court found a set of facts based on the Factual Basis provided by

Tim Balducci’s testimony along with the November 1 tape actually proved that he did know about thest6

bribe. As a result, Petitioner’s complaints about the Bousley burden of proof are irrelevant.

In fact, even if this case were on direct ap peal, any Skilling error in the plea would be harmless beyond a7

reasonable do ubt just as it was in the Skilling case itself because there is a valid, alternative theory of guilt contained

in the Information and Factual Basis.

The governm ent provided the Court with extensive case citations to support the app lication of harmless8

error analysis in a Skilling case with the most obvious being the actual Skilling case itself. See Govt. Motion to

Dismiss, pp. 24-30.

6




the government and admitted by Petitioner and then applied the elements of the offense to the

Factual Basis in determining that there was “a factual basis for this defendant to plead guilty to

this charge.” See Change of Plea Hearing Tr., p.13, Pet. Ex. 90. The “bottom line of the scheme

or artifice to defraud had the inevitable result of effecting monetary or property losses” and

harmless error should apply even if Petitioner’s Information only charged an honest services

fraud crime that is now invalid due to Skilling . See United States v. Asher , 854 F.2d 1483, 1494

(3d Cir. 1988) and Govt. Motion to Dismiss, p.26-29. The “bottom line” of the scheme to

defraud described in the Factual Basis is that if it had not been discovered by the government it

would have had an inevitable effect on the amount that Jones would have been able to collect on

his claim against Scruggs, et al.

The Information and Factual Basis establish a valid money/property scheme to defraud

Jones. Therefore, no knowledge of the bribe is required. The evidence establishes Petitioner’s

knowledge of the scheme and the other elements of misprision. Therefore, he has not and cannot

establish his actual innocence of that scheme. Skilling is inapplicable. However, even if there

was error, that error was harmless. Additionally, Petitioner’s argument is procedurally barred

and time barred.

Petitioner cannot challenge his admission to the facts contained in the Factual Basis of his

guilty plea. Petitioner admits as much on the last page of his lengthy response, “David Zachary

Scruggs does not come to this Court attempting to recant anything he stated to the Court or that

was contained in the Factual Basis.” Petitioner’s Response, p. 74. The Factual Basis provides a

baseline of proof from which to begin; however, the government is not limited to the Factual

Basis alone in refuting Petitioner’s claim of actual innocence. See Bousley, 523 U.S. at 624.

7




The Factual Basis provides the following admissions:

! Petitioner participated in a meeting at the Scruggs Law Firm in March 2007 in

which “it was decided that because of his close relationship with Judge Lackey,

Tim Balducci would speak to the judge in an ex parte manner and ask him to rule

in favor of the defendants.” (p.1) (emphasis added)

!

Petitioner was aware that “Balducci had not made an official entry of appearanceon behalf of the Scruggs Law Firm to represent them in the matter.” (p.1)

! Shortly after the March meeting, “Balducci met with Judge Lackey and discussed

the Jones v. Scruggs lawsuit.” (p.1)

! On October 18, 2007, Judge Lackey provided Balducci with a signed order “ruling

in favor of the defendants.” (p.2)

! Also on October 18, 2007, Balducci delivered the signed order to Petitioner and at

that time, Petitioner “was aware that the order would send the Jones v. Scruggs

matter to arbitration, and he was aware that the plaintiffs were unaware of both

Balducci’s involvement and that Judge Lackey’s ruling was based, in part,

on something other than the merits of the lawsuit; that is, Balducci’s

personal relationship with Judge Lackey.” (p.2) (emphasis added)! In addition to the effect of Balducci’s actions on the “plaintiffs,” Petitioner “was

also aware that such an act deprived the State of Mississippi of its intangible right

to the honest services of Judge Henry Lackey...” (p.2) (emphasis added)

! On November 1, 2007, Tim Balducci met with Petitioner and Sid Backstrom to

report on the status of his ex parte attempts to obtain an arbitration order from

Judge Lackey. Petitioner examined an updated order for arbitration and discussed

its contents with Tim Balducci and Sid Backstrom. (p.2)

! On November 5, 2007, an e-mail was sent via wire transmission in interstate

commerce related to the corrupt order sending the case to arbitration. (p.3)

Petitioner contends he “pleaded to failing to report Mr. Balducci’s earwigging of Judge

Lackey – not bribery but earwigging,” (D.E. 303, p. 12) and “an attempt to influence Judge

Lackey by earwigging is not a violation of that statute,” (Id., p. 8) nor “a felony cognizable by

courts of the United States” (Id., p. 12). In reality, Petitioner pled guilty to an Information with a

supporting Factual Basis, and the Information does not allege misprision of an “earwigging” but

misprision of a “felony.” See Information, Pet. Ex. 88. That felony is then described in the

Factual Basis. The admissions contained in the Factual Basis clearly describe a scheme to

defraud Jones (“plaintiffs”) and a scheme to deprive the State of Mississippi of the honest

services of Judge Lackey. The Factual Basis states that Petitioner had knowledge of two crimes:

8




(1) that Tim Balducci’s covert, ex parte influence caused Judge Lackey to rule against the

interest of Johnny Jones (“plaintiffs”) and in favor of the Scruggs Law Firm (“defendants”) based

on something other than the merits; and (2) that Tim Balducci’s actions “also” deprived the State

of Mississippi of the honest services of Judge Lackey.

The Factual Basis supports a wire fraud conviction standing on its own; however, the

Court may also consider the evidence offered at the May 23-25, 2011 hearing (hereinafter

“evidentiary hearing”). As the Court has already noted, “the government is not limited to the

existing record to rebut any showing Petitioner might make.” Memorandum Opinion, D.E. 371,

p.7, citing Bousley, 523 U.S. at 624.

The Factual Basis names the victims of the scheme to defraud as the “plaintiffs” in the

Jones v. Scruggs litigation, i.e. Johnny Jones. The Factual Basis and the evidence offered at the

evidentiary hearing do not have to establish that Petitioner schemed to defraud Jones, but simply

that Petitioner misprisioned the scheme of Dickie Scruggs, Sid Backstrom, Tim Balducci, and/or

Steve Patterson to defraud Jones. There is no doubt that Petitioner’s co-defendants executed a

scheme to defraud Jones that involved an interstate wire and clearly, the Factual Basis establishes

that Petitioner misprisioned their scheme to defraud.9

Tim Balducci testified that the Jones litigation was a fee dispute and that Jones contended

that the Scruggs Katrina Group (“SKG”) owed him more money than SKG was willing to pay.

Hearing Tr., Vol. I, p.129. To this day, Petitioner remains indifferent to the impact of his actions

on Johnny Jones and continues to claim that Scruggs Law Firm got to determine Mr. Jones’s

rights: “nobody sought to deprive Jones of any money he was rightfully owed.” Petitioner’s

Petitioner attempts to distinguish United States v. Dyer , 136 F.3d 417 (5th C ir. 1998) by comparing it to9

the Indictment. See Petitioner’s Response, p.15. However, Dyer involved a plea to an Information and the C ourt’s

analysis of the allegations in the Dyer Information are analogous to this Court’s evaluation of Petitioner’s

Information and accompanying Factual Basis. See Dyer, 136 F.3d at 424.

9




Response, p. 17. “Mr. Jones would have gotten exactly what he was owed: an order compelling

arbitration.” Id. at p.18, n.7. Petitioner and his co-defendants did not get to determine what

Jones was “rightfully owed.” Jones had a right to have an impartial Court decide what he was

“rightfully owed” based on the merits. The Scruggs Law Firm took that right away.

Sid Backstrom and David Shelton testified that arbitration was no more than a foregone

conclusion for the Jones litigation and Petitioner continues to assert that their view of the case is

the only possible view of the case. See Hearing Tr. Vol. II, p.25-26 and Vol. III, p.12; and10

Petitioner’s Response, p.41. However, Jones clearly had a different opinion about his own rights.

See Jones Motion to Stay Arbitration, Govt. Ex. 13, p.1 (“Defendants have expressly waived

their rights to arbitration....The law is clear.”) He practically begged for arbitration before filing

the lawsuit and the Scruggs team repeatedly ignored his requests. Id. at p.2-3. After months of

dealing with Scruggs’ stonewalling, he filed a lawsuit. Id. Only after the lawsuit was filed did

the Scruggs Law Firm decide they wanted arbitration where they were confident that at least

some of Jones’ claims, in Sid Backstrom’s words, would get “stuck” where “you can’t do

anything about it.” (11/1/2007 Tape) Pet. Ex # 40, Tr., p.28. In order to remove any doubt about

the direction of the Jones litigation and with no regard for Jones, the Scruggs Law Firm sent Tim

Balducci to influence Judge Lackey and ensure that the Scruggs team got exactly what they

wanted-even if it was based on “something other than the merits.” See Factual Basis, p.2;

Hearing Tr., Vol. I, p.136.

Petitioner again cites Barrett v. Jones , 27 So.3d 363 (Miss. 2009), a Mississippi Supreme Court decision10

that arose from the Jones, et al v. Scruggs, et al litigation. Barrett v. Jones is an opinion about sanctions and

whether the other defendants in the litigation should have been sanctioned as a result of the actions of the Scruggs

Law Firm’s tampering with the Jones lawsuit. Barrett , 27 So.2d at 370-77. The Court does affirm the lower Court’s

earlier decision to compel arbitration, but the opinion ce rtainly does not stand for the proposition that arbitration was

a foregone conclusion in 2007. Id . at 376-77. Scruggs did not know for certain that the case would be sent to

arbitration during the execution of the scheme.

10




Tim Balducci testified that his actions were clearly intended to be harmful to Jones, “I

think that if I would have been successful in persuading Judge Lackey to do me that favor, it

would have had an adverse affect on Mr. Jones, yes.” Hearing Tr., Vol. I, p.132-33. Balducci

also indicated that arbitration was a “best case scenario” for the Scruggs Law Firm. Hearing Tr.,

Vol. I, p.141. Jones and his legal team had no knowledge of Tim Balducci’s covert meetings to

corruptly influence Judge Lackey. Hearing Tr., Vol. I, p.142 and Factual Basis, p.2. Steve

Patterson testified that Tim Balducci’s relationship with Judge Lackey was “special” and like a

father and a son. Hearing Tr., Vol. II, p.185 & 190.

At the request of Petitioner and his co-defendants, Tim Balducci used his special,

Father/Son relationship to attempt to corruptly influence Judge Lackey in a way that was clearly

intended to harm Johnny Jones and enrich the Scruggs Law Firm. In addition, the Scruggs Law

Firm hoped Judge Lackey understood that a group of multi-millionaire trial lawyers would be

eternally grateful for his actions. Hearing Tr., Vol. I, p.143. Balducci did not bump into Judge

Lackey and tell him that the Scruggs Law Firm were “good guys.” See Hearing Tr., Vol. II, p.23.

Balducci was sent on a mission by the Scruggs team to use his special influence over Judge

Lackey to derail the Jones litigation by obtaining a signed order, written specifically to both meet

the needs of the Scruggs Law Firm and cause harm to Johnny Jones position in his multi-million

dollar lawsuit against Scruggs, et al.

The Factual Basis and the evidence presented at the evidentiary hearing support a valid

conviction for misprision of a money/property wire fraud and as a result, Petitioner’s § 2255

Petition fails before it even starts.11

The misprision of a money/property wire fraud describe d in the Factual Basis and further supported b y the11

evidentiary hearing also renders Petitioner’s Bousley complaints as moot.

11




B. Petitioner Did Not Prove that He is Actually Innocent of Misprision of a Valid,

post- Skilling Honest Services Fraud

In order to be found guilty of misprision of honest services fraud post-Skilling , the

underlying honest services fraud must contain a bribe or kickback. In addition to a12

money/property wire fraud, there is absolutely no doubt that Tim Balducci, Richard Scruggs and

the rest of Petitioner’s co-defendants committed an honest services wire fraud involving a bribe

that remains valid post-Skilling . Petitioner has admitted that Richard Scruggs and Sid Backstrom

pled guilty to an honest services fraud that included a bribe. Petitioner’s Response, p.4.

Petitioner also admits that his Factual Basis alone supports misprision of a pre-Skilling scheme to

deprive the State of Mississippi of the honest services of Judge Lackey. Petitioner’s Response,

p.16. As a result, knowledge of the bribe plus the admissions contained in the Factual Basis is

sufficient to support misprision of a valid honest services fraud. Since Petitioner failed to prove

that he had no knowledge of the bribe, then he failed to prove that he had no knowledge of an

honest services fraud that remains valid after Skilling .

Petitioner must prove that despite a presumption of guilt and despite the fact that

Petitioner has admitted that he knew basically everything about Tim Balducci’s missions with

Judge Lackey except the bribe payments, no reasonable juror would hear the testimony, listen to

the tapes and find that he knew about the bribe. See Bosley v. Cain, 409 F.3d 657, 664 (5 Cir.th

2005). It is not enough that he might have convinced one juror, he must prove that it is more

likely than not that no reasonable juror would find that he knew about the bribe payments. Id .

Skilling , 130 S.Ct. at 2928. It is worth noting here that Skilling was concerned with honest services fraud12

charges without a real victim, i.e. cases in which two, undeceived, parties are enriched and the pub lic, as a deceived

third party, loses nothing. See S killing , at 2926. (describing the hypothetical example o f a mayor awarding a fair

market value contract based on a bribe). Clearly, this case involved a victim in Johnny Jones who was deceived and

who faced the threat o f significant monetary loss. As a result, this case does not lie at the he art of the Skilling

Court’s stated concerns in limiting the scope of honest services fraud.

12




He has failed.

The credible evidence proves that Petitioner did know about the bribe payments even

prior to November 1, 2007. On direct examination, Tim Balducci testified that based on his

conversations with Sid Backstrom in September 2007 his “understanding at that period of time

was, they had all discussed - - [Richard Scruggs, Zach Scruggs and Sid Backstrom] all knew at

that point, when they said that I would be covered, that they all understood and knew that it was

going to cost $40,000; and they agreed to reimburse me for it.” Hearing Tr. Vol. I, p. 73-74.

Balducci also testified that the Scruggs Law Firm’s $40,000 payment to him was to

obtain the corrupt arbitration order and Sid Backstrom and Steve Patterson confirmed that the

$40,000 payment Balducci was in return for his ex parte mission with Judge Lackey. Hearing

Tr., Vol. I, p.84; Vol. II, p.51; and Vol. III, p.219. Petitioner’s Factual Basis explains that on

October 18, 2007, when Tim Balducci gave Petitioner a package, Petitioner knew that Tim

Balducci was dropping off a signed arbitration order and that Balducci had obtained the order

through covert, ex parte contact with Judge Lackey. Factual Basis, p.2. With that context in

mind, Tim Balducci testified that Petitioner received the order from him on October 18, 2007, at

the Scruggs Law Firm and applauded him for accomplishing his mission with Judge Lackey by

saying, “You’re a good friend; you’ve done a good job.” Hearing Tr., Vol. I, p.94. At that same

meeting, Tim Balducci picked up an envelope containing a $40,000 check from the Scruggs Law

Firm that was a reimbursement for the $40,000 bribe paid to Judge Lackey. Id. After the

October 18, 2007, meeting, Balducci and Steve Patterson spoke on a recorded telephone

conversation and when Patterson asked if Balducci left the order on Richard Scruggs’ desk,

Balducci responded, “I did better than that, I left it with Zach.” Govt. Ex. 8(a), Tr. p.2. Tim

Balducci also testified that the Scruggs Law Firm used a bogus voir dire assignment to cover its

13




payment of $40,000 as reimbursement to Balducci for his bribe payments to Judge Lackey.

Hearing Tr., Vol. I, p.94-95.13

The November 1, 2007 Tape Recorded Conversation between Petitioner, Balducci

and Backstrom:

Z Scruggs: It could be...(UI)14

Balducci: God only knows. (pause) Um, the other piece of this puzzle I

hadn't told you yet is uh, get it [the Order] how you want it because I've got to uh,

I've gotta go back for another delivery of uh, another bushel of sweet potatoes

down there. So. Because of all of this that has come up.

Backstrom: Mm-hmm.

Balducci: So get it right. Get it how you want it ‘cause we’re payin’ for it to

get it done right.

(11/1/07 Tape) Pet. Ex. 40, Tr., p.30 (emphasis added)

The "sweet potatoes" and "we're payin’ for it" statements are key pieces of evidence on

the issue of Petitioner’s knowledge of the bribery payments to influence Judge Lackey. Tim

Balducci did not blurt out these comments as a part of a random conversation, these words were

the culmination of a detailed conversation covering pages of transcript in which Balducci was

reporting back to Sid Backstrom and Petitioner on the status of his mission to obtain an

arbitration order from Judge Lackey. (11/1/07 Tape) Pet. Ex. 40, Tr., pp.19-30. Petitioner would

like for the Court to ignore the context of this conversation and ignore that Petitioner admits,

Steve Patterson was clear that the $40,000 payment was a reimbursement for the bribe payment to Judge13

Lackey despite his perception that the Scruggs Law Firm expected Tim Balducci to do some work. Hearing Tr., Vol.

II, p.193-195 & 219. Sid Backstrom testified that the Scruggs Law Firm had “big team” and did not need Balducci

to do the actual voir dire work. Hearing Tr., Vol. II, p.50. Backstrom also admitted on cross-examination that he

used the term “jury research” as code for Tim Bald ucci’s ex parte mission to acquire an arbitration order from Judge

Lackey in favor of the Scruggs Law Firm and that the $40,000 pa yment was in return for Tim Balducci’s influence

over Judge Lackey. Hearing Tr., Vol. II, p.85 and p.51.

Petitioner objected to e ditorial comments on the transcript that reflect the obvious sounds of doors14

opening and closing, yet Petitioner has inserted words onto the tape that simply do not exist. On at least three

occasions, Petitioner alleges, with no basis in fact, that this unintelligible portion of the tape a ctually includes the

phrase, “It could be Trent [Lott] or Tricia [Lott].” See Petitioner’s Response, p.28 n.17; p.33; p.34. The missed call

is obviously from a female and it is simply impossible to listen to the tape and draw the conclusion that Pe titioner

missed a call from then United States Senator Trent Lott. As Petitioner ironically notes, “This Court instead must

resolve these ultimate questions for itself.” Petitioner’s Response, p.34.

14




through the Factual Basis, that he knew all about Tim Balducci’s covert meetings with Judge

Lackey and the signed arbitration order ruling in favor of the Scruggs Law Firm based on

something other than the merits. In addition, Tim Balducci testified that when he said “we’re

payin’ for it” it was his understanding that Petitioner already knew about the $40,000 bribe to

Judge Lackey and the Scruggs Law Firm’s subsequent reimbursement. See Hearing Tr., Vol. I,

p.73-74.

Tim Balducci testified about the code terms used as follows:

“[Y]ou're suggesting that I was speaking in code, and that potatoes could have

meant orders. And I 'm just suggesting to you that if you listen in context to the

tape, that I said I 've got to take another load of sweet potatoes back to the judge;

and that I don' t think it would be reasonable for someone to interpret that Iwas saying I 've got to take another load of orders to him.” Hearing Tr., Vol. I,

p.116.

“[I]f you think that there' s some ambiguity about what I was talking about with

the sweet potatoes, I'm fairly certain it was cleared up in the next sentence when I

said that we were paying for it. So I think that they would have to reasonably

interrupt that that meant money at that point.” Hearing Tr., Vol. I, p.117-118.

(“interrupt” is clearly intended to mean “interpret”)

As Balducci testified at the hearing, any ambiguity about the “sweet potatoes”

statement was resolved by his next statement about getting it right because "we're payin’ for it."

“Go back” for "another delivery" of "sweet potatoes" indicates a previous delivery of "sweet

potatoes." "Because" indicates that the delivery of "sweet potatoes" is linked to "it." In the15

context of the previous discussion among Petitioner, Sid Backstrom and Tim Balducci about the

order, the "it" in the sweet potatoes statement obviously refers to the order that Petitioner,

In his assertion that the words “we’re payin’ for it” could m ean a gratuity paid at som e point in the future15

instead of a bribe, Petitioner ignores the previous sentence which indicates that Baldu cci has already made a payme nt

and has to go back and make another payment. See Petitioner’s Response, p.41. In addition to Tim Balducci, Steve

Patterson clearly described the $40 ,000 payment to Judge Lack ey as a bribe “I can tell you that, factually, [Judge

Lackey] had a quid pro quo when he asked for the money.” Hearing Tr., Vol. II, p.216.

15




Backstrom and Balducci are discussing. It would be unreasonable to believe that the participants

in the conversation would think that Balducci was talking about making a delivery of actual

"sweet potatoes." Instead, it would be reasonable to believe that he used "sweet potatoes" for a

sensitive term or word, one that they did not want to say explicitly. It's unlikely that those

involved in bribery, particularly lawyers, would say something like, "I've gotta make another

delivery of bribe money" or "I've gotta make another bribe payment."

In the context of the discussion among Petitioner, Backstrom and Balducci about the

order, and in light of the March plan to corruptly influence Judge Lackey, a reasonable

interpretation of the combined statements would be: "I have previously delivered money to

Judge Lackey and I have to make another delivery of money to Judge Lackey for getting the

order the exactly the way you want it, so get it how you want it."

Petitioner has repeatedly made reference to an 8-second pause in the conversation after

Balducci makes the statement “God only knows” as evidence that he was leaving the room,

distracted, or in the process of disengaging from the conversation. Balducci’s testimony clearly

refutes that assertion:

Q. Do you know what happened during that eight seconds?

A. Yes.

Q. What?

A. Zach and Sid went back to reviewing the order.

Hearing Tr., Vol. I, p.119

Sid Backstrom could not refute that testimony simply stating “I don’t recall him doing

that, could have been, but I don’t recall” and “I don’t recall that happening.” Hearing Tr., Vol. II,

p.60 (emphasis added) and p.63.16

Backstrom did testify that he thought Petitioner attempted to read the order at some p oint in the16

conversation. Hearing Tr., Vol. II, p.60.

16




The evidence clearly established that Petitioner, Backstrom and Balducci were in the

room when those fateful words were spoken. The clear sounds of a door opening and closing on

the tape support Balducci’s testimony. The door in Backstrom’s office was a “heavy, heavy

door” and it makes an unmistakable sound on the tape. The tape clearly reveals that the door 17

opens as Ashley Young interrupts and then closes after Petitioner tells Mrs. Young to take a

message. See Hearing Tr., Vol. II, p.130-131. Petitioner is obviously still in the room after Mrs.

Young leaves and the door closes because he says “thanks” as the door closes and then continues

“I don’t wanna answer a Tracy Lott who I don’t know anything about by off chances.” (11/1/07

Tape) Pet. Ex. 40, Tr., p. 29. The “sweet potatoes” and “we’re payin’ for it” comments follow

and then Backstrom begins speaking again. The next sound of a door opening comes after 18

Backstrom says “For the reasons set forth above all matters in this cause” and the sound of a door

closing comes after Sid Backstrom says “That, you know, that’s good enough to me. I wouldn’t

change anything.” (11/1/07 Tape) Pet. Ex. 40, Tr., p.30. As a result, the tape supports Tim

Balducci’s testimony that Petitioner was still in the room and still engaged in the conversation

when he made the “sweet potatoes” and “we’re payin’ for it” comments. A reasonable juror

would listen to the tape, find Balducci credible and conclude that Petitioner was in the room and

heard the comments. Petitioner has failed to prove his actual innocence.

Three people were in Sid Backstrom’s office when the words “another bushel of sweet

potatoes” and “we’re payin’ for it” were uttered. Only two of them testified. One, Balducci, was

certain that he remembered the events of November 1, 2007 and for good reason, as it was a day

that changed his life forever. Hearing Tr., Vol. I, p.105. The other, Backstrom, was certain that

Sid Backstrom describing the doors of his office. Hearing Tr., Vol. II, p.62.17

Petitioner did not respond. He didn’t say, “‘Payin’ for it? What are y’all talking about?” His lack of 18

surprise and failure to respond is evidence that he had prior knowled ge of the bribe.

17




he could not remember what happened-he could only interpret what he felt the tape recording

indicated. Hearing Tr., Vol. II, p.99-101.

Speculative arguments based on the relative credibility of witnesses do not meet the

Bousley standard for actual innocence. See Bosley, 409 F.3d at 665. In Bosley, the Court noted

that the evidence amounted to a classic “swearing match” between witnesses and that the

defendant failed to provide reliable evidence such as “exculpatory scientific evidence,

trustworthy eyewitness accounts, or critical physical evidence.” Id . (emphasis added).

Petitioner could not even present the Court with a “swearing match” in light of Tim Balducci’s

certain memory and Sid Backstrom’s certainty that he could not remember. The foundation of

Petitioner’s argument regarding his knowledge of the bribe payments is that the witnesses that he

perceived as favorable to him were more credible than the witnesses that he perceived were not

favorable to him. Petitioner would have the Court rule that in picking between the testimony of

convicted felons, every reasonable juror would side with his convicted felons and disagree with

the government’s convicted felon even after hearing the November 1 tape. However, if onest

reasonable juror believed Tim Balducci and the corroboration of the November 1 tape, then thatst

juror would find that Petitioner knew about the bribe payments to Judge Lackey and

consequently knew about an honest services fraud that remains valid after Skilling . As a result,

to rule in favor of Petitioner, the Court would have to find that it is more likely than not that

every reasonable juror on a jury would disregard Tim Balducci’s testimony as unreliable and

ignore the clear sounds of doors opening and closing on the November 1 tape that supportst

Balducci’s testimony.

Petitioner indicates that “several” witnesses testified contrary to Tim Balducci regarding

whether Petitioner heard or understood the “sweet potatoes” and “we’re payin’ for it” comments.

18




Petitioner’s Response, p.33 (“given the tape recording and several contrary witnesses, any

reasonable juror would have reasonable doubt whether Petitioner heard or understood those

comments.”) (emphasis added). “Several” implies at least more than two. Petitioner has19

apparently mistaken one witness who couldn’t remember what happened as “several” witnesses

who testified contrary to Balducci as to what happened behind closed doors in Backstrom’s

office on November 1, 2007.

On direct examination, Petitioner’s counsel asked Sid Backstrom the critical question as

his testimony relates to Petitioner’s knowledge of the bribe: Was Zach Scruggs in the room when

Tim Balducci made the “sweet potatoes” and “we’re payin’ for it” comments? The caution in

Backstrom’s carefully worded answer was obvious:

“ Based on hearing that on the tape, I feel like he wasn’t because he never said

anything, never responded to that.” Hearing Tr., Vol. II, p. 64 (emphasis added)

The November 1 tape did not refresh Backstrom’s memory as Petitioner suggests. Seest

Petitioner’s Response, p.35, n.25. In fact, Petitioner’s counsel did not even present Backstrom

with the November 1 tape or the transcript on direct examination to give him an opportunity tost

have his memory refreshed. See Hearing Tr., Vol. II, p.7-66. When the government eventually

confronted Backstrom with the November 1 tape on cross-examination, he did not say “Oh, nowst

I remember what happened,” he simply offered an interpretation of the tape and maintained that

he could not recall the events in his office based on his own, independent recollection:

Q. ...If you don’t recall, you don’t think so or whatever, tell us. But if that’s -

- if you’ve got definite testimony one way or another, this is the time to do it.

A. Based on my recollection of that alone, I don’t know.(Hearing Tr., Vol. II, p.100)

* * * *

According to M erriam-Webster, “several” indicates “an indefinite number, more than two and fewer than19

many.”

19




Q. All right. And I’m still a litle confused. You said Tim might have been

saying that in response to Zach walking out, and I’m still a little confused. I

thought you said, before that - - and that’s what I’m trying to clear up. Basically,

you don’t recall for certain whether Zach was in the room or not?

A. That’s right.

Q. Would that be fair?

A. That’s right.

(Hearing Tr., Vol. II, p.101)

On cross-examination, Sid Backstrom falsely asserted that he thought Tim Balducci’s

voir dire assignment was related to actual voir dire preparation and was not code for his progress

with the Judge Lackey arbitration order. Yet, when confronted with the his October 31, 2007

tape recorded conversation with Balducci, Backstrom stated the exact opposite in that he used the

term “jury research” as code to refer to Balducci’s ex parte mission to obtain an arbitration order

from Judge Lackey.

Compare the line of questioning regarding Backstrom’s taped phone conversation with

Balducci on October 18, 2007:

Q. ...Now, when he [Balducci] says Dick hired me for voir dire, gave me

40,000 for that, he’s still talking in code, isn’t he? I mean, you understand that

he’s talking in code, didn’t you?A. No. There was an expectation he would do that work.

(Hearing Tr., Vol. II, p.82.)

With the line of questioning regarding Backstrom’s phone conversation with Balducci on

October 31, 2007:

Q. ...Now, you weren’t talking about jury research, were you?

A. No. I was talking about the order

Q. Right, the order from Judge Lackey

A. Correct(Hearing Tr., Vol. II, p.86)

In addition, Sid Backstrom’s denial that he knew about the bribe on November 1, 2007,

and his assertion that even he did not know what “we’re payin’ for it” meant is inconsistent with

the recorded telephone conversation he had with Balducci on November 13, 2007. Hearing Tr.,

20




Vol. II, p. 103. On the November 13, 2007 call, Balducci bluntly tells Backstrom that they have

already paid Judge Lackey $50,000 for the arbitration order. (11/13/07 Tape), Tr., p.14.20

Backstrom does not react with the type of shock that would have indicated he is hearing those

words for the first time. He does not say “What are you talking about!” or “$50,000 have you

lost your mind!” A fair interpretation of the November 13, 2007, tape is that Backstrom had

known about the bribe payments and was not surprised to hear Balducci describe money being

paid to Judge Lackey. Backstrom’s failure to admit his knowledge of the bribe on November 1,

2007, is a sign of his limited credibility at the hearing.

Petitioner bears the burden of proof and his first witness actually proved that his section

2255 petition fails. Petitioner did not offer any “trustworthy eyewitness” accounts at the

evidentiary hearing that refuted the testimony of Tim Balducci who testified that Petitioner knew

about the bribe payments to Judge Lackey.

Although Petitioner offered no evidence of his personal impressions of anything,

including the events of November 1, 2007, he makes the outrageous suggestion that he was

looking at his Blackberry as he walked out of the office when Balducci made the “we’re payin’

for it” comment. Petitioner’s Response, p.33. This assertion of conjecture with no basis in

evidence is one of many and is an attempt to mislead the Court. There was not a scintilla of

evidence presented at the hearing that supports the assertion that Petitioner was distracted by a

Blackberry in Backstrom’s office on November 1, 2007. Any attempt to suggest otherwise is

totally unsupported by the evidence.

Sid Backstrom’s repeated refere nces to “they,” meaning Richard Scruggs and the Petitioner, did not20

occur on the November 13 tape as suggested by Petitioner. See Petitioner’s Response, p.30, n.19. Thoseth

references appear on the November 1 tape after Balducci asked Backstrom to explain what he meant by hisst

comment the day before on the October 31 tape that Richard Scruggs was about to “melt down.” See Govt. Motionst

to Dismiss, p.17 and (11/1/07 Tape) Pet. Ex. 40, Tr., p.50-52.

21






testimony or the November 1 tape. Richard Scruggs has a proven affinity for tampering withst

judicial proceedings and his stipulated testimony is a failed attempt to exonerate his own son

from criminal liability that has no credibility. See Hearing Tr., Vol. II, p.181. Ashley Young24

had a magical, but selective, memory of every detail of one particular day but could not

remember even one of her college courses during the same time period and refused to simply

admit that the November 1 tape contains the obvious sound of a door closing. Id. at p.115, 122-st

23, & 127-30. Regardless, she did not testify to how long it took Petitioner to meet her in the

hallway and she admitted that she had no idea what was being talked about in Sid Backstrom’s

office. Id. at p.123 & 130-31. David Shelton offered nothing substantive in support of

Petitioner, but did make one intriguing comment as it regards Petitioner’s claim that he was

disinterested in what was going on behind closed doors on November 1, 2007: “[Zach] didn’t

like doors closed in the office if he wasn’t inside the door.” Id. at Vol. III, p.14. Steve Patterson

is a convicted felon with a history of ethical problems who has absolutely no way of knowing

what happened in Sid Backstrom’s office on November 1, 2007. Hearing Tr., Vol. II, p.201.25

Patterson’s testimony actually offers even more evidence that Petitioner was actively involved in

this scheme from the beginning and that the payments to Tim Balducci were cover for a bribe.26

Petitioner had to prove that it is more likely than not that every reasonable juror would

The governm ent did not suggest the stipulation and frankly, one would think that he would have don e24

more to try and help his son-that he would have demanded to testify regardless of the consequences to himself.

Patterson equated po litics with corruption and characterized his detailed involvement in the25

Wilson/Delaughter bribery scheme as nothing more than one introduction and a few meetings. See Hearing Tr., Vol.II, pp.209-10 and compare p.204 with pp.205-209.

Petitioner was not involved in actually preparing the voir dire (Vol. III, p.93-96) and the voir dire work 26

was used as code to refer to Tim Balducci’s criminal missions with Judge Lackey (Vol II, p.85). Patterson testified

that Petitioner contacted him on at least one occasion looking for Tim B alducci and inquiring about his voir dire

project. Vol. II, p.193-195. A reasonable juror would find that when Petitioner called Steve Patterson, prior to

November 1, 2007 , looking for Tim Balducci to ask him abou t the voir dire that he was actually using the known

code word for the criminal scheme in this case.

23




have found that he either did not hear “another bushel of sweet potatoes” and “we’re payin’ for

it” or that he did not understand what “we’re payin’ for it” meant. A swearing match between

Tim Balducci’s certain memory and Sid Backstrom’s failure to remember is not a swearing

match at all and is simply not enough to meet that burden. See Bosley, 409 F.3d at 665.

Knowledge of a felony is the only element of misprision that Petitioner can possibly contest at

this point and he did not establish that he had no knowledge of the bribe. As a result, he did not

prove his actual innocence of misprision of a felony for deprivation of honest services.

II. Petitioner Cannot and Did Not Prove His Actual Innocence of the Honest

Services Fraud Charges in the Original Indictment

The evidence offered by Petitioner fell woefully short of proving his actual innocence of

misprision of a felony and the application of Skilling to Petitioner’s Information would amount to

nothing more than harmless error. As a result, Petitioner’s actual innocence of the underlying

charges in the Indictment is moot and the analysis unnecessary. In addition to Petitioner’s27

failure to meet his burden, there is ample evidence in the record that a reasonable juror would

find Petitioner guilty of the honest services fraud charges in the original indictment.28

It is undisputed that a conspiracy to commit valid honest services fraud, as well as valid

substantive offenses of honest services fraud actually occurred in this case. After Skilling , a

scheme to deprive the State of Mississippi of the honest services of Judge Lackey can still be

validly defined as a scheme to obtain an order from Judge Lackey based on something other than

the merits. Skilling does not make the bribe the object of the conspiracy but simply requires that

Such a finding would also undermine Pe titioner’s complaints regarding Bousley because the Bousley27

standard would have only been ap plied to the charge to which he pled guilty.

The pertinent facts related to actual innocence of misprision of felony are basically the same as those facts28

related to the underlying charges in the Indictment and the governm ent incorporates its previous analysis of the facts

as fully set forth herein.

24




the payment of a bribe be a part of the scheme, as it was in this case. See Skilling , 130 S.Ct. at

2928. The object of the conspiracy remains the same, i.e. Judge Lackey basing his ruling on

something other than the merits.

Petitioner ignores his admissions in the Factual Basis and attempts to posture himself in

such a way that he could have done no more than have mere knowledge of the crimes in this

case. See Petitioner’s Reply, p.23. In doing so, Petitioner confuses the object of the scheme (to29

deprive honest services) with an act in furtherance of the scheme (the bribe). Petitioner’s Factual

Basis and the evidence produced at the evidentiary hearing show that Petitioner joined and

actively participated in a scheme to obtain an order from Judge Lackey based on something other

than the merits and it is undisputed that the payment of a bribe was part of the scheme.30

The Factual Basis, along with the testimony and the recorded conversations admitted at

the evidentiary hearing, clearly shows that Petitioner had a position of authority in the framework

of the conspiracy/criminal venture. It is clear that on November 1, 2007, Petitioner was in a

position to provide Balducci with marching orders on how to proceed with the commission of a

crime (the “Judge Lackey deal”). (11/1/07 Tape) Pet. Ex. 40, Tr. pp.19-30. In that conversation,

Balducci explicitly discusses the bribe and seeks guidance from Petitioner as well as Backstrom

on how they want him to execute the criminal scheme. Id. Later in the same conversation, Sid

Backstrom offers more evidence of Petitioner’s authority when he describes having to explain to

“them” and “they” (Richard Scruggs and Petitioner) why Balducci had not already succeeded in

As previously noted, Petitioner’s knowled ge of the crimes alone is co nclusive of his guilt of misprision of 29

a felony, and the government in no way conced es that Petitioner did not know about the bribe prior to No vember 1,

2007.

Even if he learned of the bribe for the first time on November 1, 200 7 (which the government does not30

concede), Petitioner made no effort to withdraw from the conspiracy after that point. Walking out of a room is not

evidence that he withdrew from the conspiracy.

25




his criminal mission to obtain an arbitration order from Judge Lackey. Id. at p.50.31

Petitioner utterly failed to prove that he did not know about the bribe and, in fact, the

evidence produced at the hearing actually proved that he did know about the bribe. However,

even without knowledge of the bribe, Petitioner cannot overcome the two key points that are

abundantly clear in this case: (1) Petitioner joined and participated in a conspiracy to obtain an

order from Judge Lackey based on something other than the merits thereby depriving the State of

Mississippi of the honest services of Judge Lackey, and (2) the payment of a bribe to Judge

Lackey was a part of and in furtherance of that conspiracy.

It is well-settled that a co-conspirator does not have to know every detail of a conspiracy

in order to be found guilty of that conspiracy.

“One may become a member of a conspiracy without knowing all the details of

the unlawful scheme or the identities of all the other alleged conspirators. If a

defendant understands the unlawful nature of a plan or scheme and knowingly and

intentionally joins in that plan or scheme on one occasion, that is sufficient to

convict him of conspiracy...even though the defendant played only a minor part.”

5 Cir. Pattern Instruction 2.20.th

“A person may be guilty as a co-conspirator even if he only plays a minor role andhe need not know all the details of the unlawful enterprise or know the exact

number or identity of all the co-conspirators, so long as he knowingly participates

in some fashion in the larger objectives of the conspiracy.” United States v.

Westbrook , 119 F.3d 1176, 1189 (5 Cir. 1997) (emphasis added)th

“The larger objective of this conspiracy” was to obtain an arbitration order from Judge

Lackey based on something other than the merits. Petitioner played an active role in

accomplishing that “larger objective” and engaged in a recorded conversation that explicitly

described the payment of a bribe to Judge Lackey. Petitioner willfully joined a scheme to

Taken in context, Sid Ba ckstrom’s comments about “they” and “them” is a response to Ba lducci’s31

question about what Backstrom meant on the phone the day before when he said Richard Scruggs was about to “melt

down.” As a result, this conversation is evidence that Richard Scruggs and Petitioner were anxious about the

“Lackey deal” and questioning Sid Backstrom about the “Lackey deal” prior to October 31, 2007.

26




deprive the State of Mississippi of the honest services of Judge Lackey and that scheme included

a bribe. As a result, he is guilty of both conspiracy to commit honest services fraud and aiding

and abetting the commission of substantive honest services fraud crimes and his guilt remains

intact after Skilling . Petitioner did not prove his actual innocence of the honest services fraud

charges in the Indictment.

In addition, the Indictment charges a money/property wire fraud scheme, more explicitly

than the Information, that is also wholly unaffected by Skilling . The government has already

established the factual basis of the money/property wire fraud scheme in this case in proving that

Petitioner pled guilty to misprision of a wire fraud scheme to defraud Jones. In addition to

clearly establishing misprision, the Factual Basis along with the evidence presented at the hearing

proves that Petitioner joined and participated in a scheme to defraud Jones. The objective of the

scheme from its outset was to defeat Jones’ multi-million dollar claims against Scruggs, et al

through corrupt means, either by obtaining an outright dismissal or ensuring that the case went

straight to arbitration. Tim Balducci explained the original objective on cross-examination:

Q: At some point in time, the strategy changes. And very shortly after that[the first meeting with Judge Lackey], the strategy changes. Isn’t it a fact that Sid

Backstrom and you had a conversation about that strategy change?

A. That’s correct.

Q. And what was the change in the strategy?

A. Originally, I think that they had decided that they wanted to try to do

something in Judge Lackey’s court to end the lawsuit, either by a motion

practice or some type of kill shot pleading. And I think that they abandoned that

idea shortly after that and decided that they wanted to go straight to arbitration

instead. And that’s what Sid communicated to me.

(Hearing Tr., Vol. I, p.136)

At the March meeting, Petitioner and his co-defendants launched a scheme to defeat

Jones’ multi-million dollar lawsuit against them by corruptly using Tim Balducci’s special

influence over Judge Lackey to obtain a “kill shot” and that scheme morphed into an attempt to

27




use Tim Balducci’s special influence to send the case “straight to arbitration.” The Indictment

does not charge a victimless crime. The charges in the Indictment involve a “betrayed party”

who was put at risk of the deprivation of a significant amount of money. See Skilling , 130 S.Ct.

at 2926 (describing an example of honest services fraud: “While the offender profited, the

betrayed party suffered no deprivation of money or property”). In this case, the objective of the

scheme was to subject Jones to the loss of millions of dollars through the use of corruption and

behind the scenes tampering.

The Indictment specifically references Title 18, United States Code, Section 1343 and

describes a scheme to defraud with Jones as the obvious victim. As a result, the Indictment

charged a valid money/property wire fraud scheme to defraud Jones that is immune from

Skilling . Petitioner has not and cannot demonstrate his innocence. Because Skilling is

inapplicable, his claims are also procedurally barred and time barred.

III. Petitioner’s Ineffective Assistance Claim is Time-Barred and Clearly Fails on the

Merits

In his Response, Petitioner argues to the Court that his petition is not subject to a statute

of limitations because his petition is actually a request for coram nobis relief. See Petitioner’s

Reply, p.54. Petitioner filed a “...Motion to Vacate His Conviction Pursuant to 28 U.S.C. 2255.”

He did not file a request for coram nobis relief and Petitioner made a point to show that he was

still under supervised release and “in custody” when he filed his section 2255 petition with this

Court. See Petitioner’s Motion to Vacate Sentence, D.E. 303, p.1, 1 paragraph. A writ of st

coram nobis is only available to petitioners who are no longer in custody. Jimenez v. E.M.

Trominski, 91 F.3d 767, 768 (5 Cir. 1996). This Court has already determined that the rules of th

28 U.S.C. 2255 apply to this proceeding and the one year statute of limitations is applicable to

28




the claims in the petition. See D.E. 371, p.2, n.1 and p.23. Petitioner is essentially arguing to32

the Court that the statute of limitations does not apply to his habeas petition because he waited

longer to file it.

Petitioner also suggests that his one timely 28 U.S.C. 2255 claim, based on Skilling,

should allow him to bring any and all other claims that were otherwise time-barred. See33

Petitioner’s Response, pp.53-54. The Skilling decision provided Petitioner with an exception to

the one-year statute of limitations in 28 U.S.C. 2255 on the Skilling issue alone. The Skilling

decision did not afford Petitioner the opportunity to raise any and all issues regardless of

timeliness. The Court has already recognized this obvious principle in its Summary Judgment

Opinion. See D.E. 371, p.23 (applying one-year statute of limitations to Petitioner’s claim of the

lack of an affirmative act of concealment).

Petitioner’s Ineffective Assistance of Counsel claim is clearly barred by the one-year

statute of limitations in 28 U.S.C. 2255 and even more clearly fails on the merits. Petitioner’s

claim is based on the fact that Tony Farese simultaneously represented Joey Langston and

Petitioner from December 10, 2007 until January 9, 2008. More specifically, Petitioner

mistakenly alleges that Joey Langston’s agreement to plead guilty in the Wilson/Delaughter

matter created an insurmountable conflict with Tony Farese’s representation of Petitioner in the

Coram nobis is also inapplicable in this case because Petitioner has not stated a valid coram nobis claim.32

Coram nobis would make Petitioner’s habeas petition even harder to prove. A writ of coram nobis will only issue

“to correct errors resulting in a complete miscarriage of justice” and does no t provide another attempt to litigate

failed 28 U.S.C. 2255 claims. Jimenez , 91 F.3d at 768. In fact, the standard for coram nobis relief is “moredemanding than the cause and pre judice standard for relief under 28 U.S.C. 2255 .” Id .

Petitioner cites a string of cases in his reply that deal with co mbinations of exhausted claims and p ending33

claims in the same case. See Petitioner’s Reply, p.54, n.35. For example, Martin v. Jones, 969 F.Supp. 1058 (M.D.

Tenn. 1997) involved a state habeas petitioner who had exha usted some of his claims but still had other claims

pending in state court. The Court ruled that the state habea s petitioner could wait until all pending claims in state

court were resolved and file one habeas petition in federal court. These cases do not apply to Petitioner at all

because he did not pursue a direct appe al and has never had a “pend ing claim.”

29






assistance of counsel. See Govt. Motion to Dismiss, p.43. Petitioner suggests that the

government failed to prove this affirmative defense because the government did not call a

witness. However, the testimony of Judge David Sanders clearly demonstrates that Petitioner 34

knew the facts supporting his ineffective assistance claim before he entered his guilty plea and

certainly before the date that his judgment of conviction became final. See 28 U.S.C.

2255(f)(4)(statute of limitations begins to run when “facts supporting the [ineffective assistance

of counsel claim]...could have been discovered through the exercise of due diligence.”) The

factual predicate of Petitioner’s baseless ineffective assistance claim is that Joey Langston agreed

to plead guilty in the Wilson/Delaughter matter while Tony Farese represented Petitioner and

then Langston subsequently became a potential 404(b) witness against Petitioner in the

Jones/Lackey matter. Petitioner cannot and did not dispute that he knew these facts on the date

on which his conviction became final. As a result, Petitioner’s claim is time-barred.35

Petitioner continues to fixate on Tom Dawson’s book, The Kings of Tort. The Kings of

Tort is not evidence, period. As the Court has already noted, excerpts from a book are not a

substitute for sworn testimony at the evidentiary hearing.

“Petitioner has quoted from a book written on these issues...In resolving the issues

raised by Petitioner, the court is going to consider evidence in open court from

live witnesses in accordance with the Rules of Evidence.”

March 16, 2011 Order, D.E. 335.

Petitioner continues to cite this book as gospel even after the evidentiary hearing.

However, Tom Dawson was not only available to testify, he was under Petitioner’s subpoena and

waiting in the witness room during the entire hearing. Petitioner did not call Mr. Dawson and

As mentioned earlier, the government canno t be prejudiced in any way for failing to call a witness.34

Petitioner’s 3/19/08 Renewed 404(b) M otion makes essentially the same claim and clearly reveals that he35

knew the factual predicate of his baseless claim before he pled guilty, much less before his judgment became final.

See Renewed 404(b) Motion, D.E. 176, p.8.

31






represented two defendants in the same trial and basically argued to the jury that the innocence of

one of his clients was based on the guilt of his other client. See Newell , 315 F.3d at 519. There

is no actual conflict in this case. Joey Langston and Petitioner have never been defendants in the

same case and Joey Langston has never testified against Petitioner. Petitioner must show

“something more than speculative or potential conflict,” yet Petitioner has offered the Court no38

more than speculation and conjecture as to the possible impact of a potential 404(b) witness who

never actually testified. Petitioner executed a waiver on January 7, 2008 and the dual

representation ended on January 9, 2008, over two months before he pled guilty. There was no

actual conflict and Cuyler does not apply.

Petitioner continues to falsely claim that Joey Langston’s Motion for Downward

Departure is evidence that Langston’s guilty plea caused harm to Petitioner. See Petitioner’s

Reply, p.49. Petitioner selectively quotes the motion and omits Richard Scruggs’ and Sidney

Backstrom’s names. Id. It is beyond dispute that Joey Langston was not going to testify against39

Sid Backstrom and that his guilty plea was not directly related to Backstrom in any way. Judge

Sanders explained that Langston’s guilty plea was a substantial factor in the plea of Richard

Scruggs and Richard Scruggs’ guilty plea strengthened the government’s position with all

remaining defendants. Hearing Tr., Vol. III, p.53 (“as a prosecutor working the case, it certainly

helped matters significantly”). Petitioner is quoting the motion out of context and suggesting that

it says something that it just does not say.

Petitioner also cannot establish that the alleged conflict adversely affected his lawyer’s

Bostick , 580 F.3d at 306, citing United States v. Culverhouse, 507 F.3d 888, 892 (5 Cir. 2007).th38

Petitioner quotes the motion as it regards Langston’s cooperation with the following passage:39

“substantially contributed...to the plea of...Zach Scruggs.” The full quote from the Motion for Downward Departure

reads: “substantially contributed to Dickie S cruggs’ subsequent plea of guilty as well as the pleas of S idney

Backstrom and Zach Scruggs (Scruggs I).” See Pet. Ex. 92, Motion for Downward Departure.

33




performance. After January 9, 2008, Tony Farese no longer represented Petitioner. Petitioner

must show that the alleged conflict adversely affected his lawyer’s performance. See Bostick ,

580 F.3d at 306-307. Petitioner has never alleged that “his lawyers” at the time of his plea had a

conflict. After Petitioner fired Tony Farese, he received counsel from a team of qualified,

experienced criminal defense attorneys for over two months before pleading guilty. The

subsequent representation of Petitioner’s experienced legal team led to a very favorable offer to

plead guilty to misprision of a felony with a recommendation of probation. At the time of his

plea, the performance of “his lawyers” was wholly unaffected by Tony Farese’s representation of

Joey Langston.

After three days of an evidentiary hearing, the best Petitioner can do is quote a book that

is not evidence and cite an affidavit that was never mentioned at the hearing. Petitioner cannot

cite real evidence because the evidence presented at the evidentiary hearing conclusively proves

that his claim of the Farese Conflict/Ineffective Assistance is time-barred and fails on the merits.

IV. Petitioner’s Alleged Government Misconduct Claim Fails

Judge Sanders’ uncontradicted testimony at the evidentiary hearing clearly showed that

Petitioner was aware of the factual predicate of his baseless government misconduct claim at the

time of his guilty plea and certainly on the date in which his judgment of conviction became

final. He could have and did not raise the issue on appeal and has procedurally-defaulted the

claim. He has also failed to comply with the one year statute of limitations contained at 28

U.S.C. 2255(f). See Govt. Motion to Dismiss, pp.30-36

The testimony of Judge David Sanders completely disposes of Petitioner’s claim that

government misconduct rendered his plea involuntary. The uncontradicted evidence before this

Court is that Petitioner did not rely on the government’s “fully aware” comment when he pled

34




guilty. On re-direct, Judge Sanders made it very plain:

“We never got that cleared up? I’ve already said we got it cleared up. You, me

and Nathan or Nathan and me, we got it cleared up...I know that Zach didn’t enter

a guilty plea based at all on his fear of what Joey was going to - - that Joey would

come in and say he knew everything about Scruggs II. Because I made that clear

to either you or Nathan or both that that was not what Joey was going to testify

to.” Hearing Tr., Vol. III, p.90-91.

Petitioner cannot overcome Judge Sanders’ testimony and he knows it. His only

response is to claim that David Sanders, a Federal Magistrate Judge, intentionally misled this

Court. Petitioner unabashedly accuses Judge Sanders of offering a “convenient surprise” to the40

government and providing self-serving testimony. See Petitioner’s Reply, p.66-67, n.42.

Petitioner’s attack on Judge Sanders has no basis in evidence and is unacceptable. Nathan

Garrett was the only other witness at the evidentiary hearing that could possibly contradict Judge

Sanders’ testimony and he did the exact opposite, admitting that he would not disagree with

Judge Sanders if Judge Sanders suggested that he explained the actual extent of Joey Langston’s

testimony prior to the date of his guilty plea. See Hearing Tr., Vol. II, p. 170-173. (“I mean, I

just don’t have a personal recollection of it. I don’t doubt Dave.”)

Over and over again, Petitioner has suggested to this Court that the government’s

response to his renewed 404(b) motion forced him to plead guilty. However, the41

uncontradicted evidence before this Court is that Petitioner had already agreed to the terms of his

plea agreement before March 21, 2008 when the government filed its response. See Hearing Tr.,

Judge Sande rs’ uncontradicted testimony also raises serious doubt as to whether Petitioner raised this40

issue in good-faith.

Petitioner continues his relentless assertions of personal impressions unsupported by the evidence, for 41

example:“[Petitioner] was focused on Mr. Langston’s testimony as a primary obstacle in any trial.” Petitioner’s

Response, p. 68. Nathan Garrett actually testified that he was focused on Petitioner’s plea and he was not focused on

the 404(b) issue. See Hearing Tr. p. 141. (“my focus and attention throughout this 404 and throughout all of this

latter part of the case was on seeking to reach a plea resolution with the government. That’s where- - and perhaps

particularly attributable to my lack of acute memory with regard to the 404. My focus was on that.”).

35




p.71 (Judge Sanders: “we certainly had hammered out a deal prior to the date he entered the

plea”). Petitioner did not abruptly decide to plead guilty on the morning of March 21, 2008.

Petitioner attempts to mislead the Court by claiming that he pled guilty the day after the

government filed its response. See Petitioner’s Response, p.69 (“Petitioner had to plead guilty,

which he did the very next day”). The government’s response was filed on March 21, 2008, the

same day that Petitioner entered his guilty plea.

Petitioner wholly failed to prove that he relied on the “fully aware” statement when

entering his guilty plea and in fact, Judge Sanders’ testimony proved the exact opposite, that

Petitioner did not rely on the “fully aware” statement when pleading guilty. As a result,

Petitioner’s claim for relief based on alleged government misconduct must fail.

CONCLUSION

Petitioner did not prove any grounds for relief in support of his 28 U.S.C. 2255 petition

and his petition fails on numerous levels. For these reasons, the Petitioner’s Motion to Vacate

His Conviction Pursuant to 28 U.S.C. 2255 should be denied.

Respectfully submitted,

JOHN MARSHALL ALEXANDER

United States Attorney

/s/ Clayton A. Dabbs

By:

CLAYTON A. DABBS

Assistant United States Attorney

Mississippi Bar No. 101537

/s/ William C. Lamar By:

WILLIAM C. LAMAR


Mississippi Bar No. 8479

36




CERTIFICATE OF SERVICE

We, CLAYTON A. DABBS, Assistant United States Attorney, and WILLIAM C.

LAMAR, Assistant United States Attorney, hereby certify that we electronically filed the

foregoing GOVERNMENT’S MEMORANDUM OF LAW AND REPLY TO

PETITIONER’S RESPONSE IN OPPOSITION TO THE GOVERNMENT’S MOTION

TO DISMISS with the Clerk of the Court using the ECF system which sent notification of such

filing to the following:

Honorable David Lee Martin

[email protected]

Honorable Michael C. [email protected]

Honorable Christopher T. Robertson

[email protected]

Honorable Edward D. Robertson, Jr.

[email protected]

This the 17th day of June, 2011.

__ /s/ Clayton A. Dabbs ______________

CLAYTON A. DABBS


__ /s/ William C. Lamar ______________

WILLIAM C. LAMAR



mailto:[email protected]








Documents

Government Responds to Zach Scruggs arguments to undo guilty plea - 061811