Wednesday, February 24, 2010
In 2004, Attorney General Jim Hood hired attorneys Joey Langston and Timothy Balducci—who later pled guilty to corruption in 2008 and 2007, respectively—to recoup unpaid taxes and interest resulting from a multi-state tax fraud scheme Clinton-based WorldCom cooked up before the company's 2002 collapse.
WorldCom's new owner, MCI, eager to be rid of loose ends after the bankruptcy, agreed to pay the attorneys separately from the $110 million they agreed to pay the state. But State Auditor Stacey Pickering said state law doesn't allow a defendant to directly pay attorneys contracted by the attorney general's office, and wants that $14 million fee put directly into state coffers. Hinds County Circuit Court Judge Winston Kidd disagreed on Feb. 11, saying there was "nothing improper or illegal" about MCI's payment to the Langston Law firm.
Pickering is pursuing the case to the Mississippi Supreme Court, however, and will likely get a preferential decision considering the court's corporate-defense-friendly environment, and such a decision would be good for corporate defendants. Hood asserts that a decision against the MCI settlement will discourage attorneys from seeking contracts with the state for big law suits—contracts that have earned the state more than $260 million during his two terms in office. The money often came at critical moments of budgetary shortfall, such as the $40 million Hood earned in 2009 in a Microsoft settlement and the more recent $18 million settlement with Eli Lilly and Co. this year.
But Republicans, spurred by corporate supporters like the U.S. Chamber of Commerce, don't like big companies getting sued, even if they acted improperly or endangered lives. The Chamber's influence is obvious in Republicans' repeated efforts to complicate or end Hood's ability to contract outside attorneys through failed bills this legislative session.
The Chamber and its affiliates invested heavily in judges' campaigns for the state Supreme Court, and it will likely get what it wants in terms of Hood's ability to take on corporate malfeasance. But at what cost to the state? Pickering's suit, according to Hood, has already cost taxpayers more than $340,000 in legal fees paid to its own contracted attorneys to chase Pickering's position.
On top of that, if Pickering succeeds in nullifying Hood's contract with the Langston firm, the state may have to pay the attorneys an extra $3 million. By Hood's contract, the firm had earned $16.9 million, based on the size of the WorldCom settlement, not $14 million. The company could fall back on Hood's original $16.9 million contract if Pickering breaks the MCI contract.
Langston proved to be a dirty guy, but the process that employed him has been successful in saving the state's backside on countless occasions. It's time to stop putting the will of the Chamber over the needs of the state, especially in these trying times.