Jackson Free Press

U.S. District Court Judge William Pauley is sending the state's $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 WorldCom's $126.2 million tax-fraud settlement with the state in 2005.

The state got $100 million in cash and ownership of WorldCom's downtown property, and gave $4.2 million to the Children's Justice Center—a 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 Children's 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.

"It is illegal for public funds to be spent except upon a two-thirds vote of the Mississippi Legislature," 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 "any decision on the merits of the claim is left to the Mississippi state court."

Langston's attorney Fred Krutz said the decision means no more than a change of setting, and that the law still stands in Langston's favor. Krutz called the decision "a purely procedural ruling by the New York federal court," adding that "no court has ruled on the merits of his claims against Mr. Langston."

Krutz went on to define Pickering's motivation as political because of the timing of the demand.

"(This) is solely about politics," Krutz said. "You can understand Mr. Langston's 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."

Pauley himself was apparently confused by the state's late action in demanding the attorney fees, according to a Sept. 19 conversation with Attorney Greg Geno, of Jackson, who was representing the state.

"But the settlement was pretty clear, wasn't it, as to how the money was going to go to the Langston law firm?" he asked.

"It was, your Honor, but state law says that if lawyers get money it's to be paid to them from some source other than the Attorney General's hourly rate or contingency fund … it has to be placed with the state legislature," Geno said. Ӆ 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?"

"But didn't the settlement agreement specifically provide that the debtors would pay $14 million to the law firm?" Pauley asked.

"It did, your Honor, but it did not give them the right to stick it in their pocket and not place it before the legislature," 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.

"Let's say DOT signs off on a $10 million contract to build a bridge. The bridge is built, they cut the ribbon. It's the best bridge in the history of this state, but a couple of years pass and the auditor says we shouldn't have paid you $10 million to build this bridge. We think it's more fair if we paid you $1 million, so why don't you just go ahead and give us back that $9 million, even though you had a contract with DOT. The legislators didn't sign off on the contract, DOT did," 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 general's contract, which called for Langston's firm to receive $16.9 for their service, not $14 million.

Pickering told the Jackson Free Press in August that the payout was the Legislature's problem: "That's a decision the Legislature will have to work out," he said. "That's not the auditor's or the attorney general's 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."

Langston and Timothy Balducci—another attorney who aided in the WorldCom case—pled guilty to bribing judges in 2007, a turn of events not lost on state judges. Langston's personal flaws will have little bearing on a state contract signed between Hood and Langston's 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

ID

141010

Comment

Folo is blogging this story today, as well as Salter's more partisan column about it today.

Author

DonnaLadd

Date

2008-11-26T11:05:26-06:00

ID

141012

Comment

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.

Author

justjess

Date

2008-11-26T11:51:38-06:00