New Scruggs intrigue - this deal down in Venezuela
Let's connect some dots
by Alan Lange
This week, there was a very interesting new development in the Scruggs Nation. The 5th Circuit reversed and remanded a dispute between Northrup Grumman and Venezuela (yes, the country run by Hugo Chavez). Scruggs represented, at one point in the proceeding, Venezuela. Here's the docket from the original Southern District case (1:02-cv-00785). It has the usual cast of Scruggs characters (Dickie, Zack and Sid Backstrom).

From the judgment of the 5th Circuit handed down comes a synopsis of the facts.

Basically, Northrop Grumman got into a dispute with Venezuela on cost overruns on some ship repair they were doing that ran into the hundreds of millions of dollars. Scruggs, acting on behalf of Venezuela, apparently felt that he'd negotiated a settlement for $70M and Northrop accepted it. However, Venezuela protested, but the lower court held to enforce the settlement even though Scruggs could not produce any specific written authorization on behalf of his client (Venezuela) to enter into the settlement. Scruggs withdrew as counsel and made a claim for attorneys fees, but the 5th reversed and remanded the case.

During the Balducci consentual recordings where he's jawboning with Sid Backstrom, there is an unusual back and forth on this very topic, where Balducci pitches bringing in Richard Ieyoub (former LA Attorney General) to seize Venezuelan tankers to satisfy the judgment that Scruggs had.


Balducci - Um, alright, um, RICHARD lUBE (phonetic), who I think you probably know, former Attorney General in Louisiana, buddy of SCRUGGS ...
Backstrom - Mm-hmm.
Balducci - ... uh, back from tobacco days and all, he's joined us of counsel now ...
BackstromMm-hmm.
Balducci - ... and STEVE (Patterson) and he go back a long way too ...
Backstrom - Mm-hmm.
Balducci - ... but anyway, we're talking with him the other day about maritime, JONES ACT stuff, uh ...
Backstrom - Who's he workin' for now?
Backstrom. . . not anybody?
Balducci - ... not anybody. He's kind of, he, he's lone wolfin' it right now.
Backstrom - So it's like RICHARD lUBE, Attorney at Law?
Balducci - He's, he's been connected in an of counsel role with some firm in Lake Charles, I think ...
Backstrom - Mm-hmm.
Balducci - ... but he's dropping that and becoming of counsel to us and just gonna do a deal with us.
Backstrom - Mm-hmm.
Balducci - So urn, but he's got a awful lot of connections down there, you know, in Louisiana on all these types of things. One thing we, that just kinda we were
stumbled into, I went to New Orleans this week and urn, I was down there and we had lunch and talked about just a bunch of business opportunity stuff, but one of the things we kinda stumbled into was he has worked previously with his nephew on actually seizing oil tankers that have come into the port of New Orleans and port of Lake Charles ..
Backstrom - Mm-hmm.
Balducci - ... from foreign nations.
Backstrom - Right.
Balducci - And I thought about, during that time, I thought about ya'll's judgement against Venezuela ...
Backstrom - Mm-hmm.
Balducci - ... That I don't really know much about other than I think you've got a judgement and you need to collect for a whole bunch of money and you need to collect it. And there is in Lake Charles, there is the largest CITGO refinery in the world ... is in Lake Charles.
Backstrom - Mm-hmm. Mm-hmm.
Balducci - And there is, you probably know this, CALSASHUE (phonetic) or CALSACUE (phonetic), uh ... CAL, CALCASHUE (phonetic). CALCASHUE uh, LANE or whatever? That goes to it from the port and he says that you know, the government of Venezuela is runnin' vessels up and down that thing all the time ...
Backstrom - Mm-hmm.ยท
Balducci - ... going to that refinery.
Backstrom - Mm-hmm.
Balducci - And he says that he thinks that we can seize one of those vessels ...
Backstrom - Mm-hmm.
Balducci - ... or, or more I don't know how much an oil rig is worth, but you know, assuming, I mean, we could sue, seize five or six of 'em to satisfy the judgement if we had to I think, but that's somethin' That I wanted to ask you about and see if that, is That somethin' you think that has any legs to it?
Backstrom - Mm-hmm.
Balducci - Urn, to try to ...
Backstrom - Yeah, I mean we need to, we need to get our judgement in a collectable posture. Urn ...
Balducci - Oh, is it not?
Backstrom... it's not yet. Uh, you know, he's entered that judgement in our favor, but, but not for a liquidated amount yet. And so ...
Balducci - Oh, well somewhere in my mind I thought it was like forty million dollars. Where ...
Backstrom - No .
Balducci - ... 1 got that from some impression I had somewhere.
Backstrom - Yeah. Urn, no he's just found that we're entitled to fees, but he hadn't determined the amount. I mean the, if he follows our form, our formula,
yeah, it'll be, forget what the number is, but I think it's forty.


Could there be bodies buried somewhere inside Venezuela? Was there any other Venezuelan connection with the Scruggs players?

Posted July 23, 2009 - 12:06 am

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