Striking a Nerve With a Key Figure in the Don Siegelman Case

Have you ever said or written something and then wondered why it seemed to strike a nerve with a certain person?

We recently had such an experience here at Legal Schnauzer. It involved a central character in the Don Siegelman case. And it left me wondering about possible conflicts of interest involving the Siegelman criminal case and an ongoing federal lawsuit against people and entities connected to HealthSouth Corp.

For what it's worth, it also raised a number of questions in my mind about my unlawful termination at the University of Alabama at Birmingham (UAB).

It started with a post we titled "Does Rob Riley Engage in Fraud While He 'Fights' Fraud?" And it ended with a heated missive from Doug Jones, a prominent Alabama Democrat who served as lead counsel on Siegelman's defense team for roughly three years. Jones did not represent Siegelman during the trial.

Jones also happens to be one of the chief plaintiffs' lawyers in the massive federal lawsuit involving HealthSouth. Chief among the defendants in that case is former HealthSouth CEO Richard Scrushy, who was Siegelman's codefendant in a criminal case that landed both of them in federal prison.

Progressives in our state have tended to see Doug Jones as one of the "good guys," even an heroic figure at times. Jones served as U.S. attorney under Bill Clinton from 1997 to 2001. He received national attention in 2001 when he reopened and successfully prosecuted the 16th Street Baptist Church bombing case of 1963. He testified before a subcommittee of the U.S. House Judiciary Committee in October 2007 about selective prosecution in the Bush Justice Department.

Doug Jones and I would seem to be political "brothers in arms." On the same day that Jones testified before Congress, documents were entered that contained numerous references to my reporting on the Paul Minor case in Mississippi, a political prosecution with many similarities to the Siegelman case.

From the tone of Jones' response to my post about Rob Riley and the HealthSouth lawsuit, we don't seem to be on the same wavelength at this point. Maybe that's because Jones, like Riley, is one of the lead plaintiffs' lawyers in a case against Scrushy and others that has generated more than $500 million in settlements--with more to come. You can only imagine what kind of attorney fees that case might generate.

Why did Doug Jones react to my post about Rob Riley in a fairly hostile way? What does his response say about a Birmingham legal environment that seems to be awash with conflicts of interest?

First, let's consider the post in question. It ran on March 31, 2009, and noted the curious lead role Rob Riley had assumed in the massive HealthSouth lawsuit. Rob Riley, a Homewood attorney, is the son of Alabama Republican Governor Bob Riley, one of Don Siegelman's primary political adversaries.

My post noted that, because of his ties to the Siegelman/Scrushy criminal case, it appears Rob Riley had access to inside information that he was able to use to his advantage in the civil case against Scrushy and others.

Sam Stein, of Huffington Post, first raised this issue in a report in March 2008, noting that Rob Riley engaged in what amounted to "legal-political insider trading." My post borrowed heavily from Stein's work, and I added some original reporting, highlighted by this:

Riley is a curious choice to be lead counsel in a lawsuit alleging health-care fraud. That's because, according to our sources, he is an officer in a company that appears to have engaged in health-care fraud--and perhaps still is.

Sources tell Legal Schnauzer that Riley is an owner and officer in a Birmingham-based company that provides physical-therapy services. The company is facing allegations that it has repeatedly defrauded federal health-care programs.

Jones, in a response at a progressive listserv run by Pam Miles of Huntsville, Alabama, made it clear he didn't much care for my post. He proceeded to trash me, saying I knew "nothing about" the events covered in my Legal Schnauzer post. He labeled my work as "innuendo and speculation" and said I had jumped to "absurd conclusions" out of what appear to be "purely political motivations."

Those are strange words for Doug Jones to be hurling at a progressive blogger/citizen journalist, someone who has repeatedly stood up for one of Jones' former clients--Don Siegelman. It's even more strange when you consider that strong evidence indicates I lost my job at UAB because my blog has been supportive of Siegelman and critical of the Bush Justice Department.

Jones' response went from strange to alarming, in my mind, when I realized that he has legal connections to UAB. In fact, Jones' words raised troubling questions on a number of fronts, including:

* Jones' actions in his defense of Siegelman;

* Jones' motives and alliances connected to the HealthSouth lawsuit;

* Jones' motives and alliances regarding Rob Riley, who is an owner of Performance Group LLC, a fledgling physical-therapy company that stands to gain from a weakened HealthSouth, even though Riley's company faces allegations of health-care fraud that so far have been covered up by Alice Martin, U.S. attorney for the Northern District of Alabama;

* Jones' motives and alliances regarding UAB, the place where I was fired under curious circumstances, roughly a month after first writing about Rob Riley's role in the HealthSouth litigation. Jones has represented UAB in at least one high-profile legal matter, and two of Riley's partners in Performance Group are on the staff at UAB.

We will soon be raising a number of questions about these and related matters. But first, let's take a look at Jones' response to my piece.

Why did our post strike such a nerve with Jones? What do Jones' words reveal about the tight rope he has walked between the Siegelman/Scrushy criminal case and the HealthSouth civil case?

Here is Jones' full, unedited response, as posted on Pam Miles' listserv:

I try to limit my responses to most of the posts on Pam's distribution list, but when someone writes to something that they obviously know nothing about and hit hits close to home, then I am compelled to respond. Such is the case with Roger's post below. I have been involved as liaison counsel in the HealthSouth securities fraud case since the beginning of the case in August of 2002, even before the FBI raid that occurred in March of 2003. As such I have been privy to facts and not just innuendo and speculation. So let me try and clear the air on this once and for all:

To begin with I should explain that in any securities fraud case there are usually a number of complaints that are filed and both the plaintiffs and their lawyers seek appointment as "leads" from the court. The lead plaintiffs are usually large institutional investors with huge losses from the drop in the stock price. The law also states that there is a presumption that the investor or combination of investors with the largest loss should be appointed as the lead plaintiff to maintain the class action on behalf of all investors. The lead counsel is the law firm that brings that lead plaintiff to the table. Lead counsel will often have a local or liaison to assist in the case. Liaison counsel can and usually does do a good bit of work on the case, which is a all done on a contingency basis. To imply, however, that liaison counsel is some how a "lead" counsel is very misleading.

It is true that Rob Riley was not involved in the early stages of the litigation. His entry into the case, however, was more fortuitous than sinister. Until 2005, my former law firm and I were the sole liaison counsel in the case. The Coughlin Stoia firm from San Diego and the Lowey Danenberg firm from NYC were designated by the Court as the lead counsel and their clients were the lead plaintiffs. However, as the litigation progressed a conflict of interest developed for the institutional investor plaintiffs and they moved to withdraw from the case. At that time the Court opened up the lead plaintiff and lead counsel appointments again. A number of new institutional investors and their lawyers applied for the lead plaintiff and lead counsel positions, including the New Mexico Retirement Systems who had sought Rob Riley as their local counsel. The Court heard arguments from all plaintiffs and their lawyers seeking lead status. During the appointment process the primary lawyers for the New Mexico Retirement Systems, the Labaton Sucharow firm, and the Coughlin Stoia firm struck a deal whereby they would jointly put forth their respective clients as co-lead plaintiffs and the two firms as co-lead counsel. As part of the deal, Rob Riley (for the Labaton firm) and I (for the Coughlin firm) were named as co-liaison counsel. The appointment of Rob riley was solely the result of these negotiations by the lead counsel and had absolutley nothing to do with Siegelman, Scrushy or Judge Fuller. I tried to explain all of this to Mr. Stein of the Huffington Post. Anyone that was involved involved in the appointment of lead and liaison counsel will simply laugh at the suggestion that Rob Riley's entry into the case was somehow connected to Siegleman or the result of "legal-political insider trading." We both had to go through the appointment process with the court.

It is true that Riley had very little experience in securities fraud cases at time that he was selected by the Labaton firm as their local counsel. However, B'ham did not have many plaintiffs counsel that were experienced in this type litigation and all of those were already involved in the case and thus had conflicts. Moreover, while experience is helpful it is not a prerequisite for local counsel. All facets of the litigation are controlled by the lead counsel, which in the HealthSouth case was 2 of the best in the country. I will candidly say, however, that Rob Riley and his firm have provided assistance in all phases of the HealthSouth litigation and have done an outstanding job. It is a more than a stretch, however, to suggest that Rob Riley "engineered" the 445M dollar settlement paid by Healthsouth and their insurers.

I have no knowledge of whether or not Rob Riley has an interest in any health care related firm, but the fact is that the HealthSouth debacle was of Healthsouth's own making, not the plaintiff lawyers who brought the case for stockholders who lost literally billions of dollars, and certainly not Rob Riley. The settlement against HealthSouth was presented to the court for approval by lead counsel, not me or Rob Riley. The settlement against EY will be presented by lead counsel, not me or Rob Riley.

Rob Riley and I have many, many political differences, but the HealthSouth case and our duties to our clients and the stockholder class is not one of them. The bottom line here is before anyone decides to jump to absurd conclusions based on what appears to be purely political motivations they should check out facts from those involved and try and actually learn at least something about the legal proceedings they are writing about.

(To be continued)