Alabama's All-White Supreme Court, in a state with a 26-percent Black population, appears to oppose a new bar exam that might enhance diversity in legal field

Alabama's All-White Supreme Court

Alabama, with a population that is 26 percent Black, has appellate courts that consist of justices who are 100 percent White. If that smells funny to you, it might be because you are one of those "forward-thinking people," who draw suspicious glances from the all-White arbiters of justice filling Alabama's high courts. After all, they seem just fine with things the way they are, given their apparent distaste for a new bar exam that might actually enhance diversity and inclusion in the legal profession. One of their number has openly stated his opposition to the new exam before a nationwide audience, and the others (by their silence) seem to agree with him. 

Donald Watkins, an online journalist and longtime Alabama attorney and businessman (who is Black), points out a largely forgotten part of the bar-exam story in his home state and surrounding states. Bar exams started as a form of resistance to desegregation of law schools across the South. In short, bar exams came into being when Blacks, Hispanics, Native-Americans, Asians, and other under-represented groups began to enter law schools across the South. Is it possible the all-White justices in Alabama remember segregated law schools as a sign of the "good old days" in their profession. In an editorial opinion at his Web site, DonaldWatkins.com, Watkins notes that one White Alabama justice seems to yearn for the days when bar exams were used to help keep "undesirables" out of the legal profession.This justice already has announced his opposition to a new bar exam that might help make the field more diverse and inclusive.

Is this approach both shameless and short-sighted? Watkins addresses that question in a post titled "All-White Alabama Supreme Court Resists New Bar Exam That Promotes Diversity, Equity, and Inclusion." Watkins writes:

Alabama Supreme Court Justice Jay Mitchell wrote an editorial opinion which was published in The Wall Street Journal (WSJ) on May 19, 2023, that blasted a new Bar exam (NextGen) developed by the National Conference of Bar Examiners. The new exam is scheduled to roll out across the nation in 2026.

Ostensibly, Justice Mitchell’s views represent those of his brethren and sisters on the all-white Alabama Supreme Court, since none of them has publicly distanced themselves from his anti-black editorial rant about the new NextGen Bar exam.

Justice Jay Mitchell

Justice Mitchell claimed the new Bar exam will put “considerable emphasis on examinees’ race, sex, gender identity, nationality and other identity-based characteristics.”

Mitchell, who possesses no academic or professional expertise in the psychometric principles involved in the construction, small-scale feasibility trials, content validation, large-scale testing, and cut-score algorithms for standardized tests, asserted that “[t]he idea seems to be that any differences in group outcomes must be eliminated—even if the only way to achieve this goal is to water down the test.”

Interestingly, Justice Mitchell has never felt compelled to speak out against the all-white makeup of the 9-member Alabama Supreme Court, the 5-member Alabama Court of Civil Appeals, or the 5-member Alabama Court of Criminal Appeals in a state that is 26% black. Mitchell is apparently very comfortable in this all-white appellate court paradigm.

Mitchell also whitewashes an ugly part of Alabama's history with legal education. Writes Watkins:

Justice Mitchell, a member of the ultra-conservative Federalist Society, seems to be obsessed with the possibility that greater numbers of black lawyers might be admitted to the Alabama Bar Association under the new Bar exams, which he wants to delay by 5 to 10 years.

Nowhere in his WSJ editorial does Justice Mitchell acknowledge the fact that the state of Alabama operated with no Bar exam, whatsoever, for graduates of the University of Alabama’s law school until 1965.

White University of Alabama law school students (and white graduates from other accredited law schools) were admitted to the Alabama Bar Association under a “diploma privilege” upon their graduation from law school, pursuant to Title 46, § 26, Alabama Code (1940).

Title 46, § 26, was amended in 1961 so that the "diploma privilege" would ".... apply only to graduates of the law department of the University of Alabama who, having been students there on or before August 31, 1961, graduate therefrom on or before August 31, 1965, and to no others." Title 46, § 26, Code 1940 (1973 Supp.). 

Of course, the University of Alabama was all-white until Vivian Malone and James Hood desegregated the undergraduate school under National Guard protection in 1963. The University's law school was desegregated in 1969.

In essence, the "diploma" privilege was a  form of white privilege -- and one of its beneficiaries went on to become a powerful U.S. senator, writes Watkins:

One of the University’s best known “diploma privilege” graduates is former U.S. Senator Richard Shelby, who received his undergraduate degree in 1957 and law degree in 1963 from the all-white University of Alabama in Tuscaloosa. After graduating from law school, Shelby lived and worked in Tuscaloosa as a prosecutor for the city (from 1963 to 1971) and a U.S. magistrate for the Northern District of Alabama (from 1966 to 1971).

In his law-enforcement capacities, Shelby was a direct and willing participant in the FBI's COINTELPRO program in the Northern District of Alabama. Between 1963 and 1971, Shelby aggressively used his law-enforcement positions to railroad thousands of blacks in judicial proceedings conducted by all-white, like-minded trial judges in Tuscaloosa city's and the Northern District's criminal-justice systems.

The history of bar exams in the South is filled with racial animus, Watkins states:

When blacks, Hispanic-Americans, Native-Americans, Asians, and other underprivileged minority students began attending law schools across the South, resistance to the desegregation of these all-white law schools arose. Alabama and other Southern states began eliminating the “diploma privilege” and imposing a “bar exam.”

As stated by the Speaker of the South Carolina Senate, the purpose of the bar examination was “to bar Negroes and undesirable whites” from becoming lawyers. The “bar exam” became a means to ensure racial disparity.

It is painfully apparent that the drum major of the new movement “to bar Negroes and undesirable whites” from becoming lawyers in Alabama is Justice Jay Mitchell, who was elected to the Alabama Supreme Court in 2018.

Before serving on the Supreme Court, Justice Mitchell was an attorney with Maynard, Cooper & Gale (now Maynard Nexsen). He has never been known as a champion of diversity, equity, and inclusion.

Justice Mitchell was born in Mobile, the hometown of former U.S. Attorney General Jeff Sessions. He grew up in South Alabama and in Homewood.

Mitchell received his Bachelor of Arts with honors from Birmingham-Southern College, where he graduated Phi Beta Kappa and served as president of the student body.

Ironically, the city of Birmingham, which is 69% black, is presently considering a $5 million loan to bailout a financially destitute Birmingham-Southern College so that it can produce more state government leaders like Jay Mitchell and his band of Federalists.

Justice Mitchell holds a Master of Arts from University College in Dublin, Ireland, and received his law degree from the University of Virginia School of Law.

Jay Mitchell hardly is alone in supporting a backward-looking approach to legal education. Writes Watkins:

Ironically, no official of the Alabama Bar Association or the Alabama Lawyers Association has distanced himself/herself from Justice Mitchell's racist commentary. Likewise, neither organization has challenged the all-white makeup of Alabama's appellate court system.

Justice Jay Mitchell epitomes the renaissance of an all-white Alabama state government, once again. His WSJ editorial says out loud what his colleagues on the Supreme Court bench say in private conversations.

Alabama has returned to the “Good Ol’ Days” of the White Citizens Council (now known as the state Republican Party) and an all-white appellate court system.

Eric Parsa, an autistic 16-year-old in Louisiana, was having a "meltdown," and he died after deputies applied a chokehold and sat on his back for 9 minutes

Scene of Eric Parsa's death near New Orleans

 

A 16-year-old autistic boy in Louisiana is dead after sheriff's deputies applied a chokehold and sat on his back for nine minutes. Lawyers from the U.S. Department of Justice state in a court document that officers might have violated the youth's civil rights. That is from a report at ProPublica, under the headline "Feds Say Jefferson Parish Deputies May Have Violated Law in Death of Autistic Teen; Officers sat on the 16-year-old’s back for nine minutes before he died. They claim they needed to do so because he posed a threat."Reporter Richard A. Webster writes:

The Jefferson Parish Sheriff’s Office (JPSO) in Louisiana may have violated the civil rights of a 16-year-old autistic boy when deputies pinned him to the pavement, handcuffed and shackled, as officers sat on his back for more than nine minutes, according to a “statement of interest” filed this month by the Department of Justice as part of a civil rights lawsuit against the JPSO.

The teen, Eric Parsa, died on the scene in January 2020. The sheriff’s office has also recently faced a number of other lawsuits alleging wrongful death, excessive force and racial discrimination by deputies. The sheriff’s office was the subject of a yearlong investigation by ProPublica and WRKF and WWNO starting in 2021, which disclosed evidence of racial discrimination and violence by deputies; after the first story ran, the American Civil Liberties Union called on federal prosecutors to investigate the department.

Eric Parsa (right), with his parents

Regarding the DOJ filing, the JPSO maintains that its deputies did not discriminate against Parsa based on his disability — and thus did not violate the Americans with Disabilities Act — because Parsa posed a threat to himself, the public, and law-enforcement officers.

But the DOJ said that evidence submitted in the case appears to show that Parsa posed no danger, and that deputies were aware of the teenager’s disability and did nothing to modify their procedures or actions to ensure his safety, as required by law.

“A reasonable jury could thus find that Defendants discriminated against E.P. based on disability,” DOJ attorneys said in their May 12 statement about the Parsa case, noting the only word Parsa uttered throughout the deadly ordeal was “firetruck.”

The Parsa family disagrees with the coroner's conclusions in the case, Webster writes:

The coroner ruled the teen’s death an accident as a result of “excited delirium,” a controversial diagnosis that is listed as a cause of death for a number of people who died in police custody. The coroner also cited “prone positioning” as a contributing factor. But Parsa’s family disputes the finding that his death was accidental, saying it should be classified as a homicide. In January 2021, they sued Sheriff Joe Lopinto and seven deputies, claiming the sheriff’s office violated Parsa’s constitutional and civil rights, as well as his rights under the ADA.

The Justice Department files statements of interest in civil lawsuits to “explain to the court the interests of the United States in litigation between private parties,” according to a 2017 article in the Harvard Civil Rights-Civil Liberties Law Review. Since January 2020, the DOJ has filed at least 18 other statements of interest in disability rights cases. In this case, the department’s interest is its responsibility to enforce Title II of the ADA, which prohibits law-enforcement agencies from denying individuals with disabilities the “opportunity to participate in or benefit from their services.”

The DOJ's May 12 statement followed a motion from the sheriff’s office for federal Judge Wendy Vitter to issue a partial summary judgment, which would toss out the ADA claims without taking them to trial. The motion is pending.

The incident leading to Eric Parsa's death started from what was supposed to be a fun family outing. From the ProPublica report:

On Jan. 19, 2020, Parsa’s parents took him to play laser tag at the Westgate Shopping Center in Metairie. As they were leaving, he experienced a disability-related meltdown, according to the family’s lawsuit. Surveillance footage shows the boy repeatedly slapping his own head in the parking lot, then slapping and wrestling his father for several minutes.

A nearby business manager contacted JPSO Deputy Chad Pitfield and informed him that a child with special needs was having a violent episode, Pitfield testified in a September 2022 deposition. When Pitfield arrived in his patrol car with the lights flashing, Parsa became even more agitated. He once again began slapping his own head, then slapped Pitfield, who took him to the ground, the video shows.

At least six more deputies arrived in four patrol cars and two unmarked vehicles. They handcuffed and shackled the teen as three deputies took turns sitting on his back, with one putting him in a chokehold. About 10 minutes later, deputies noticed Parsa had gone “limp” and had urinated, according to the lawsuit. His mother screamed that they were choking him. Only then did they roll him into a “recovery position,” as filings describe it. But it was too late. He died on the scene.

What requirements does the law place on law-enforcement officers in such a delicate situation? The DOJ and the sheriff's office disagree on that question, Webster reports:

Title II of the Americans with Disabilities Act requires law-enforcement agencies to make “reasonable modifications” to their policies, practices, and procedures to ensure that people with disabilities are not discriminated against or denied services.

In Parsa’s case, the DOJ said deputies could have dispatched crisis intervention officers, used de-escalation strategies, or given the teenager time and space to calm down as he didn’t pose a significant safety threat. Instead of sitting on him as he lay facedown on the pavement, deputies could have rolled Parsa onto his side, stood him up or sat him in a vehicle.

The sheriff’s office maintained in court documents that such policy modifications are only required once two factors are in place: The scene is secured, and there is no longer a threat to public safety or life. JPSO maintains that neither condition had been met in Parsa’s case, and therefore the deputies’ actions did not violate the ADA.

“The video speaks for itself and clearly shows that the scene was never secure prior to E.P.’s demise,” the sheriff’s office’s attorneys wrote in a May 1 motion for partial summary judgment, referring to surveillance footage taken from the scene.

What does the video show? It shows a chaotic scene that defies clear-cut conclusions. Writes Webster:

The video shows that at about 1:29 p.m, Pitfield pinned Parsa to the ground by sitting on his back. From that point forward, Parsa did not move from that spot. At one point, he was surrounded by seven deputies and seven JPSO vehicles. An ambulance arrived at 1:39 p.m. and a few minutes later paramedics took Parsa’s lifeless body away on a stretcher.

In reviewing the video, the DOJ reached different conclusions from those put forward by the sheriff’s office.

“Critically, nothing … suggests that E.P. had a weapon, that officers ever reasonably suspected he had a weapon, or that there was a threat to human life,” the DOJ said in its statement. “The record contains no evidence that any bystanders were at risk.”

There is evidence, however, that deputies “could have provided any number of reasonable accommodations once the scene was secure, and thereby afforded the child a safe and effective law-enforcement response,” DOJ attorneys concluded.

Statements provided by deputies who were present — and who acknowledged that they knew or assumed Parsa was autistic or had special needs — also seem to contradict the sheriff’s statement that the scene was not secure. They said that while he was on the ground, he was “calm” or “under control” and was not resisting.

“Everything was fine,” two deputies said.

Richard Scrushy says in press release that he has no ties to Alabama inmate's million-dollar account, and he has heard from disgruntled Encompass shareholder

Richard Scrushy (center)

 

Former HealthSouth CEO Richard Scrushy says accusations last week that he controls a million-dollar account for an Alabama inmate are false and amount to an attack on his family by attorneys from Bradley Arant, the law firm representing the company Scrushy founded (now known as Encompass Health). Bradley Arant is leading collection efforts related to a $2.78-billion judgment against Scrushy. The former CEO said he has heard from a disgruntled Encompass Health shareholder who is concerned about the millions of dollars in shareholder assets that have been spent on Bradley Arant's largely fruitless collection attempts.

In a press release issued yesterday, Scrushy stated:

On May 22, 2023, Bradley Arant, Encompass Health attorneys, filed a TRO motion (temporary restraining order), asking Judge England to allow certain discovery of a bank account belonging to Eddie Briskett, an Alabama inmate who they claimed to have a financial tie to Richard Scrushy. They made a claim that Mr. Scrushy was a signature on Mr. Briskett’s account at JP Morgan Chase. They also made the claim that Mr. Scrushy was receiving funds from that account to the tune of several million dollars. Judge England held a hearing on May 23, 2023, where he asked Mr. Scrushy about his knowledge and involvement with Mr. Briskett. Mr. Scrushy told Judge England to put him under oath and swear him in if needed. Mr. Scrushy told the court he has never been on any account of Eddie Briskett and is not a signature on the account and that he has never received a single penny from inmate Eddie Briskett.

Mr. Scrushy told the judge to allow the plaintiff attorneys at Bradley Arant to have full discovery of Mr. Briskett’s account and they would see that Mr. Scrushy was never on the account as a signature and that Mr. Scrushy has never written a check on Mr. Briskett’s account and that Mr. Scrushy has never received a penny from Mr. Briskett. They will also find, as well as everyone else, that this was false information put out by the Encompass Health attorneys at the law firm Bradley Arant and it was simply another attack on Mr. Scrushy and his family.

Mr. Scrushy said, “ I have never been a signature on any account associated with Eddie Briskett and I have never received any money from Eddie Briskett” Scrushy also stated “ this is nothing more than a continuation of the overbilling machine at the Bradley law firm; these attorneys continue to make up opportunities to bill their client, Encompass Health.

Scrushy said: “ This is another boondoggle allowing the Bradley attorneys to bill large fees, and the leadership at Encompass is either being hoodwinked by this law firm or they are simply incompetent, allowing millions in billings without a return, and this is uncommon for a public company to allow this kind of waste of shareholder assets.”

Scrushy also stated: “ I have received calls from a disgruntled shareholder of Encompass, complaining about the millions and millions of wasted shareholder assets being paid to the Bradley law firm over the past 10-plus years, with no return.”

Scrushy further stated “ we were informed by a knowledgeable source that to date the Bradley attorneys have billed Encompass Health more than $110,000,000 filing, useless and wasted make-up legal work that has not given Encompass Health a nickel in return and never will because there is no there there.”

Mr. Scrushy stated that as a minister he has been involved in prison ministry for many years and he met Eddie Briskett in his work with prison inmates, and that Eddie Briskett is a good Godly man with a family who has turned his life around and one day hopes to return to the free world and be a productive citizen, a father to his children and a husband to his wife.

Bradley Arant's collection scheme on $2.78-billion Richard Scrushy judgment shines light on the "anything goes" credo that guides big law, big business

When many Americans voice concerns about crime, they probably are thinking about street crime -- muggings, stabbings, thefts, and the like. But another form of crime, which likely flies beneath many radars, has become the "new frontier" of criminal activity, according to a post at DonaldWatkins.com.

A longtime Alabama attorney and businessman, Watkins says publicly traded companies have become a "land of opportunity" for the criminally minded. Under the headline "Ripping Off Public Companies is the Newest Hotbed of Criminal Activity," Watkins writes:

Only after I began researching the decades-long racketeering enterprise and massive $27-billion accounting-fraud scheme at the Atlanta-based Southern Company, in a series of articles published between January 27 and May 23, 2023, did I realize that ripping off publicly traded companies has become the newest hotbed of criminal activity.

Encompass Health’s payments of more than $100 million to the Birmingham, Alabama-based law firm of Bradley Arant Boult Cummings LLP (“Bradley Arant”) to collect $33 million on a $2.9-billion civil-court judgment against former HealthSouth CEO Richard Scrushy solidified my belief in this regard.

The payment of more than $100 million to collect $33 million on a civil debt made me realize that no one is safeguarding the financial interests of shareholders in these publicly traded companies. The executive officers in charge of these public companies can waste, mismanage, pilfer, and/or steal hundreds of billions of dollars in corporate funds each year, with no worries at all.

Publicly traded companies present criminal opportunities on an epic scale, the kind that everyday Americans hardly can imagine. Writes Watkins:

The amount of market value and cash held in publicly traded companies is obscene. What is more, the CEOs of these companies make more than a hundred times what their employees get paid in annual salaries.

In the Southern Company’s case, for example, former CEO Thomas A. Fanning’s total compensation for 2022 was more than 167 times the median annual pay of $143,500 for a Southern Company employee.

The total market capitalization of the U.S. stock market was $40,511,838,800,000 (rounded off to $40.5 trillion), as of December 31, 2022. The market value is the total market cap of all U.S.-based public companies listed in the New York Stock Exchange, NASDAQ stock market, or OTCQX U.S. market.

In 2022, publicly traded companies were sitting on $5.8 trillion in cash, according to Mitchell Petersen, a finance professor at Northwestern's Kellogg School of Management.

In contrast, the U.S. government’s budget for the fiscal year that began on October 1, 2022, and ending on September 30, 2023, is $6.2 trillion. The state of Alabama’s budget for 2022 was $35.5 billion. The city of Birmingham’s budget for the fiscal year that began on July 1, 2022, and ends on June 30, 2023, is $517 million.

On any given day, the aggregate amount of market value. liquid assets, and cash held in these publicly traded companies dwarfs the annual money appropriated to these three government entities.

Yet, nobody is paying attention to how the corporate executives of public companies in America mismanage, pilfer, and/or steal this public money -- not the U.S. Department of Justice, nor the U.S. Securities and Exchange Commission, nor the Federal Trade Commission, nor state attorneys general, nor state securities commissions.

There is no shortage of oversight agencies, but they can't, or won't, take action against the unbridled greed that is present in corporate America, Watkins reports:

Nobody is watching these Wall Street crooks, and they know it. As a result, many of the top executives of these public companies are looting them in displays of unparalleled greed and corruption.

The unreported and undisclosed “insider” deals among the executives and board members of publicly traded companies have mushroomed to epic proportions and are limited ONLY by the imagination of the greedy executives who run these companies.

Unlike government agencies, there are virtually no private oversight groups or public “watchdog” organizations guarding this Wall Street money.

Executives at public companies, along with many of their board members, are feasting off this abundance of corporate cash.

A somnolent U.S. Department of Justice (DOJ) bears much of the blame for this sorry state of affairs:

There is virtually no federal law-enforcement activity with respect to New York Stock Exchange/Fortune 500 companies and other publicly trade companies. Their executives are mostly immune from federal criminal prosecution, as well.

Starting with the Barack Obama administration, these public companies were deemed “too big to prosecute.” This gave them the freedom to do as they pleased.

Instead of prosecuting Wall Street crooks, the Department of Justice has focused on the prosecution of street criminals and small-time politicians like former Alabama state representative Fred Lee Plump Jr. 

Why did the DOJ single out Fred Plump? Perhaps because he is Black? Maybe because he's easy pickings? Writes Watkins:

Plump was charged on May 23, 2023, with one count of participating in a $400,000 federal wire-fraud conspiracy and one count of obstruction of justice. Plump pled guilty on the same day.

Prosecutors and defense attorneys call criminal cases like Plump's “low hanging fruit.” Ninety-nine percent of the criminals swept up in these cases plead guilty. Those who go to trial are usually convicted.

On May 27, 2023, we broke the story of how Bradley Arant has ripped-off Encompass Health for more than $100 million in legal fees since 2009. As expected, there has been no criminal investigation into this rip-off scheme by federal prosecutors because Encompass Health is a New York Stock Exchange/Fortune 500 company and Bradley Arant is considered a “blue-chip” regional law firm.

Furthermore, Lloyd Peeples, who heads the Criminal Division of the U.S. Attorney’s Office in Birmingham, is a former Bradley Arant law partner. Peeples has never prosecuted a New York Stock Exchange/Fortune 500 company for any crime.

Lloyd Peeples has given Wells Fargo Bank, which operates in Birmingham, a prosecutorial "pass" for the bank's nationwide crime spree and 230 major violations of laws since 2000.

Since 2009, two Bradley Arant partners have served as general counsel of Encompass and its predecessor, HealthSouth Corp. The first one was John P. Whittington, who was general counsel from 2006 to 2016.

Patrick Darby succeeded Whittington as general counsel in 2016. Darby was a Bradley Arant partner, as well.

Rather than hiring Bradley Arant on a standard 15% contingency fee contract for Encompass Health’s debt-collection work on the court judgment in Richard Scrushy’s case, Whittington and Darby chose to reward Bradley Arant with an open-ended “fee for services” contract that has enriched their old law firm by more than $100 million.

Despite spending more than $100 million to collect about $33 million on the Scrushy judgment, the firm has not collected one dime of money from Richard Scrushy in the past 10 years that can be credited towards the Encompass civil judgment.

In recent years, the only beneficiary of Bradley Arant’s debt-collection work in the Scrushy case has been the Bradley Arant law firm itself. Whittington and Darby placed their old law firm on the gravy train of a lifetime -- at the expense of Encompass Health's shareholders.

Meanwhile, these Birmingham federal prosecutors are pounding their chests and salivating over the guilty plea in Fred Plump’s $400,000 wire-fraud conspiracy case.

Not one of these prosecutors has exhibited the courage needed to investigate and prosecute the Encompass Health-Bradley Arant $100-million rip-off scheme.

Have the DOJ's prosecutors in Birmingham shown much interest in the Bradley Arant collection scheme? Nope. It seems they are too busy handing out free passes, Watkins notes:

So, what is former Bradley Arant law partner Lloyd Peeples doing about this situation? Peeples has turned a blind eye to this rip-off scheme. He is part of Birmingham's "Good Ol' Boys" network.

Remember, Lloyd Peeples’ only hands-on experience in running a business involved a failed pizza restaurant he owned and ran for 11 months prior to joining the U.S. Attorney’s office in 2017 after his pizza business crashed. 

What is Prim F. Escalona (U.S. Attorney for the Northern District of Alabama) doing about the Encompass Health-Bradley Arant rip-off scheme? Absolutely nothing.

After all, Ms. Escalona is a Donald Trump “laissez-faire” holdover appointee who is poised to serve throughout President Joe Biden’s presidency for reasons that no one can explain.

That brings us to the U.S. Securities and Exchange Commission (SEC), which seemingly has been asleep at the switch for decades. Writes Watkins:

As was the case with the infamous Bernie Madoff fraud scheme, the SEC has been asleep at the wheel with respect to the Southern Company's racketeering and massive $27-billion accounting-fraud case and the Encompass Health-Bradley Arant $100-million legal fees rip-off scheme.

Bernie Madoff was a New York financier who executed the largest financial-fraud crime in history, via a sophisticated Ponzi scheme. Madoff defrauded thousands of investors out of at least $64.8 billion over the course of 17 years.

On December 11, 2008, FBI agents arrested Madoff and charged him with one count of securities fraud.

The SEC had previously conducted multiple investigations into Madoff's business practices, but the Commission had not uncovered the massive fraud. In 2000, financial analyst Harry Markopolos filed a “whistleblower” complaint with the SEC that was ignored. It wasn’t until five years later, in 2005, that Markopolos was able to convince the SEC of Madoff’s financial crimes.

On March 12, 2009, Bernie Madoff pleaded guilty to 11 federal felonies and admitted to turning his wealth-management business into a massive Ponzi scheme. Madoff was sentenced to 150 years in prison and required to forfeit $170 billion. He died in prison on April 14, 2021.

Like the Madoff case, the SEC has paid no attention to Bradley Arant’s brazen $100-million rip off of Encompass Health in connection with its judgment-collection work in the Richard Scrushy civil case. Why would it? After all, the agency, itself, was scolded by a federal judge in a May 7, 2003, published opinion for its egregious violations of Scrushy’s constitutional rights. It does not appear that the SEC gives the 10-Qs and 10-Ks of Encompass Health, the Southern Company, and other publicly traded companies anything more than a cursory glance. Furthermore, no honest and competent SEC enforcement official would condone Bradley’s $100-million rip off of Encompass Health.

Have publicly traded companies become engulfed in an "anything goes" environment, and has anyone in authority shown signs of trying to stop it? Watkins is not holding his breath:

There is no indication that the federal law-enforcement establishment is willing or prepared to take on big-time Wall Street crooks or a law firm like Bradley Arant.

Attorney General Merrick Garland is retired in the job he was given as a consolation prize for not getting the U.S. Supreme Court seat that Obama promised him. Meanwhile, President Joe Biden is busy learning how to walk without stumbling.

The SEC’s Enforcement Division staff is an embarrassment to itself and the Commission. The Division consists mostly of lawyers who are too washed up to go into private practice. If deferential and ingratiating federal judges did not show these government lawyers preferential treatment, the Division would likely lose nearly all of its enforcement cases.

Within this sad paradigm, the pilfering of corporate money from the coffers of publicly traded companies will continue to skyrocket. This cookie jar replenishes itself, it is wide open, and no one is stopping the theft of shareholders' money.

Efforts to seize assets of former HealthSouth CEO Richard Scrushy re: $2.87-billion judgment renew memories of my nutty chat with Judge Allwin Horn

Judge Allwin Horn

 

Part Three

We wrote last week about former HealthSouth CEO Richard Scrushy and accusations that he is hiding millions of dollars related to a $2.87-billion judgment against him. In Part One of a three- or four-part series that began last Thursday (5:25/23), I reported that Scrushy had denied wrongdoing and said he welcomes court-ordered disclosures because opposing counsel "will find nothing. It’s totally made-up, false information that never should have been put out.”

In Part Two, we focused on Donald Watkins' op-ed piece stating that efforts to collect on the Scrushy judgment had turned into a $100-million gravy train for Birmingham law firm Bradley Arant. Watkins noted that an investigation by the US. Securities & Exchange Commission and a shareholder-derivative lawsuit might be necessary to bring Bradley Arant's "open-ended" collection scheme to a halt.

Along the way, I noted that the latest events renewed my longstanding suspicions that justice was not done in the  Scrushy civil matter, which concluded in June 2009 with a judgment against the former HealthSouth chief of almost $2.9 billion. Why did I find the outcome of the Scrushy trial, along with the latest efforts to seize his assets, troubling?

It's because I had an unpleasant encounter with Judge Allwin Horn, in a matter separate from the Scrushy case, shortly before he retired in 2009. Horn summoned me to his office, and I sat about an arm's length from him, on the other side of his desk. He gave me the impression that his mental acuity was clouded, and his integrity was . . . well, I wasn't sure  it existed to any significant degree -- at least for a man entrusted with presiding over a court of law. I remember thinking, "This guy has no business overseeing any legal case, much less the Scrushy lawsuit -- a complex matter involving billions of dollars. Horn retired from the bench on June 1, 2009, just 17 days before announcing the Scrushy verdict on June 18, 2009.

The peculiarities with Horn begin right there. A judge retires 17 days before announcing the verdict in one of the most high-profile corporate cases in Alabama history? That becomes more troubling when you consider that the Scrushy case was a bench trial, with no jury and Horn sitting as the lone decision maker. Are we to believe The Alabama Court System could not find an active judge, one not retired, to handle this matter? According to published reports, both sides agreed to a bench trial, without coercion -- and that allowed Horn to act as a one-man decision maker, without the presence of a jury. Is it true, however, that both sides willingly agreed to this arrangement?

Some of the oddities hit close to home for our Legal Schnauzer family, as I noted in an April 30, 2009,  post titled "Good Riddance to a Bad Judge--One Who Has Ties to the (Don)  Siegelman Case."Here is how I got intertwined with Allwin Horn:

News came recently that Alabamians soon will have one less bad judge to worry about. That's because Jefferson County Circuit Judge Allwin Horn is retiring, effective June 1.

That's good news because we've seen Horn in action, and he's a lousy judge. It's frightening to think Horn has played a major role in a multimillion-dollar lawsuit, one that has connections to the prosecution of former Alabama Governor Don Siegelman.

Former HealthSouth Corp. CEO Richard Scrushy, the codefendant in Siegelman's criminal case, has long been embroiled in a civil case in state court. The case is styled Tucker v. Scrushy, and Horn has been right in the middle of it.

Tucker v. Scrushy started in 2002 when HealthSouth shareholder Wade Tucker filed a derivative claim on behalf of the company in state court. Several settlements have been announced in the consolidated case, but I believe it still has not been fully resolved.

Will Horn take more more action in the case prior to his June 1 retirement date? (Answer: Maybe, but he definitely took action after he was retired.)

What convinced me that Horn was a bad judge. This is how I spelled it out in the April 2009 post:

How do I know Horn is a bad judge? I've had the misfortune of watching him work in an up-close-and-personal way. I've been in his office two or three times for "conferences." Just thinking about that experience makes me want to take a shower.

How bad is Horn? So bad that he can't even follow his own orders. Here's the story:

Horn "handled" my legal-malpractice case against Birmingham attorney Richard Poff. The case shouldn't have been all that difficult. Poff took $4,500 of my money, did virtually no work on my case, and lied to me about how he planned to handle the matter.

Specifically, Poff had assured me that we would conduct discovery in the lawsuit involving my troublesome neighbor, Mike McGarity. We would conduct depositions to provide information both for my defense and for the countersuit I had filed against McGarity.

After assuring me of that, Poff then became incommunicado for months. He failed to return numerous phone messages. He quit responding to e-mail messages. Finally, as the trial date was just a week or two away, Poff informed me that we didn't need to conduct discovery, that we would go to trial without it.

For a lawyer to say he is going to trial without conducting discovery is like a football coach saying he's going to play a game without his offense. He will just let the other team have the ball all the time and try to win only with a defense. It's preposterous, and if Poff's actions don't amount to legal malpractice, it's hard to imagine what would.

I found out later that Poff was going through an ugly divorce at about the time he was representing me, and court papers in the divorce case indicate he had a gambling problem. Maybe that's where my $4,500 went.

Bankruptcy is a complex area of law, and it was a central issue in my dispute with Richard Poff before Judge Horn:

In addition to his divorce, Poff also was going through bankruptcy, which complicated my legal-malpractice case against him. Court documents in the bankruptcy case also indicated Poff had a gambling problem. (Yep, that's probably where my money went.)

Poff sought to have my malpractice claim discharged as part of his bankruptcy case and, contrary to law, Horn let him get away with it.

How could that happen? Poff is pretty much a loathed figure in Birmingham legal circles because he blew the whistle on what appeared to be a corrupt local law firm in the 1990s. That tells you a lot about the legal profession. One of its members brings unethical behavior to light and winds up being hated for it.

I hired Poff strictly because of his role in the whistleblower case. I had already had one lawyer (Jesse P. Evans III and his sidekick Michael Odom) cheat me, so I was determined to get an honest lawyer this time. I figured Poff was the most honest guy around.

Looks like I was wrong about that. Perhaps Poff had tired of beating his head against the legal establishment and decided it was better to join them than to fight them. You can read about my experiences with Evans/Odom and Poff at this post, titled "Lawyers Take Money, Don't Take Responsibility." That title also tells you a lot about the legal profession.

Allwin Horn taught me how far the legal establishment will go to protect one of its own--even one of its own who is largely despised within the profession.

How goofy was Horn's handling of the Poff matter? The judge, it turns out, could not even follow his own orders. (I'm not making this up.):

Horn insisted that I had to go to bankruptcy court and get permission to proceed with my legal-malpractice claim in state court. But Poff had not included me as a creditor in his bankruptcy case, so I had no standing to do anything in that court.

In fact, as we showed in a post about one year ago, Horn stood the actual law on its head. Under Watson v. Parker (264 B.R., 685, 2001), the burden was on Poff, not me, to reopen his case in bankruptcy court if he wanted to try to have my claim discharged. If Poff didn't do that, under the law, my case was to proceed in state court.

When I pointed out the actual case law to Horn, he said it was his "impression" that I needed to seek permission in bankruptcy court. And if I didn't like that, I could appeal him.

Isn't that impressive? Horn essentially was saying, "I don't know what the law is, and I'm too lazy to look it up, so I'm going to guess. And if you don't like the results of my guess, you can waste taxpayer money by filing an appeal to a court that almost certainly won't bother to look up the law either."

Justice in America. Ain't it grand?

At one point, Horn looked like he had been persuaded by my arguments and was actually going to follow the law in my case against Poff. I had filed a motion, citing Watson v. Parker and asking the court to correct its order that I had to get permission in bankruptcy court to proceed with my state claim. My motion stated in part:

Watson outlines the procedure for reopening a bankruptcy case: "Only a debtor, creditor, or trustee has standing to move for the reopening of a the case." (See Bankruptcy Rule 5010, Fed R. Bankr. P.5010 or Alpex, 71 F. 3d 356.) Shuler obviously is not a debtor or trustee in Poff's case, and Shuler is not listed as a creditor. Therefore, Shuler does not have standing to do anything regarding Poff's bankruptcy case.

The law was clear, and even Poff didn't dispute it, so it appeared that Horn was going to actually do the right thing. In an order dated April 24, 2008, Horn wrote:

This matter comes before the Court on Motion for Correction of Order filed by Plaintiff on March 26, 2008. As the Court file does not clearly reflect that Plaintiff's legal-malpractice claim was listed by Defendant as a potential claim in Defendant's bankruptcy proceeding, Plaintiff's referenced motion is hereby set for Hearing before the undersigned on May 28, 2008 at 8:30 A.M. in Room 350 of the Jefferson County Courthouse. At the Hearing, Defendant is hereby ORDERED to present to the Court certified copies of Defendant 's bankruptcy case so the Court may determine whether the Plaintiff's legal-malpractice claim was included in said bankruptcy filing.

Something to note: I was ordered to appear (and I did), and Poff was ordered to appear (and he did not). I was ordered to do nothing, other than to appear at Horn's office (which I did), and Poff was ordered to produce certain documents (which he did not because he wasn't there.). You might think I would earn a few points with Horn simply by doing what I was told to do. But it soon became apparent I would get no justice in Horn's court, no matter what I did. And that's why I've long had doubts about how the Scrushy matter was handled. From my April 2009 post:

Horn's order was strange because Poff had already admitted in court documents that my legal-malpractice claim was not listed in his bankruptcy proceeding. I wasn't sure why a certified copy of the bankruptcy documents was necessary to prove something Poff had already admitted. The judge seemed to finally recognize that I couldn't go to bankruptcy court and do anything, and I'm guessing Horn knew that all along.

I figured I would show up for the May 28 hearing and go along for the ride. Things finally seemed to be moving in a lawful direction, and I'd seen judges make all sorts of bizarre rulings, so I decided not to worry about the hints of nuttiness in Horn's order.

Little did I know that the nuttiness with Horn was just beginning.

When I showed up at Horn's office last May 28, the first sign that something was up came when I noticed that Poff was nowhere to be found. When I was ushered into Horn's office, along with some apparent staff member I'd never seen before, the judge informed me that he was sticking with his "impression" that I had to seek permission in bankruptcy court to pursue my state case.

Even after all the crap I'd been through with judges, I was dumbfounded.

"What about the certified material you had ordered Poff to produce?"

Horn indicated that his mind was made up.

"Why does Poff not have to do what you ordered him to do?"

Horn indicated that he wasn't going to give any explanations.

"My claim was not included in his bankruptcy case--Poff has already admitted that--so you know I can't go to that court and seek permission for anything. You indicated in your order that you know what the law is. Why aren't you following the law?"

Horn didn't like the tone of that question. And he hinted that if I asked more questions, I was likely to be introduced to a security guard.

Was the mysterious staff member present because Horn thought he needed "security" in case I reacted badly to being cheated? That's how it looked.

Horn wound up dismissing my case, without prejudice, which means the case can be re-filed in the future. Meanwhile, I had to give Horn points for creativity. I had seen judges abuse the law in a variety of ways, but I'd never seen one that couldn't even follow his own order. That was a new one.

As for Poff, he has a variety of legal troubles. He is battling a legal-malpractice claim from another former client, a Mobile man named Gregory Dennis. Jefferson County Circuit Judge Robert Vance, a Democrat by the way and a Don Siegelman appointee, has handled Dennis' case. And Vance apparently pulled the same stunt on Dennis that Horn tried to pull on me. . . . 

Dennis went to bankruptcy court and tried to get Poff's case reopened. I've checked the court file several times, and it appears that officials in bankruptcy court have blocked Dennis every step of the way. . . . 

As for Horn's change of heart last May 28, contradicting his own order, it was a case of curious timing. I had been wrongfully terminated from my job at UAB just nine days earlier, on May 19. Makes me wonder if the forces who cost me my job also influenced Horn to cheat me.

Was Horn doing more than just trying to protect Richard Poff? I think the answer might be yes.

We've noted in a recent series of posts that a growing body of evidence indicates my termination might have been tied to stories I had written about HealthSouth litigation in federal court. And Horn is overseeing HealthSouth litigation in state court? What a coincidence.

Efforts to collect on $2.78-billion judgment against Richard Scrushy have turned into a $100-million gravy train for Birmingham's Bradley Arant law firm

Richard Scrushy

 

Part Two

The Birmingham law firm of Bradley Arant Boult Cummings (BABC) is using an unusual "fee for services" contract in an effort to collect on a $2.78-billion judgment against former HealthSouth CEO Richard Scrushy. The arrangement, according to a post at DonaldWatkins.com, has provided little in the way of benefits to BABC's client in the matter, but it has created a financial windfall for the law firm in the form of what might be called "open-ended legal fees."

Watkins, a longtime Birmingham attorney and businessman, writes in an editorial opinion under the headline "Did Bradley Arant Boult Cummings Rip Off Encompass Health for Over $100 Million?"

Former HealthSouth CEO Richard Scrushy was in the news this past week. HealthSouth Corp., now known as Encompass Health, was back in a Birmingham, Alabama, state court, once again, to collect money on a $2.9-billion civil judgment that was entered against Scrushy in the aftermath of the infamous HealthSouth accounting- fraud scandal.

In 2005, Scrushy was acquitted on all charges in a companion criminal case. However, the civil judgment was entered against Scrushy at the conclusion of a shareholder-derivative lawsuit four years later.

Last week, lawyers for Encompass went to court to chase down a rumor that Scrushy had control over a prisoner’s multimillion-dollar bank account. Scrushy denied this claim.

Encompass is represented in the post-judgment collection proceedings by the Birmingham-based law firm of Bradley Arant Boult Cummings, LLP (“Bradley”).

Encompass has received some benefit from collection efforts, but the company's law firm has been the big winner. How did that happen? Watkins sets the stage:

After the civil judgment was rendered in 2009, the law firms of Hare, Wynn, Newell & Newton and Bradley were able to quickly collect about $33 million from their post-judgment collection activities. No money has been collected from Scrushy in the past 10 years.

Encompass has paid Bradley more than $100 million for its legal work in the case. As a result, the law firm has gotten rich from this case.

Since 2009, the legal work in the case has focused on debt-collection activities.

BABC, it turns out, has long tentacles in the legal world, and that helped the firm pad its own bottom lie in the Schrushy civil matter. Writes Watkins:

Since 2009, two former Bradley partners have served as general counsel of HealthSouth/Encompass. The first one is John P. Whittington, who was general counsel from 2006 to 2016.

Patrick Darby succeeded Whittington as Encompass' general counsel in 2016. He, too, was a former Bradley partner.

Why does this matter? Watkins explains:

Rather than engaging Bradley's services for debt-collection work in Scrushy's case using the standard 15% contingency-fee contract, Whittington and Darby chose to reward their old law firm with an open-ended “fee for services” contract that has enriched Bradley by more than $100 million.

Bradley is gouging Encompass in the Scrushy case. Despite receiving more than $100 million from Encompass to collect about $33 million, Bradley has not collected one dime from Richard Scrushy in the past 10 years.

In recent years, the sole beneficiary of Bradley's debt-collection work has been the Bradley law firm itself.

Encompass is a New York Stock Exchange/Fortune 500 company. Its payment of more than $100 million in legal fees to Bradley in the Scrushy case has made it possible for the law firm to expand its offices into the Atlanta market -- courtesy of an open-ended gravy train provided by Encompass CEO Mark Tarr, former general counsel John Whittington, and current general counsel Patrick Darby.

How have Encompass shareholders fared in this scenario? Not so well, reports Watkins:

The $100 million or more in payments to Bradley for legal fees in Richard Scrushy's case have been detrimental to Encompass' shareholders for several reasons.

First: John W. Haley, the prominent Hare, Wynn, Newell & Newton attorney who won the civil case against Scrushy, reportedly told Bradley attorneys during a post-judgment discovery proceeding, "there is nothing here; we have gotten everything Richard Scrushy had."

Haley also called one of Richard Scrushy’s attorneys and told him that he [Haley] was cutting his losses and he was convinced they had gotten all they could get from Scrushy.

Afterwards, Haley resigned from the case. Bradley, riding the wave of an open-ended "fee for services" contract, pressed on.

The individuals who supervised Bradley's unproductive debt-collection work and who approved Encompass' payment of Bradley's invoices in Scrushy’s case are John Whittington and Patrick Darby – the two former Bradley partners.

The legal fees paid to Bradley have only served to subsidize the law firm. For more than a decade, there has been no direct or indirect benefit to Encompass shareholders from the company's payments to Bradley in Scrushy's case.

Second: The $100 million or more that Encompass has paid to Bradley could have built three Encompass rehabilitation facilities. Each one of these new facilities would have netted Encompass shareholders at least $10 million per year in free cash flow for each facility for a 50-year period.

Third: The $100 million or more paid to Bradley to collect $33 million raises plenty of red flags. Something is amiss here. This matter smells. Furthermore, this Encompass-Bradley payment arrangement warrants an internal review by Encompass's board of directors and an external investigation by the U.S. Securities and Exchange Commission. This is the only way Bradley's gravy train with Encompass will come to an end in the Scrushy case.

Fourth: Bradley’s “fee for services” contract should be terminated immediately and replaced with the standard 15% contingency-fee contract for post-judgment discovery and debt-collection proceedings.

Fifth: The amount of money Bradley has received from Encompass beyond the 15% standard fee on the $33 million that was collected more than a decade ago should be clawed back from Bradley, John Whittington, and Patrick Daniel, via a shareholder-derivative lawsuit.

As Bradley Arant's gravy train rolls swiftly down the tracks, what does it say about the law firm? Watkins provides a hard-edged answer to that question:

As it stands today, Encompass has rewarded Bradley with more than $100 million in shareholders' money for what some legal observers have characterized as "routine" debt-collection proceedings that normally are provided on a 15% contingency-fee basis.

A law firm that cannot find what it believes to be "hidden" money and assets after it has been paid more than $100 million to do so is sorely lacking in high-quality legal talent, or it is simply ripping off a client, such as Encompass.

If Bradley truly believes that Richard Scrushy has "hidden" $2.9 billion in wealth somewhere in the world, the law firm should be competent and confident enough to find it on a contingency-fee basis.

At some point, Bradley needs to demonstrate its expertise in something beyond sucking more than $100 million in shareholder money out of Encompass in one case.

Coming in Part Three: The Schnauzer describes his unsettling experience with Judge Allwin Horn in a matter separate from the Scrushy civil case. Was this judge fit to serve on the bench?