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James Biden’s dealmaking caught on FBI tapes in unrelated bribery probe

OXFORD, Miss. — Richard “Dickie” Scruggs, a famed Mississippi trial attorney, was tantalizingly close to a historic deal to force tobacco companies to pay billions of dollars — but there was one last hurdle. A divided Congress had to sign off. And Scruggs had identified one of the most skeptical senators, Joe Biden, as a key to winning the vote.

Scruggs turned to Biden’s younger brother James, an old acquaintance who ran a D.C. consulting firm with his wife, Sara.

Scruggs paid the firm $100,000 in 1998 for advice on passing the bill, Scruggs said in an interview at his office here — the first time he has disclosed the amount.

“I probably wouldn’t have hired him if he wasn’t the senator’s brother,” Scruggs said.

Biden eventually backed the bill, which ultimately failed to pass Congress.

“Jim was never untoward about his influence,” Scruggs said. “He didn’t brag about it or talk about it. He didn’t have to. He was the man’s brother.”

Scruggs’s deal with James Biden highlights how President Biden’s brother has for decades benefited financially from his proximity to his powerful sibling, a relationship that is newly relevant today as congressional Republicans investigate whether President Biden assisted his family members’ business deals. During Joe Biden’s 36 years in the Senate, eight years as vice president and now three years as president, James Biden’s private business work — as a consultant for hire and behind-the-scenes political fixer — has often intersected with his brother’s public responsibilities.

For months, that probe has focused on the president’s son Hunter Biden, but the House Oversight Committee recently issued subpoenas for James and Sara Biden to testify, drawing attention to James Biden’s unique role in his brother’s life and career. James and Sara Biden’s company Lion Hall, to which Scruggs paid $100,000, also is cited in one of the subpoenas as central to the probe.

Scruggs said he did not know whether James Biden had talked to his brother about his vote, “but I hope he did.” Paul J. Fishman, a lawyer for James and Sara Biden, said in an email that neither had talked to Joe Biden about the tobacco settlement bill. “Jim Biden’s consulting work has never involved speaking with or providing access to his brother for this or any other client,” Fishman said.

The White House did not respond to a list of questions from The Washington Post about President Biden’s action on the tobacco legislation and, more broadly, on his relationship with his brother and whether he has ever used his public position to help him financially.

The deal with Lion Hall also illuminates the Bidens’ decades-long relationship with Scruggs, once one of the country’s most powerful trial lawyers, who made his fortune taking on corporate interests and making friends in politics. Scruggs took James Biden on a boat trip while discussing a potential partnership on asbestos lawsuits; flew Joe Biden on his private plane to a fundraiser; and met with Biden family members at a University of Mississippi football game, Scruggs and his associates said in interviews.

But James and Sara Biden’s ties to Scruggs also later brought them to the periphery of a sweeping federal investigation, one that eventually led to the trial lawyer’s epic downfall in 2008 over a bribery scheme.

As FBI agents circled in on Scruggs and his associates over a plan to deliver $40,000 in bribes to a local judge, they also secretly recorded conversations with James Biden — who, at the same time, was trying to create a consulting firm with the Scruggs partners. Neither James Biden nor his brother was charged or accused of wrongdoing in the case, which led to prison for Scruggs and several of his associates, including James Biden’s would-be partners.

Fishman, asked about this case, responded by email that “more than fifteen years ago, Jim and Sara Biden had serious discussions” with Scruggs’s associates in Mississippi “about starting a firm that would provide legal and consulting services. That venture never got off the ground. Jim and Sara were not aware of or involved in any unethical or illegal behavior” by the associates.

Much of the material related to James Biden in the Mississippi case is not available in court files, but the recordings, transcripts and other material were collected by Curtis Wilkie, who wrote a 2010 book about Scruggs, “The Fall of the House of Zeus,” which reported a number of details about the Biden connections. Wilkie granted permission for The Post to review his archives at the University of Mississippi, including FBI recordings of James Biden. In addition, The Post reviewed thousands of pages of court records and other material and interviewed key participants.

What emerges is a tale of money, politics and influence, stretching from Mississippi to the corridors of power in Washington, one that has echoes of a legal thriller by John Grisham — who, like the novelist William Faulkner, once lived in Oxford. It is, at its heart, a tale of the bond between the Biden brothers — one that is now being tested anew amid a flurry of subpoenas issued by Republican lawmakers.

Shortly after arriving in the Senate in 1973, Joe Biden began one of the most unlikely friendships of his career — one that would lead to an equally unlikely connection to the Deep South.

After delivering a maiden speech that focused on civil rights, Biden received a note from Sen. John Stennis (D-Miss.), who had been an ardent segregationist, saluting his courage and saying he respected him despite their disagreements. Biden later became friends with a Stennis aide named Steve Patterson, who became chairman of the Mississippi Democratic Party and eventually coordinated the Southern operation of Biden’s short-lived 1988 presidential campaign.

“Biden wouldn’t have known anybody in Mississippi if not for me. That’s just a fact. I take ownership of that,” Patterson said in an interview, recalling how Biden would respond to his many requests to come to the state for fundraisers and Ole Miss football games. “Biden loved Mississippi.”

Patterson, who was elected state auditor in 1991, had also gotten to know James Biden, known widely by his nickname Jimmy.

Joe Biden’s 74-year-old brother has played a vital role in his personal and political life. He helped care for Joe Biden’s children after their mother and one of their siblings were killed in a car accident in 1972.

James Biden became one of his brother’s key fundraisers — in some cases because he was willing to take money from donors when his brother was wary.

When Joe Biden first ran for the Senate, in 1972, James Biden pleaded for money from a top union official, who agreed to give $5,000 on condition that he could meet Joe Biden. As James Biden later recalled — as quoted in his brother’s autobiography — Joe Biden believed the union official wanted a promise for a certain vote in exchange for the contribution. James Biden recalled that he felt like Fredo Corleone in “The Godfather,” the fictional son of mafia don Vito Corleone and younger brother of Sonny Corleone. The union leader handed the check to Joe Biden, who refused it. That left the handoff to James, who said, “I had to take it,” according to his brother’s autobiography.

Long before Biden’s son Hunter became known for benefiting from the family name, James Biden also undertook a number of business ventures that created headaches for his brother. At one point in the 1970s, when James Biden faced significant debt from a nightclub business, Joe Biden said he shouldn’t be tarred by his brother’s problems, saying, “Don’t bring my name into it,” according to the Dallas Morning News.

Patterson said that in the early 1990s he introduced Scruggs to James Biden, who hoped to work on the trial lawyer’s lucrative cases against asbestos manufacturers accused of causing lung disease. Scruggs said in an interview that he took James Biden, along with Patterson, on a 50-foot Hatteras boat to an island off the Mississippi coast.

A partnership on asbestos cases did not materialize, but an even more enticing possibility soon emerged. Scruggs sued cigarette manufacturers, alleging that they had cost states hundreds of billions of dollars through Medicaid, citing insider information showing the companies knew their product was addictive and hid that fact for decades. (The events were later dramatized in the 1999 movie “The Insider,” filmed partly at Scruggs’s Pascagoula home.) Scruggs eventually oversaw a case in which he believed that the companies would have to pay $368 billion.

But members of Congress were divided about the settlement, which required federal legislation to waive antitrust provisions, according to their statements and hearing transcripts from the time. That concerned Biden, then the ranking Democrat on the Judiciary Committee, who said in a 1997 news release that he was “not yet convinced that this settlement is a good deal” for the American people. A few days later, Biden said at a hearing that if the deal wasn’t improved, it would go “down the tubes.”

Scruggs was at risk of losing hundreds of millions of dollars in legal fees without a deal. Scruggs said Patterson urged him to talk to Joe Biden, so he went to Washington in mid-1997 and met with the senator for the first time, as well as with other lawmakers he considered to be potential roadblocks. He said he realized he needed more help winning over the senator from Delaware and other members of Congress. That is when he turned to James and his wife, Sara, a former congressional aide.

Starting on April 9, 1998, Scruggs made a series of $10,000 payments to their firm, Lion Hall, during a year-long period. Those payments totaled $100,000, according to records that Scruggs provided to The Post.

When a larger version of the tobacco settlement finally reached the Senate floor in June 1998, Biden had gone from being one of its biggest critics to becoming one of its leading defenders — a significant victory for Scruggs.

Biden’s support wasn’t enough. After the vote, Biden said Republicans, who had largely opposed the legislation, had been swayed by an intensive tobacco industry advertising blitz.

At the time, little was known about Lion Hall. But one lawsuit at the time alleged that James and Sara Biden openly sought to benefit from their connection to Joe Biden.

Filed by the firm of the lawyer Leonard Barrack, who hired Lion Hall during the same period it worked for Scruggs, it alleged that James had provided assurances that he would “generate business for the Barrack Law Firm through his family name and his resemblance to his brother.” Barrack claimed Lion Hill never delivered and sought damages. Sara Biden countersued, and the matter was settled confidentially. Barrack did not respond to a request for comment.

Scruggs had no such complaints. He said he was satisfied with the work done by James and Sara Biden.

“Jim was a help, and Joe gave us some good advice,” he said.

After the tobacco legislation died in the Senate, Scruggs and other lawyers made separate deals in the states for a $248 billion settlement that Scruggs said netted his firm between $300 million and $400 million.

Scruggs’s influence had reached new heights by the time Joe Biden arrived in Oxford around 2000, joining Scruggs and Patterson on the Grove at Ole Miss before heading to a skybox to watch a football game, Scruggs said.

Months later, Scruggs picked Joe Biden up in his Falcon 10 jet in Fort Lauderdale and flew with him to Jackson, Miss., for a fundraiser. Scruggs said that when Biden saw that the pilot had blond dreadlocks, he said, “If I had hair like that, I can be president of the United States!”

Seven years later, after Biden launched his second bid for the presidency, he once again headed to Mississippi for a fundraiser, arriving in Oxford with James at his side in August 2007. He gave a talk about his just-released memoir, “Promises to Keep,” at a bookstore around the corner from Scruggs’s law firm.

Then Biden traveled to the nearby University Club for a presidential campaign fundraiser, which brought in $70,000, according to media reports at the time.

Behind the scenes, James Biden was focused on another deal with some key players at the fundraiser — including Patterson, who had resigned in 1996 as state auditor after pleading guilty to a misdemeanor tax charge, and a lawyer named Tim Balducci.

Patterson, Balducci and James Biden had for weeks been discussing their plan: an influential new consulting firm with offices on the Oxford town square and in Washington. The firm would be called Patterson, Balducci & Biden, PLLC Law Group, according to a 24-page promotional booklet, a copy of which can be found in the University of Mississippi archives, with Sara as the named partner because of her background as a lawyer. The marketing pitch noted Sara Biden’s extensive Washington experience and added, “In 1995, Sara married Jim Biden, brother of Senator Joe Biden (D) Delaware.”

Patterson, who was designated as the firm’s president, said in an interview that having the Biden name on the cover was “important but it’s not the end-all.” He said the partners understood they would need “to stand on their own two feet.”

Five weeks after the Oxford fundraiser, James Biden was on the phone with Balducci discussing the final details about the firm’s creation, according to court records.

That same day, Balducci had handed an envelope containing the first of two $20,000 payments to a Mississippi judge who was slated to rule in a case involving Scruggs, according to court records. The filings say $26.5 million in legal fees was at stake, and Scruggs wanted the judge to give him a favorable settlement.

“Lord have mercy,” said the judge, Henry Lackey, as he took the envelope, according to court records.

Balducci did not know that Lackey was working with the FBI.

Weeks earlier, Balducci had floated the idea of Lackey’s being hired after retirement as “of counsel” to Balducci’s law firm, according to the judge’s statement to federal officials. Lackey viewed that offer as a quid pro quo to get him to favorably settle the Scruggs suit, leading him to contact the FBI and the U.S. attorney’s office, according to court records. The tip led the FBI to begin recording Balducci’s phone calls, including some with James Biden; the tapes provide insight into how James and his wife explored business opportunities.

After handing off the cash, Balducci drove to Scruggs’s office, where he sought support from the trial lawyer for the new consulting firm Balducci was trying to form with Patterson and Sara Biden.

Afterward, Balducci called James Biden to say how well the meeting with Scruggs had gone, laying out how the consulting firm would have not only Sara Biden as a named partner, but also would have the involvement of James Biden and Hunter Biden, the senator’s son.

“I told him we had formalized our relationship with you guys,” Balducci told James Biden, according to the FBI recording reviewed by The Post. “I told him about the real Washington presence, that this was not going to be a bullshit, you know, a shingle hung somewhere in the window. That this was a real deal, that Sara was coming on, you know, as a named partner, an equity share in the venture, that we were changing the name of the firm to include her. … Hunter was going to be involved, and you were going to be involved.”

Balducci told James Biden that Scruggs was enthusiastic, quoting the trial lawyer as saying, “With the political connections you guys are putting together now, I know you’re going to do really, really well.”

In another call later that day, James Biden told Balducci that he had just concluded a “great conversation” with Scruggs. Biden said he told Scruggs that he was “really excited” that Scruggs was involved, and recounted that the trial lawyer told him, “I think you can make a lot of money.”

Scruggs said in the interview with the The Post that while he agreed to speak positively about the venture to help give it a boost, he never planned to be part of it or invest in it. A lawyer for Hunter Biden did not respond to a request for comment. Lackey, the judge, has since died, but Patterson said in an interview that he did not think Lackey “could have conceivably known” about Balducci’s interactions with James Biden.

James Biden can be heard on subsequent tapes discussing a number of possible deals. One idea was to work for the chief of the Mississippi Band of Choctaw Indians, which had filed an application with the federal Bureau of Indian Affairs to use 100 acres for a $375 million casino, which needed state and federal approval. James Biden said it seemed to be an ideal opportunity.

“You know my hesitancy to be a, you know, an opportunist if everybody is jumping on him,” James Biden said on tape on Oct. 15, 2007, referring to the tribal leader. “There’s nothing wrong with opportunist. Sara just rolled her eyes at me. So, but being a whore about it, okay, you know, like everybody just jumping in, like, ‘Let me do your insurance, let me do your legal.’” He said the tribe had been “used and abused,” and the “beauty” of his proposed arrangement was that he could work through people who are “not scumbags” and who would vouch for him.

Fishman, the lawyer for James Biden, said his client “was discussing a potential opportunity to sell insurance to the Choctaw tribe, but he never pursued that business.”

Just as the plan for the Patterson, Balducci and Biden firm was about to be publicly unveiled, Balducci was confronted by the FBI about the payment to the judge. He promptly agreed to flip, according to court records. The FBI sent Balducci, wearing a wire, to Scruggs’s office, where their conversations were recorded. A few weeks later, the FBI raided Scruggs’s office and seized some computer hard drives. The next day, Scruggs and his son, Zach, agreed to surrender at the federal courthouse, just a few blocks away.

By mid-2008, weeks before Biden was nominated to be vice president, the key players had all pleaded guilty to various charges related to the effort. Dickie Scruggs ultimately served about five years in prison for his role in the Lackey case and for another conviction.

Patterson, who was sentenced to two years in prison on a charge of seeking to corruptly influence a judge, said he had not spoken publicly about most of the case and his relationship with the Bidens until his interview with The Post. Since being released, he said, he “has tried to make a living any way I can. Frankly, it’s been a real struggle. There’s not a big market for a washed-out old politician with a felony conviction.” Nonetheless, he said, he has maintained good relations with Joe Biden; attended the funeral of Biden’s son Beau; spoke to Joe Biden a couple of times during the 2020 campaign; and he said of the Biden family, “I love them.”

Balducci declined to comment on the specifics of the case. Instead, he said via text message: “Those events don’t define me, yet I accept them as part of what makes me who I am today. I am blessed to have been redeemed from those dark days and I have been granted a second chance for which I am very grateful.”

The fall of Dickie Scruggs from his perch as one of the nation’s most successful and wealthiest trial lawyers became a national story.

Prosecutors never questioned James Biden, according to a former federal official familiar with the matter, who spoke on the condition to discuss the investigation.

But the financial connection of key players in the case to Joe Biden’s campaign was widely noted in media reports at the time, and Joe Biden gave to charities $11,500 in campaign contributions that he had received from Scruggs, Patterson, Balducci and other associates.

The year after the arrests, Joe Biden dropped his presidential bid and Barack Obama picked him as a running mate. It’s not clear whether the case or James Biden’s other business ventures were discussed during the vetting process to add Joe Biden to the ticket — at the time, the existence of the FBI tapes of James Biden were not publicly known, and little attention had been paid to his business ventures.

On a recent day, the clock tower chimed at the 1872-era white courthouse on Oxford’s town square, diners filled the elegant City Grocery restaurant, and shoppers browsed at Square Books, with its shelves of Faulkner and Grisham titles. The once-prominent Scruggs firm overlooking the square had closed, and Dickie and Zach Scruggs now were located a few block away in a modest office, where since shortly after being released from prison they have run a nonprofit called 2ndChanceMS helping Mississippi residents get adult education.

Dickie Scruggs said he has not spoken to Joe Biden for years and last talked to James Biden in 2015. He said that he still admires and supports Joe Biden, but he said that as he watched events unfold in Washington, the Mississippi story is a cautionary tale about what can happen for family members of prominent individuals.

The House Oversight Committee has issued subpoenas to James and Sara Biden as well as Hunter Biden seeking information about a number of ventures, including more recent activities of Lion Hall. Republicans on the committee have sought to link Chinese money to funds that were deposited into the Lion Hall account, alleging a money trail that they say ended with a $40,000 check from Joe and Sara Biden to Joe Biden and labeled “loan repayment.”

These allegations do not prove any wrongdoing, nor that Joe Biden knew about the alleged money trail. Nonetheless, Oversight Chairman James Comer (R-Ky.) has said that “laundered Chinese money landed in Joe Biden’s bank account.”

Fishman said that the committee’s “desperate search” to find financial transactions between James and Joe Biden has come up empty, saying that the panel has resorted to criticizing two loans James received when Joe was not in public office and that were repaid within weeks. “There is nothing more to those transactions, and there is nothing wrong with them,” Fishman said. “And Jim Biden has never involved his brother in his business dealings.”

The White House also has dismissed Comer’s claims.

Scruggs, asked whether he thinks James and Hunter Biden went too far or tried to profit off the family name, said he empathized about what they are facing in the congressional investigation. As he said this, he gestured down the hall to where Zach was working. He takes responsibility for his son’s role in the case, which resulted in a misdemeanor plea of failing to report knowledge of a felony and about five months’ imprisonment despite the prosecutor’s recommendation of probation. Zach Scruggs declined to comment.

“I have some empathy with Jim and Hunter Biden and, I hate to say it, even the Trump kids,” Scruggs said.

“It’s really difficult for the close relative or particularly the sons of prominent men to make it on their own. Anything they do on their own, people say, ‘Well, it’s because their daddy helped them.’ My own son, for example, had to live in my shadow, for better or worse, and it got him in trouble. So I’m a little empathetic with the sons and daughters of prominent people. They have a cross to bear that nobody else has.”

Alice Crites contributed to this report.

This post appeared first on The Washington Post

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