New Evidence in Siegelman Case Points to Republican Cabal

By Sam Stein, Huffington Post. Posted March 13, 2008.

A new review of evidence suggests that an aligned group of Republican interests were pressing for -- and seeking to profit financially from -- the trial of former Alabama Gov. Don Siegelman on charges of bribery.

According to court documents and official testimony, months before Siegelman was charged, Rob Riley, the son of the state's governor, expressed confidence that an indictment would occur and that Siegelman's political financier, Richard Scrushy, would be drawn into case.

Around the same time, moreover, Riley managed to maneuver himself into an extremely profitable position: lead local counsel on a separate, massive civil suit against Scrushy and his company, HealthSouth.

How he received the assignment aroused some suspicion.

Riley had limited experience in securities litigation. And, for critics, his appointment gave of the appearance of legal-political insider trading: the governor's son, cognizant that Scrushy would be dragged into Siegelman's case, saw the benefits to be had from the civil suit against Scrushy's company, and positioned himself to profit.

Riley denied these charges in an interview with the Huffington Post, saying that he had no prior knowledge of Siegelman's forthcoming indictment and arguing that he had been recruited to come on board the HealthSouth case, not the other way around.

What is agreed upon, however, is that Riley earned big money from his work. Ten months after he signed onto the HealthSouth suit, Siegelman was indicted. Less than a year after that, the former governor was convicted of bribery along with Scrushy. And months later, Health South settled for $445 million one of the largest settlements in securities litigation history.

In the early days of 2005, HealthSouth and Scrushy were in the midst of a long-waged battle over whether the company had "perpetrated an elaborate scheme to deceive HealthSouth's investors." The case alleged that the company, and its financial supporters, had "committed deceptive acts whose primary purpose and effect was to create a false appearance" of good financial results and future prospects. There were no connections to Siegelman.

On January 13, Rob Riley, a lawyer for the firm Riley & Jackson P.C. and the son of the state's governor, was abruptly added as local counsel to the New Mexico State Investment Council, a relatively new plaintiff in the case against HealthSouth. It was an interesting move. Riley, who specialized in medical malpractice law, had little history in complex securities litigation. Co-plaintiffs complained, as they often do, that his presence would simply drive up the cost of the case and cut into the pot of any settlement. But their appeal was denied.

Why did Riley come on board? According to him, it was a product of local stature and a bit of luck.

"A guy in New Mexico said, 'Hey, we are trying to get involved in this case,'" Riley recalled. "At that point, it was pretty well out in the papers that there had been fraud at HealthSouth. So I felt like it was probably a good case. I didn't know what chance we had at being lead counsel."

Another official with knowledge of the case said Riley was chosen primarily for his political connections.

But around that time, Jill Simpson, an Alabama Republican official and opposition researcher, told the House Judiciary Committee that Riley called her and said the state's legal apparatus was gearing up to re-investigate Don Siegelman. Moreover, Simpson recalled Riley as saying that Republicans would tie the former governor with Scrushy, "a reviled figure in Alabama."

Less than a year earlier, Siegelman had been indicted for conspiracy and Medicaid fraud but his trial -- which seemed politically motivated -- fell apart within a day in court.

On this new go-around, the prosecution had a more favorable judge. Mark Fuller, who had been appointed by President Bush to the U.S. District Court in the Middle District of Alabama, was well connected in Republican circles and, according to local Alabama journalist Glynn Wilson, had personal ties to Rob Riley.

Ten months after Riley signed onto the HealthSouth case, Siegelman and Scrushy were indicted on charges of political bribery. At the center of the charge was a $500,000 donation Scrushy made to the former governor's 1999 campaign. The money had gone to the state's education lottery and in exchange Scrushy got a position on a hospital regulatory board.

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