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Fla. Won’t Transfer Tobacco Money

May 22, 1998

WEST PALM BEACH, Fla. (AP) _ In a move some are calling unconstitutional, the state on Thursday refused to return $149 million in tobacco settlement money turned over by a bank.

All the money paid so far as part of the state’s $11 billion deal with the tobacco industry has been held in court-supervised escrow accounts while appeals are exhausted.

The escrow agreement said no money could be released without permission from Circuit Judge Harold Cohen, who has allowed the state to spend about half of the $750 million the industry has paid so far.

But lawmakers grew tired of waiting for all the money, so they passed a bill ordering Comptroller Bob Milligan to get $149 million from NationsBank. Gov. Lawton Chiles signed it into law last Friday.

On Tuesday, the bank gave the state the money.

But Wednesday, the bank apparently realized it should not have released the money without Cohen’s approval and demanded the state return it by 9 a.m. Thursday or face legal action.

The state refused _ angering the private attorneys who represented the state in its lawsuit against the industry and are now fighting the government over legal fees.

``Our government absolutely, willfully, intentionally and unlawfully expropriated this money,″ said attorney W.C. Gentry. ``The bank obviously stupidly and ignorantly turned it over. Now they’re frantically trying to get it back.″

Steve Yerrid, another private attorney who represented the state, filed a motion saying the state should be held in contempt of court. The tobacco industry filed a motion seeking to force the state to return the money.

Steve Krigbaum, an attorney representing the tobacco companies, said the state was clearly violating the escrow agreement and the court’s orders.

Jim Beasley, an attorney representing three of the state’s private lawyers, called the state’s action ``blatantly unconstitutional.″

But state Sen. Pat Thomas, a Democrat who sponsored the bill to seize the money, insisted that lawmakers are on firm legal ground.

``We did not do it without full recognition there might be a problem,″ he said. ``But we did not do it without full legal counsel.″

NationsBank spokesman Jerri Franz said Thursday the bank is reviewing the situation and ``is committed to continuing to work to resolve the issue to the satisfaction of all parties.″

Some of the private attorneys who represented the state are seeking to be paid under their 25 percent contingency fee contract. But the settlement, reached in August, called for the fees to be determined by arbitration.

Cohen recently ordered the state and the tobacco industry to put up $50 million each for the attorneys until a final fee is determined.

The state has refused to comply, maintaining that none of the settlement funds should be used to pay its own attorneys

Last week, Cohen said he thought the new law was unconstitutional and ordered $187.5 million _ 25 percent of the $750 million paid so far by tobacco _ out of the NationsBank account and into the court registry to protect it from legislative appropriation.

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