Indictment details allegations of officials' fraud, extortion
RALEIGH, N.C. - An offer by a winning politician to a vanquished candidate to help repay campaign debts has resulted in federal fraud, extortion, money laundering and conspiracy charges.
Charges against two former aides of Agriculture Commissioner Meg Scott Phipps were related to fund raising during and after Phipps' 2000 campaign, a federal prosecutor announced Tuesday.
Former campaign treasurer Linda J. Saunders was charged with 17 counts. Former commissioner candidate and assistant commissioner Bobby McLamb was charged with two counts - extortion by a public official and conspiracy, U.S. Attorney Frank Whitney said.
Phipps was not charged. During a hearing before the state Board of Elections last year, Phipps repeatedly denied knowing about her campaign's payments toward McLamb's loans.
But the indictment said Phipps called and wrote to Centura Bank, where McLamb owed $75,000, asking that the loan be extended.
"My husband Robert and I are holding a series of fundraisers now and after the election in November to assist Bobby in retiring this debt and feel we should have no trouble raising the money to satisfy his debt to Centura Bank," Phipps wrote in an October 2000 letter to the bank.
During the elections board hearing, Phipps said she and her husband talked with McLamb and a campaign contributor about helping McLamb. But she said she never agreed to use her campaign money to pay off McLamb's debt.
"I would have been terribly upset had I known that," Phipps said in June. "My husband and I have much more of an amount of campaign debt and it should have gone to us first."
According to the 42-page indictment, the alleged crimes began after Phipps' campaign told McLamb the campaign would help repay his debt. McLamb received the assurance May 2, 2000, the night of the primary after McLamb offered to support Phipps in the general election.
The indictment said the Phipps' campaign diverted at least $86,000 in contributions to repayment of McLamb's $100,000 debt. McLamb had separate $75,000 and $25,000 bank loans and Phipps called at least one bank asking that the loan be extended while her campaign raised money for it.
An attorney for McLamb said he hadn't seen the indictment and couldn't comment on the charges. An attorney for Saunders didn't return a telephone call and numbers for Saunders in Raleigh and Louisburg weren't answered.
McLamb's first court hearing is scheduled for March 24, according to the court clerk's office. No hearing had been scheduled for Saunders.
Federal prosecutors said McLamb was issued a summons to appear for his hearing, while an arrest warrant was issued for Saunders. The summons gives the defendant a chance to come to court voluntarily, while the warrant tells marshals to detain the defendant.
"I'm not surprised that the indictments came down," said David Long, McLamb's attorney. "My client has been interviewed."
Whitney said the U.S. Justice Department has made official corruption a priority, right behind terrorism and cybercrime, and that the charges weren't what he normally sees.
"In my 12 years in the Justice Department, I am not aware of any charges like this in North Carolina ... two senior state officials indicted for allegations of extortion," Whitney said.
Saunders, a longtime assistant to Phipps, and McLamb were accused of soliciting money they said would go toward retiring Phipps' campaign debt. But state campaign finance reports filed by the campaign didn't disclose the payments to McLamb.
The indictment also said after Phipps was elected in 2000, Saunders told fair midway companies they would have to contribute to help Phipps repay debts to be considered for a contract for the 2002 fair. Phipps replaced the longtime provider of midway shows with a new company.
Saunders, 43, also was accused of accepting two cashier's checks totaling $14,500 from unidentified donors who wanted to influence the awarding of the midway contact for the North Carolina State Fair, according to the charges. McLamb, 42, also received a $20,000 check from someone seeking a vendor contract at the fair, the indictment said.
The indictment said Saunders funneled $22,000 in cash "through a complicated structure of financial transactions" to avoid a bank currency transaction report.
McLamb had received a $75,000 loan from Amusements of America, the New Jersey-based midway operator that won the midway contract for the 2002 North Carolina State Fair, the indictment said. One of the bank loans was to repay that loan, which was funneled through the owner of a private county fair. The repayments were sent back through the same route, the indictment said.
Whitney said the indictments resulted from a nine-month investigation by state and federal law enforcement. Whitney also said the investigation is continuing and declined to say if more people would be charged.
The counts against Saunders carry a maximum prison sentence of 175 years and fines totaling $5 million. McLamb faces maximum penalties of 25 years in prison and fines of $500,000. Whitney said neither defendant, if convicted, would get the maximum sentence.
It wasn't the first investigation of Phipps' campaign. Last year, the state Board of Elections fined her campaign $130,000. The board said the campaign had taken $84,202 in cash from donors it could not identify and more than $14,000 in illegal corporate contributions.
Phipps, 47, is the daughter of former Gov. Bob Scott and granddaughter of Kerr Scott, who served as governor and U.S. senator. She declined to comment on the indictments, citing the ongoing investigation, but said "I have faith in our system of justice ...."
Source: www.charlotte.com
Cybercrime News Archive