A federal grand jury indicted former campaign treasurer Linda Saunders on 17 counts for her role in alleged raising and divertingdonations related to Phipps' 2000 campaign. Bobby McLamb, a campaign aide who later worked for Phipps as an assistantcommissioner, was indicted on two counts.
Phipps hasn't been charged with any crimes. Federal prosecutors say the investigation is continuing.
"We have not discussed resignation with her," said Roger Smith Sr., one of Phipps' attorneys. "She has not been charged with anyviolation of the criminal laws.
"The United States government has done a thorough investigation, and Meg Scott Phipps has not beencharged. She may never be charged."
During a visit in King on Friday, Phipps declined to answer questions about whether she will resign or run for re-election.
"Although I would like to talk about the issue, it is inappropriate for me to talk right now," she said.
Some political experts say the corruption charges around Phipps will have an impact on other Democratic candidates should she run against in2004.
"It is getting to the point where (resignation) has got to be seen as a potential option," said Thad Beyle, a political scienceprofessor at the University of North Carolina at Chapel Hill.
"If she resigns, the governor gets to appoint someone as her successor," Beyle said. "Otherwise, they are going to go into anelection year (in 2004) where if she doesn't resign, she's going to taint the (Democratic) ticket."
The indictment outlined a scheme in which the defendants allegedly diverted campaign contributions intended for Phipps tohelp pay some of McLamb's campaign debt.
McLamb lost to Phipps in the Democratic primary in 2000 and, when he then joined hercampaign, Phipps said she would help him repay what he owed.
During a hearing before the state Board of Elections last year, Phipps repeatedly denied knowing about her campaign's paymentstoward McLamb's loans. But the indictment said Phipps called and wrote to Centura Bank, where McLamb owed $75,000, asking that theloan be extended.
The State Board of Election last June fined Phipps' campaign $130,000. The board said the campaign had taken $84,202 in cashfrom donors it could not identify and more than $14,000 in illegal corporate contributions.
Phipps is the first female agriculture commissioner in the state, the daughter of one Democratic governor and granddaughter ofanother Democrat who was governor and U.S. senator.
Rep. Frank Mitchell, R-Iredell, an agriculture committee member, says that Phipps needs to resign.
"It's hard to say that someone should resign until they've been proven guilty, but she's had so many charges leveled at her and heremployees that you can only assume the worst," Mitchell said.
Even some Democrats are surprised about the developments.
"If they've got nothing else on Meg, maybe she can go on," Rep. Dewey Hill, D-Columbus, the House Agriculture Committeechairman. "But if something else comes out, I think she needs to think real hard about what she can do to help our cause.Agriculture needs all the help it can get right now."
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