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Former N.C. Agriculture Commissioner Indicted On 28 Federal Charges

Posted September 4, 2003

— Former state Agriculture Commissioner Meg Scott Phipps, already facing state charges in an investigation of her campaign's finances, was indicted Thursday on 28 federal charges, including extortion, witness tampering and fraud.

Phipps, the daughter and granddaughter of North Carolina governors, was indicted on 10 counts of mail fraud, nine counts of wire fraud, four counts of extortion, one count of conspiracy, one count of bribery, one count of obstruction of justice and two counts of witness tampering, federal prosecutors said.

Attorney Roger Smith broke the news to Phipps, who has always maintained her innocence.

"She was disappointed, but she's strong and stated her strength again, and we expect her to continue to be strong," he said.

Phipps resigned in June after three former aides were indicted as a result of a federal probe examining whether her campaign solicited illegal campaign contributions from carnival companies. A month later, she was charged in state court with perjury and obstruction of justice.

Twenty-three of the felony counts carry a maximum prison penalty of 20 years each. The remaining five carry prison terms of five to 10 years.

Parallel state and federal investigations center on a contract awarded by Phipps to carnival operator Amusements of America to run the midway at the N.C. State Fair and campaign donations arranged by the company.

Two former Phipps' aides, Bobby McLamb and Linda Saunders, have pleaded guilty to federal charges including extortion. They have not yet been sentenced and are cooperating with prosecutors.

Former Deputy Commissioner Mike Blanton has pleaded innocent to federal charges including perjury and obstruction of justice. His trial is set for Oct. 10.

A fair vendor, James H. "Jimmie" Drew III, has been indicted on state charges. Drew, who was given a contract to operate a chair lift at the State Fair, is accused of lying to investigators about providing illegal campaign contributions to Phipps.

"The federal and state agencies conducting this investigation have worked tirelessly and cooperatively," U.S. Attorney Frank Whitney said in a news release. "The team is now focused on preparing for the Michael Blanton trial, which is scheduled for Oct. 6, 2003. This office and the U.S. Department of Justice remain committed to investigating all credible allegations of public corruption."

The investigation into the Phipps campaign also brought a subpoena for her father, former Gov. Bob Scott, who testified before a federal grand jury in June.

Federal indictments allege that a web of illegal transactions too place between Phipps' campaign, McLamb, Rocky Mount businessman Norman Chambliss and several amusement companies.

The transactions were designed to allow Phipps to secretly pay off a $75,000 bank loan and other campaign debts for McLamb in return for his political support and access to his ties in the fair industry, the indictments said.

Blanton, Phipps and Saunders also allegedly met at a Raleigh town house in April 2002 to devise a cover story for the contributions.

Because of the scandal, state agriculture officials canceled the contract held Amusements of America to run the fair midway. Amusements of America, based in Monroe Township, N.J., sued the state in return.

In July, Interim Agriculture Commissioner Britt Cobb awarded the midway contract to Strates Shows, which had provided the rides at the fair for more than five decades before Amusements of America took over last year.

Phipps has been staying home with her family in Haw River since her resignation. She is due to surrender next week. The U.S. Attorney's Office released a statement, saying the investigation is still ongoing.

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