Prosecutors say Kevin Geddings failed to disclose to state ethics officials that he was paid nearly $229,000 over several years by a for-profit lottery contractor that wanted to do business with North Carolina.
They dropped one of the wire fraud charges against Geddings before jury selection began Wednesday, leaving him facing five counts of mail fraud and three counts of wire fraud.
Geddings, who faces up to five years in prison and a $250,000 fine on each count, has said that he has rejected several plea offers from the U.S. Attorney's Office.
"I'm looking forward to the opportunity to spend a considerable length of time with a jury of my peers and letting them hear all the facts," Geddings has said.
Attorneys chose a full panel of 12 jurors and four alternates by mid-afternoon Wednesday, questioning candidates about the lottery and whether they had played any of its games. In one batch of 18 prospective jurors, nearly half said they had played.
A grand jury indictment charges Geddings with misleading the state, fellow lottery commissioners and others about his financial relationship with Scientific Games Corp. and his lottery work in other states. Geddings was chief of staff for Jim Hodges when Hodges was governor of South Carolina and helped lead efforts to start a lottery there.
Hodges, Gov. Mike Easley, House Speaker Jim Black and Richard Harpootlian, former head of the South Carolina Democratic party, were listed Wednesday among several dozen possible witnesses.
Sherri Johnson, a spokeswoman for Easley, said Wednesday that the governor had not been subpoenaed, but would testify if called.
Geddings, 41, resigned from the lottery commission in November, less than six weeks after Black named him to the panel. Since his indictment, he has moved from Charlotte to Florida, where he works at a radio station owned by his wife.
He has acknowledged working for Scientific Games last year as lawmakers debated whether to create a state lottery. The indictment alleged that he tried to hide it following his appointment to the North Carolina Education Lottery Commission. Among other things, the indictment said an economic disclosure statement that Geddings filed with the State Board of Ethics made no mention of a $9,500 payment from Scientific Games the day before the filing.
"As a public official, he had a fiduciary duty to ensure that the public received honest services free of improper influence or corruption," the indictment said.
Geddings said he believed he filled out the form fairly and completely and had even disclosed that he had a financial relationship with Alan Middleton when Middleton was an executive at Scientific Games. Middleton, now a New York-based seller of instant-win tickets and lottery software, later unsuccessfully bid to become a supplier to North Carolina's nascent lottery.
"In hindsight, I would have asked a lawyer to review my ethics form submission, but the State of N.C. ethics form does not have a warning label on it reading: 'Failure to detail to the specifications of the U.S. Attorney's office in Raleigh, N.C. is punishable by 20 years in federal prison and potentially a $1 million fine,'" Geddings wrote in an e-mail. "That kind of warning would have made me treat the form quite differently."
In recent days, Geddings has reached out to reporters, arguing that many people knew he worked for Scientific Games, including House Speaker Jim Black, who recommended he be appointed to the board, and Mac McCorkle, one of Gov. Mike Easley's trusted political advisers.
"The speaker and others knew that I had a past business relationship with Scientific Games Vice President Alan Middleton and that will come out during the course of the trial," Geddings told WRAL in a phone interview.
"Fraud depends on some false statement," said Richard Myers, a law professor at the University of North Carolina at Chapel Hill. "If the connections were all fully disclosed (orally) then it will be harder to prove that he committed fraud."
Black has said repeatedly he would not have appointed Geddings had he known about his work for Scientific Games. An attorney for the House Speaker said the allegations are not true.
Geddings responded that Black is just trying to save his own hide.
"I know the speaker is under intense political and legal scrutiny at this point," he said. "I feel like I'm in the middle of a battle royal between a Republican U.S. attorney (General) office and a Democratic speaker of the House."
McCorkle said he had nothing to do with Geddings' appointment and knew nothing about his connection to Scientific Games. Had he known Geddings was being considered for a seat on the commmission, McCorkle said he would have advised against it.
"I was convinced that he had ties in the past that I thought were out there or at least reached the appearance of a problem," said McCorkle, who like Black has been subpoenaed to testify at the trial.
Prosecutors and others are sure to closely follow Black's testimony.
The speaker's former political director, Meredith Norris, pleaded no contest last month to charges she broke state lobbying laws because she worked for Scientific Games and encouraged lawmakers to create the lottery.
Black's campaign has also been ordered to return $6,800 in illegal campaign donations he received from optometrists, and a former political ally -- ex-state Rep. Michael Decker -- pleaded guilty earlier this summer to taking $50,000 in campaign contributions to switch to the Democratic party in 2003 and support a particular candidate for speaker. Black was the only Democratic candidate for the chamber's highest post then, but he has denied making any deal with Decker.
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