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House Speaker Expected To Testify At Fraud Trial

Posted October 4, 2006

— House Speaker Jim Black is likely to take the stand Wednesday in the fraud trial of former lottery commissioner Kevin Geddings. This comes a day after Gov. Mike Easley made a brief appearance in federal court to testify.

Easley was the first witness whom the defense called after prosecutors rested their case. He confirmed that House Speaker Jim Black recommended Geddings for the commission only after Easley said he wanted to keep Black's original choice, attorney Bob Cordle, on the state elections board.

"I thought it was good to keep him on the state Board of Elections," Easley said during 15 minutes on the witness stand.

Easley said Black called him the day the appointments were released and said he would pick Geddings. In that phone call, Black identified Geddings as a former chief of staff for former South Carolina Gov. Jim Hodges, Easley said.

Black was in court on Tuesday, but was not called to testify.

Easley declined to discuss the case with reporters outside of the courtroom. Security officers quickly ushered him into and out of the federal court building.

"As a former prosecutor, I don't talk during trials," Easley said as he prepared to enter an elevator after his testimony.

Easley's testimony appeared to be part of a defense effort to show that Geddings did not conspire to win the appointment.

"What I'm charged with was supposed to be this grand, five-year scheme that somehow was going to land me on the lottery commission," Geddings told reporters outside the federal courthouse. "And clearly, what we saw today from both the governor and Mr. Cordle is that it happened in about 24-48 hours."

Prosecutors have accused Geddings of failing to disclose to the State Board of Ethics and others that his Charlotte-based public relations firm received more than $250,000 from for-profit lottery company Scientific Games Corp. or a company it acquired. He is charged with eight counts of fraud and could face up to 20 years in prison and thousands of dollars in fines on each count.

Among other evidence, prosecutors have cited Geddings' failure to disclose on a state ethics form a $24,500 payment from Scientific Games for work in North Carolina and South Carolina in 2005. Geddings has said he's innocent because such disclosures were not legally required.

Earlier Tuesday, former lottery commission Chairman Charlie Sanders said he felt as if he had been "kicked in the stomach" when he learned Geddings had been paid by Scientific Games in the months before his appointment.

"My first reaction was anger, because I had felt he had lied to me," Sanders said.

Geddings said Tuesday he does not consider it a lie, but more of a misunderstanding.

"I thought he was talking about a whole different vendor or a whole different set of issues, and I'm sorry that he feels upset," Geddings said.

Since his indictment, Geddings has moved from Charlotte to Florida, where he works at a St. Augustine radio station owned by his wife.

Sanders, a former chairman of drug-maker Glaxo and a one-time candidate for U.S. Senate, said he believed Geddings when he said publicly at the first lottery commission meeting that his relationship with Scientific Games lobbyist Alan Middleton was only a friendship.

Scientific Games severed its business ties to Geddings the day after his appointment to the commission, according to e-mails presented at the trial. Sanders said Tuesday he didn't believe that was enough.

"It should have been disclosed," Sanders said. "It would have made it a lot easier to deal with."

Scientific Games is a leading provider of instant-win tickets and other lottery supplies, but the company ultimately failed to win any contracts with the nascent North Carolina Education Lottery, which hired rival GTECH Holdings Corp.

Also Tuesday, one of Easley's top political advisers, said he was "pretty shocked and surprised" when the governor told him Black had nominated Geddings.

"I told the governor I thought there'd be a problem," Mac McCorkle told jurors.

McCorkle said he knew nothing of Geddings' business dealings with Scientific Games, as Geddings alleged before the trial, but was concerned about his work elsewhere supporting lotteries. The two men worked together in 1998 on Hodges' campaign for governor of South Carolina, and Geddings later ran the referendum campaign that led to the creation of the South Carolina lottery.

"My problem with Kevin was not legal," McCorkle said, but rather with the potential for a conflict of interest.

After connections between Geddings and Middleton became public, McCorkle said he and Easley decided it would be best if Geddings resigned from the commission.

"I thought all the appearances would be bad," McCorkle said. "By the time I talked to the governor, he smelled it too."

During cross-examination, Geddings' lead attorney, Thomas Manning, asked McCorkle why he didn't simply call Geddings and ask him to quit.

"It was not productive for me to call Kevin," McCorkle said. "My gut instinct was that if I called him, he would dig in even more."

Easley's senior budget adviser, Dan Gerlach, testified Tuesday that Geddings asked during two or three conversations in October 2005 whether he should resign, but concluded he couldn't.

"Dan, I can't resign," Gerlach recalled Geddings telling him. "If I did, it would look like I did something wrong."

Geddings went on to resign Nov. 1, 2005, hours before Scientific Games disclosed that it paid him $24,500 in that year for communications work.

"I was upset," Gerlach said of the phone call he received from Sanders, in which the commission chairman informed him about the payment. "I said, in sum, 'We'd been lied to.'"

Geddings told WRAL he expects the trial to wrap up on Friday.

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