Local News

State Election Board Orders Phipps Campaign To Repay $130,000

Posted June 12, 2002 1:44 a.m. EDT

— State elections officials Friday ordered the campaign of Agriculture Commissioner Meg Scott Phipps to pay $130,000 for taking illegal campaign contributions and paying down an ex-rival's loan.

The state Board of Elections voted 5-0 to order the payment to the state, which includes $23,000 for the cost of investigating the allegations.

The board said the Meg Scott Phipps Campaign 2000 was "grossly negligent in the conduct of its fund-raising and campaign reporting activity."

Board Chairman Larry Leake said the findings would be forwarded to the Wake County District Attorney's office, which will determine if criminal charges are warranted. The board declined to issue additional civil penalties.

"We hope this will deliver a painful message," Leake said after the hearing. "The message to the campaigns is that you better follow the law, and if not there will be something to pay."

The board determined that the Phipps' campaign had accepted $84,202 in unreported cash contributions, as well as more than $14,623 in corporate contributions. State law limits cash contributions to $100, and corporate donations are illegal. The board also found nearly $20,000 in unreported expenditures.

The Democrat's campaign collected some of its contributions with "the intent to deceive" the board and the public, the board ruled. The board said that Phipps' campaign had received at least $22,500 in illegal donations or loans from people related to the fair industry.

Leake said he had never seen the level of reporting errors as found in the Phipps' investigation.

Phipps' campaign had "a treasurer and a campaign who just totally appeared to be inept," Leake said.

Agriculture Department spokesman Mike Blanton said after the hearing that Linda Saunders was removed Thursday as Phipps' campaign treasurer. Saunders had been blamed by board members for the inaccuracies in Phipps' campaign report.

Blanton said Phipps will obey the board's order but hasn't ruled out an appeal to Wake County Superior Court.

Evidence presented in the three-day hearing showed Phipps didn't know five checks dated last year totaling $64,184 in payments from her campaign were used to retire the debt of rival-turned-ally Bobby McLamb. The board ordered McLamb to pay to the state those payments he received from the Phipps campaign.

State law limits direct giving by a campaign - even for loan repayments to another campaign - to $4,000 per election.

McLamb was beaten by Phipps in the 2000 Democratic primary, then threw his support behind her. McLamb told the board he believed Phipps knew last year that her campaign money was being used to retire a $75,000 loan he had taken out for his campaign.

But Phipps testified this week she never agreed to pay off McLamb's debt but only to help retire it. She said she first learned about using the campaign money this spring.

Saunders' testimony Friday morning appeared to back up Phipps' story, saying she never talked to the commissioner about any of the McLamb debt payment or other unlawful contributions.

Blanton said the evidence backed up Phipps' contention.

"It was fairly clear that in the 2-1/2 days of testimony that the commissioner was not aware originally or initially that her campaign was actually repaying the campaign debt of Bobby McLamb," Blanton said.

Saunders testified Phipps' campaign adviser, Brad Crone, told her about taking on McLamb's debt, an accusation Crone denied later Friday.

Phipps declined comment after the hearing and left to visit her father, former Gov. Bob Scott, who is hospitalized for pneumonia.

Phipps has blamed her problems in part on agriculture and fair industry officials unhappy with her selection of Amusements of America to operate the midway at the 2002 North Carolina State Fair.

McLamb declined comment after the hearing. His attorney, David Long, said his client hasn't determined whether to appeal.

"I thought it was a fair decision," Long said. "I thought it was an appropriate decision."