Local News

Questions Linger Around State Ag Commissioner's Election Campaign

Posted March 13, 2003 6:58 a.m. EST

— A federal grand jury recently indicted two former campaign workers for State Agriculture Commissioner Meg Scott Phipps. As the federal investigation continues, questions linger about how the controversy will damage her effectiveness in office.

Phipps has not been charged and U.S. Attorney Frank Whitney declined to say whether she might be a target of investigators.

"She has not been contacted by the U.S. attorney's office or any of the investigators associated with the case, but she's certainly willing to cooperate," said spokesman Mike Blanton, a deputy commissioner who was interviewed for 3-1/2 hours by investigators and testified to a grand jury.

Phipps' attorney, Roger Smith, said he couldn't comment about the case, but Blanton said Phipps' attorneys had contacted the federal prosecutors to tell them she was willing to talk to them.

As for Phipps' effectiveness to lead in the wake of the indictments, ranking members of the Senate agriculture committee said it must be a difficult time for her.

"As far as I know that work is still going on, but I know it's got to be hard for her. It's got to be a distraction for her," said Sen. Charles Albertson, D-Duplin.

"It is damaging and it does make it difficult and I do think that a serious cloud has been cast over her and her administration," said Sen. Austin Allran, R-Burke.

Two of Phipps' former aides were indicted this week by a federal grand jury on fraud, extortion, money laundering and conspiracy charges related to fund raising during and after Phipps' 2000 campaign.

Former campaign treasurer Linda J. Saunders was charged with 17 counts, including conspiracy, mail and wire fraud, extortion by a public official, money laundering and structuring transactions to avoid reporting them. Former commissioner candidate and assistant commissioner Bobby McLamb was charged with two counts - extortion by a public official and conspiracy to commit mail and wire fraud.

An initial appearance hearing for McLamb is scheduled for Thursday, according to his lawyer, David Long. No hearing was immediately scheduled for Saunders.

The indictment outlined a scheme in which the defendants allegedly diverted campaign contributions intended for Phipps to help pay some of McLamb's campaign debt. McLamb lost to Phipps in the Democratic primary in 2000 and, when he then joined her campaign, 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 payments toward McLamb's loans.

But the indictment said Phipps called and wrote to Centura Bank, where McLamb owed $75,000, asking that the loan be extended.

"My husband Robert and I are holding a series of fund-raisers now and after the election in November to assist Bobby in retiring this debt and feel we should have no trouble raising the money to satisfy his debt to Centura Bank," Phipps wrote in an October 2000 letter to the bank.

During the elections board hearing, Phipps said she and her husband talked with McLamb and a campaign contributor about helping McLamb. But she said she never agreed to use her campaign money to pay off McLamb's debt.

According to the 42-page indictment, the alleged crimes began after an unnamed person in Phipps' campaign told McLamb the campaign would help repay his debt. McLamb received the assurance May 2, 2000 - the night of the primary - after he offered to support Phipps in the general election.

The indictment said the Phipps' campaign diverted at least $86,000 in contributions to repayment of McLamb's $100,000 debt. McLamb had separate $75,000 and $25,000 bank loans and Phipps called at least one bank asking that the loan be extended while her campaign raised money for it, the document said.

Saunders, 43, a longtime assistant to Phipps, and McLamb, 42, were accused of soliciting money they said would go toward retiring Phipps' campaign debt. But state campaign finance reports filed by the campaign didn't disclose the payments for McLamb.

Last year, the state Board of Elections fined Phipps' campaign $130,000. The board said the campaign had taken $84,202 in cash from donors it could not identify and more than $14,000 in illegal corporate contributions.