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FOR IMMEDIATE RELEASE:

Tuesday - March 2, 2004

GREENVILLE - United States Attorney Frank D. Whitney announced that MEG SCOTT PHIPPS, 48, of Haw River, N. C., was sentenced in federal court in Greenville on Tuesday, March 2, 2004. U. S. District Judge Malcolm J. Howard imposed a sentence of 48 months imprisonment, a fine of $25,000.00, and a supervised release term of two years. PHIPPS also forfeited to the United States $25,000.00. Immediately following the sentencing hearing, she was taken into custody by the United States Marshals Service. PHIPPS will serve her sentence in a federal institution, which will be designated by the U. S. Bureau of Prisons.

Pursuant to a plea agreement with the United States Attorney's Office, PHIPPS, former North Carolina Commissioner of Agriculture, pled guilty on November 10, 2003, to: one count of conspiracy to commit offenses against the United States (Count One of the indictment); two counts of using the mails in a scheme and artifice to deprive the State of North Carolina and its citizens of the right of honest services (Counts Four and Five of the indictment); and two counts of extortion under color of official right (Counts 21 and 26 of the indictment).

Counts Four and Five are based on the "honest services" section of the federal mail fraud statute, enacted by Congress in 1988. Under this provision, a public official is guilty if the mails are used in any way in a fraudulent scheme to deprive the public of honest services free of improper influence or corruption. Counts 21 and 26 are based on the "Hobbs Act," which makes it illegal for a public official to use her position to obtain property from someone for or because of officials acts. Count 21 arises from a $10,000.00 cash payment that Jimmie Drew III, of Drew Expositions, personally handed to Phipps in the Spring of 2002. Drew's company had the midway contract for the Mountain State Fair near Asheville, and later obtained a contract to construct cable lift rides at that fair and the State Fair in Raleigh. Count 26 arises from the $2,000.00 cash payment that a fair food concessionaire handed to Phipps at the 2001 State Fair in Raleigh. PHIPPS was indicted by a federal grand jury in Raleigh on September 4, 2003, on 28 charges related to the investigation of the Meg Scott Phipps Campaign 2000 for Commissioner of Agriculture, and subsequent events during her tenure in that position. A 30-count superseding indictment (which added two counts) was filed on October 2, 2003.

Three other defendants charged in the investigation, Bobby C. McLamb, Linda Johnson Saunders, and Michael Eugene Blanton, pled guilty previously and will be sentenced on Wednesday, March 3, 2004, in Greenville. Two additional defendants, Norman Y. Chambliss III (charged with obstruction of justice) and Weldon B. Denny (charged with making false statements to the FBI) are scheduled for arraignment on Monday, April 5, 2004, in Greenville.

The investigation in this case has been ongoing for approximately 20 months and has been conducted jointly by the Federal Bureau of Investigation and the North Carolina State Bureau of Investigation, in conjunction with the United States Attorney's Office and the Office of Wake County District Attorney C. Colon Willoughby, Jr. The Public Integrity Section of the Criminal Division of the U. S. Department of Justice also played a role in the investigation. Assistant U. S. Attorney Dennis M. Duffy and Executive Assistant U. S. Attorney John Stuart Bruce are handling the case for the government.

News releases are available on the U. S. Attorney's web page at www.usdoj.gov/usao/nce within 48 hours of release.

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