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FOR IMMEDIATE RELEASE:

Tuesday - October 19, 2004

GREENVILLE - United States Attorney Frank D. Whitney announced that NORMAN Y. CHAMBLISS III, 53, of Rocky Mount, N. C.; WELDON B. DENNY, 78, of Raleigh, N. C.; and MORRIS VIVONA, JR., 46, of Vecona, New Jersey, were sentenced in federal court in Greenville on Tuesday, October 19, 2004. U. S. District Judge Malcolm J. Howard imposed the following sentences:

CHAMBLISS--Two years of probation, 180 days of home confinement, and a fine of $25,000.00.

DENNY--One year of probation and a fine of $2,000.00.

VIVONA--Two years of probation, 150 days of home confinement, and a fine of $3,000.00.

Pursuant to plea agreements with the United States Attorney's Office:

CHAMBLISS pled guilty on April 5, 2004, to obstruction of justice in connection with the 2002-2003 federal grand jury investigation of the Meg Scott Phipps Campaign 2000 for Commissioner of Agriculture. A criminal information filed by the United States Attorney's Office on March 1, 2004, charged that CHAMBLISS colluded with another witness in order to impede the government's investigation and provided false statements to law enforcement assisting the grand jury investigation.

DENNY pled guilty on May 3, 2004, to making false statements to the Federal Bureau of Investigation (FBI) on January 22, 2003, in connection with the 2002-2003 grand jury investigation of the Meg Scott Phipps Campaign 2000 for Commissioner of Agriculture. The U. S. Attorney's Office filed a criminal information on March 1, 2004, that charged DENNY with falsely informing the FBI that he was unaware of illegal cash payments made by James J. Drew III to Meg Scott Phipps, when, in truth and fact, DENNY knew of three illegal cash payments totaling at least $20,000.00.

VIVONA pled guilty on June 7, 2004, to obstruction of justice in connection with the federal grand jury investigation in 2002 and 2003. A criminal information filed by the U. S. Attorney's Office on June 3, 2004, charged that VIVONA colluded with Norman Y. Chambliss III in order to impede the government's investigation and provided false statements to law enforcement assisting the grand jury investigation. (Chambliss had pled guilty previously to the same charge.)

The United States Attorney for the Eastern District of North Carolina and Amusements of America have agreed to enter into a Corporate Compliance Agreement. Under the agreement, Amusements of America will be monitored for 18 months by the U. S. Attorney's Office and the U. S. Probation Office for compliance with laws and ethical standards in the operation of its business. If the agreement is adhered to, there will be no criminal charges brought against Amusements of America as a corporate entity by the United States Attorney for the Eastern District of North Carolina in connection with the investigation of the Meg Scott Phipps campaign and her administration as Commissioner of Agriculture.

Others convicted and sentenced as a result of the federal grand jury investigation include:

MEG SCOTT PHIPPS-48 months imprisonment, a fine of $25,000.00, and a supervised release term of two years. Also, she forfeited $25,000.00 to the United States.

LINDA JOHNSON SAUNDERS--three months of imprisonment, 270 days of home confinement, and two years of supervised release.

BOBBY C. McLAMB--*16 months imprisonment, two years of supervised release, and a fine of $1,000.00. (*Pursuant to the government's motion for reduction of McLamb's sentence based on substantial assistance rendered after sentencing, the court reduced his sentence to twelve months and one day on October 19, 2004.)

MICHAEL EUGENE BLANTON--12 months and one day of imprisonment, two years of supervised release, and a fine of $1,000.00.

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. She pled guilty on November 10, 2003 to: one count of conspiracy to commit offenses against the United States; 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; and two counts of extortion under color of official right.

SAUNDERS and McLAMB were indicted by a federal grand jury in Raleigh on March 10, 2003, on charges related to the Meg Scott Phipps Campaign 2000 for Commissioner of Agriculture. According to the indictment, McLAMB, after losing to Phipps in the Democratic primary in August, 2000, supported Phipps in the general election and later became Assistant Commissioner of Agriculture. SAUNDERS served as the treasurer of the Phipps Campaign and was appointed Special Assistant to the Commissioner of Agriculture following the election.

BLANTON was indicted by a federal grand jury in Raleigh on June 6, 2003, also on charges related to the Meg Scott Phipps Campaign 2000 for Commissioner of Agriculture. According to the indictment, he participated in a cover-up by helping alter documents produced to the North Carolina Board of Elections; by

helping persuade SAUNDERS to lie to the North Carolina Board of Elections and to investigators; by lying to investigators himself; and by lying to the grand jury investigating the matter. BLANTON was hired as Public Affairs Manager for the Department of Agriculture in May 2001, promoted to Assistant Commissioner of Agriculture in February 2002, and again promoted to Deputy Commissioner of Agriculture in early 2003.

U. S. Attorney Whitney said, "With today's sentencings and Amusements of America's Corporate Compliance Agreement, we can announce that the investigation is complete. Barring unforeseen developments, there will be no further criminal charges brought by our office."

He added, "We believe this is the most successful public corruption prosecution in North Carolina history." Seven people have been convicted of felonies in federal court, five of whom were high ranking state officials. Former Commissioner of Agriculture Meg Scott Phipps was found guilty following a jury trial in state court and pled guilty in federal court. One additional person pled guilty in state court and was sentenced. Whitney further stated, "This case has been a model of federal and state cooperation. The District Attorney's Office, the FBI, and the SBI are to be commended for getting the job done without worrying who got the credit. The citizens of North Carolina have been well-served by the agencies involved."

The investigation in this case lasted approximately 27 months and was 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 prosecuted the case for the United States.

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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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