Morgan releases details of subpoena

A federal subpoena served on House Speaker Pro-Tem Richard Morgan last week seeks information relating to a small cigarette manufacturer that bankrolled a political group Morgan created in 2004 to help his re-election and that of his legislative allies.

The subpoena, which Morgan released today, also shows that federal authorities are interested in Morgan's connections to House Speaker Jim Black and two former House Republicans that Black met with to try to win their vote for speaker in 2003. One of those representatives, Michael Decker of Forsyth County, changed parties and supported Black, paving the way for a power-sharing agreement that allowed Black and Morgan to serve as co-speakers in 2003 and 2004.

Morgan, a Moore County Republican who lost his re-election bid in this year’s GOP primary, said in a statement today that he has been subpoenaed to testify as a witness and that he has "no idea what they think I know; however, I will be happy to fully answer all of their questions and cooperate in any way that I can."

The subpoena seeks information related to S&M Brands, a small cigarette manufacturer in Keysville, Va., and three people associated with the company — Malcolm, Steven and Betty Bailey. In 2004, while Morgan was in a tight race for re-election, S&M gave his political group $100,000, which at the time represented nearly two-thirds of the money the group received. The company's principals also gave individual contributions to the campaigns of Morgan and his allies.

Black, a Mecklenburg County Democrat, and his allies were also benefactors of campaign donations from S&M officials.

In 2003, Morgan stopped legislation that would have caused S&M and other small cigarette manufacturers to pay into a settlement between the states and the four major tobacco companies. The bill, which passed the legislature in 2005, would have cost S&M and other small cigarette makers millions of dollars. At the time the company gave the money, Morgan and a company official said the political help had nothing to do with Morgan's aid on the tobacco legislation.

The subpoena asks Morgan to provide information on 37 individuals or entities. Several represent video poker interests, four involve strip clubs and two pertain to the payday lending industry. There is also a request for information regarding Automated Wagering, a company later taken over by Scientific Games, a gaming vendor that sought to win contracts to operate North Carolina's new lottery.

The subpoena calls on Morgan to appear before a federal grand jury this week, but his lawyer, Steve Smith of Raleigh, has said that he is seeking a postponement because Smith will be out of town.