State Politics

Jury indicts lottery consultant

A federal grand jury indicted former state lottery commissioner Kevin L. Geddings on Thursday on five counts of mail fraud and four counts of wire fraud as part of what U.S. Attorney Frank Whitney called a scheme to conceal Geddings' ties with a lottery vendor.

The 42-page indictment outlines an almost five-year relationship between Geddings and Scientific Games International. The company, a national lottery vendor, lobbied for and helped write North Carolina's lottery law last year and then sought multimillion-dollar contracts to operate the games.

The indictment says Scientific Games and related businesses paid Geddings $228,796 between February 2001 and September 2005 for work on lottery efforts in North Carolina, South Carolina, Tennessee and Oklahoma.

Geddings, a political and public relations consultant who lives in Charlotte, said late Thursday in a voice mail message to a News & Observer reporter that he had not read the indictment. But he said he is "completely innocent" and looks forward to "setting the record straight" in court.

Geddings faces up to five years in prison and a $250,000 fine for each charge, prosecutors said. Whitney said any penalties would probably be much less than the maximum allowed.

The indictment says Geddings worked to pass the lottery while being paid by Scientific Games; that he tried to win a seat on the state commission overseeing the lottery; and that he concealed his relationship with Scientific Games after being appointed to the commission in late September.

Four days after his appointment, the indictment says, Geddings wrote to his executive assistant in an e-mail message: "Pls never acknowledge by phone that sci games is a client. ..."

Geddings also did not disclose his financial relationship with the company in required forms filed with the state.

Geddings concealed the ties because "he knew it would disqualify him from service as a lottery commissioner," Whitney said in a news release.

Whitney said the indictment is part of a continuing investigation by the FBI, the Internal Revenue Service and the State Bureau of Investigation.

The indictment says Geddings "owed a duty of honest services" to the state but hid his conflict of interest using the Internet, U.S. mail and telephone lines.

Geddings said he has been "totally forthcoming."

"I think prosecutors have some very inaccurate assumptions that they secured through the grand jury process," he said.

Scientific Games' general counsel, Ira Raphaelson, said in an interview that the company was cooperating with the investigation. The company was not accused of wrongdoing in the indictment.

Geddings' personal and financial ties with a vice president of Scientific Games and the company's chief lobbyist were disclosed by The N&O last year.

State and federal investigators began inquiries, and legislators have pushed for a sweeping new state ethics law and other reforms.

Geddings was appointed to the lottery commission by House Speaker Jim Black.

Black, a Democrat from Mecklenburg County, has said he was not aware that Geddings was connected with the company when he appointed him. The indictment does not say that Black knew of the ties.

Black could not be reached Thursday. His office issued a statement saying that Black was surprised by the depth of Geddings' ties with Scientific Games.

"Had the speaker known the details and exact timing of his relationship with the lottery company, he would never have appointed him to the new lottery commission," spokeswoman Julie Robinson said.

Geddings resigned from the commission in November, hours before Scientific Games disclosed to the state that he had worked for the company.

The company said it had paid him $24,500 for work in North Carolina but did not disclose the work in other states.

The indictment says that when Scientific Games representatives told Geddings they were about to provide to authorities records detailing their financial ties, Geddings asked whether the company was required to do so by a subpoena.

Told that was not the case, Geddings "inquired as to why Scientific Games was turning over the information," the indictment says.

The company said authorities had asked, and Geddings then said he "would be 'done' as a commissioner," the indictment says.

He resigned a few days later.

Scientific Games was not awarded the contracts to operate North Carolina's lottery, which began in March. In January, the lottery commission awarded the multimillion-dollar contract to operate scratch-off ticket and lotto numbers games to GTECH Holdings of Rhode Island.

Charles A. Sanders, chairman of the commission, said the state was fortunate that Geddings did not remain on the commission and could not say what Geddings' motives were.

The indictment says that in his time on the commission, Geddings forwarded favorable news about Scientific Games' work to commissioners and unfavorable news about GTECH.

"I don't understand," Sanders said, "how people like that get up in the morning and look themselves in the mirror, quite honestly."

(Staff writer Andrea Weigl contributed to this report.)

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