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N.C. lottery fraud trial puts S.C. Lottery under microscope

North Carolina LotteryNorth Carolina Lottery: N.C. lottery fraud trial puts S.C. Lottery under microscope
Kevin L. Geddings

The federal trial of Kevin L. Geddings is probing as deeply into his pro-lottery work in South Carolina as it is into his activities leading up to his appointment last year to North Carolina's lottery commission.

And the evidence presented so far by prosecutors suggests they see a pattern of conduct — payments to Geddings by lottery vendor Scientific Games in exchange for helping the company win lottery business.

Testimony and evidence show that creating a lottery in the Palmetto state involved legislative and public relations strategies worked out with top political officials, and business dealings that did not surface until after the lottery had passed. One big difference: Geddings was the public face of South Carolina's lottery campaign, while in North Carolina he worked out of the public eye.

Geddings, 41, faces eight counts of fraud. Prosecutors say he hid roughly $250,000 in business dealings with Scientific Games and a related business when House Speaker Jim Black appointed him last fall to North Carolina's lottery commission. Geddings says he committed no crime and complied with state conflict-of-interest disclosure requirements.

Geddings' success in South Carolina brought him a national reputation as a legislative and public-relations strategist. But federal authorities say some of his activities there show he was not being up front about his business dealings with lottery vendors.

Prosecutors have repeatedly raised questions about a $35,000 payment that Scientific Games gave to a lottery advocacy company that Geddings started in July 2001, called South Carolinians for an Effective Lottery.

Geddings and his wife formed the for-profit company less than one month after the legislature had passed a lottery.

In mid-September 2001, as South Carolina was getting ready to award major contracts for the games, a memo was sent to Lorne Weil, chief executive of Scientific Games, from Alan Middleton.

At the time, Middleton was a friend and business associate of Geddings who was also lobbying for Scientific Games. Middleton later joined the company as vice president of lobbying.

"We have both sides of the business in South Carolina at our feet," Middleton wrote to Weil. "We must continue to be covertly aggressive in our approach."

Among Middleton's requests were that the CEO host a fundraiser for the South Carolina governor in New York and that he immediately make a payment to "help fund the grass-roots effort here in South Carolina."

Scientific Games sent a payment for $35,000 to South Carolinians for an Effective Lottery on Oct. 5, 2001. It was mailed two days after Scientific Games won the contract to provide scratch-off tickets and three weeks before winning the other major lottery contract to provide online games.

Weil held a fundraiser in New York City for S.C. Gov. Jim Hodges' unsuccessful 2002 re-election campaign. It brought in roughly $50,000, much of it from company officials, testimony and records show.

On Tuesday, Pam Cox, who was an administrative assistant for Geddings' public-relations firm from 1999 to 2005, testified that she saw no activity in the account for South Carolinians for an Effective Lottery. There were no invoices for services billed, she said, and no other payments beyond the $35,000.

On Oct. 22, eight days before the state awarded the contract for online games to Scientific Games, Geddings sent a fax of a negative news article regarding the only other competitor — GTECH — to the chairman of the South Carolina lottery commission. "Just wanted you to be ready for an onslaught of bad press if Gtech wins SC contract," he wrote.

'Work product'

Geddings said there was nothing improper in the business he received from lottery vendors. He said in a brief interview Tuesday that he will present evidence showing the lottery advocacy company was active.

"There's work done, work product," Geddings said. "I'm proud of everything that I've done."

Geddings went to South Carolina to run Hodges' successful campaign for governor in 1998. Geddings turned the lack of a lottery into a major issue, producing popular ads featuring a Georgia convenience store owner who thanked South Carolinians for their lottery business.

After serving for nearly a year as Hodges' chief of staff, Geddings led the campaign to persuade voters to back a lottery. His company provided consulting services to an advocacy group called The South Carolina Lottery for Better Schools Coalition. Scientific Games paid $25,000 to the coalition for an ad campaign produced by Geddings' firm.

In North Carolina, Geddings received $24,500 from Scientific Games in 2005, with much of the money paid for helping gain passage of a lottery. Geddings prepped state Sen. Tony Rand, a Fayetteville Democrat, for a lottery debate in May 2005, and produced radio ads that were used to pressure three Republican senators to support lottery legislation. Two of them were absent for the final lottery vote, paving the way for its passage.

Geddings is not charged with any crime stemming from his efforts in South Carolina. But the federal investigation has led some South Carolina lawmakers to call for an investigation into how the lottery came into being.

News & Observer

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1 comment. Last comment 8 years ago by EXCALIBUR.
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United States
Member #2460
October 7, 2003
766 Posts
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Posted: September 28, 2006, 3:08 am - IP Logged

They worry a lot about online gambling, but they should worry more about the crooks that run the state lotteries and the rest of the government.

Somebody should investigate Frisk and the likes of him.