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Scientific Games faces criminal investigation

Nov 3, 2005, 11:12 am

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Scientific Games

Apparent violations of lobbying laws prompt North Carolina to initiate a probe

North Carolina Wednesday began a criminal investigation of lottery company Scientific Games and three people who worked this year for the major gaming operator.

The N.C. Secretary of State's office, which regulates lobbyists, said it found "apparent violations of the lobbying laws" by Scientific Games International Inc. and a vice president, Alan Middleton, as well as company consultants Meredith Norris and Kevin Geddings.

The state investigation is the latest development in a series of problems surrounding the start-up of the state lottery, which Gov. Mike Easley signed into law Aug. 31. Federal prosecutors have opened a separate investigation into questions about the lottery's creation. House Speaker Jim Black's office has been subpoenaed for records, including ones involving Scientific Games, Middleton, Norris and Geddings.

Two state lottery commissioners have resigned in the past two weeks, one citing time constraints and the other — Geddings — amid questions about his ties to Scientific Games.

On Wednesday, regulators with the Secretary of State would not describe in detail the apparent violations.

State law requires companies and individual lobbyists to register with the state and disclose spending related to lobbying for specific legislation. Neither Geddings nor Norris registered as lobbyists for Scientific Games, though Norris did register for other clients.

Under state law, lobbying is defined as "influencing or attempting to influence legislative action through direct oral or written communication" with legislators or the "solicitation of others by lobbyists to influence legislative action."

Scientific Games, a publicly traded company that operates instant-ticket games in 29 states and lotto numbers games in 12 states, said through a spokeswoman that it would cooperate with any investigation. The company had no further comment.

Norris is a Raleigh lobbyist who also served as political director to Black, a Mecklenburg County Democrat, until last month. She also is a former legislative staffer in Black's office.

Norris was paid $40,000 by Scientific Games this year for her work and $4,885 to cover meals and other expenses, much of which involved entertaining lawmakers, the company said.

Neither Norris nor a lawyer she has hired could be reached. She said in past interviews that she did not lobby for the company and only monitored legislation for it.

Geddings, who owns a Charlotte public relations firm, was a state lottery commissioner — appointed by Black — until he resigned Tuesday, hours before Scientific Games disclosed that it paid him $24,500 this year.

Geddings had not revealed that he took money from Scientific Games, which is expected to seek contracts to run North Carolina's lottery games. One payment from Scientific Games to Geddings for $9,500 was made the day after he was appointed to the commission, records show.

Geddings did not return a message seeking comment, but he has said in the past that he has done nothing wrong.

Middleton, who is Scientific Games' chief lobbyist and a longtime friend of Geddings, did not return a message seeking comment.

Misdemeanor charge

The State Bureau of Investigation will investigate the possible violations, Attorney General Roy Cooper's office said Wednesday. Potential charges would be referred to Wake County District Attorney Colon Willoughby.

Any charge would be a misdemeanor, punishable by a fine and possible probation. Lobbyists convicted also face a ban on lobbying in North Carolina for two years.

Norris' work as a political consultant for SCANA Corp., parent company of PSNC Energy, is part of the state probe, officials said.

The Secretary of State's Office said it could not get sufficient information about her work for SCANA. But, regulators said, it is clear that a contract between Norris and SCANA "can easily be construed to encompass legislative lobbying activities." E-mail correspondence shows that Norris set up a dinner among nine House Republicans and two SCANA lobbyists this year.

Angie Townsend, a spokeswoman for SCANA, said the company has cooperated with the investigation and will continue to.

"We have not done anything improper, and we are confident that the information gathering process will bear out that there was no wrongdoing on our behalf," she said.

Secretary of State regulators began their inquiry after a News & Observer report showed that Norris had helped arrange at least one dinner between Black and Middleton and helped recruit lawmakers for a Scientific Games yacht outing in Seattle. Those acts appeared to go beyond monitoring legislation, officials said.

This week, Scientific Games filed a report with the state showing that Norris paid for at least 12 other dinners with lawmakers.

The report also showed that Middleton was working in Raleigh at least a month before he registered with the state as a lobbyist.

In addition, the report showed Geddings was paid $5,000 to prep Sen. Tony Rand, a Fayetteville Democrat, for a lottery debate.

Scientific Games said in the filing that it does not believe the activities of Norris or Geddings were lobbying under state law.

State lottery chairman Charles Sanders of Durham said Wednesday he is concerned that the state will not end up with a fully competitive bidding process to operate the lottery games because of the questions about Scientific Games, one of only two major lottery vendors in the nation.

The company's rival is GTECH Holdings of Rhode Island, which said Wednesday that it made no payments for meals or other entertainment for lawmakers this session. GTECH paid $48,000 for Raleigh law firm Parker Poe Adams & Bernstein to send a handful of lobbyists to work the halls of the legislature this year.

Sanders said the gaming company situation is still evolving.

"Whatever we end up doing to select a vendor, it will have to be done with total transparency," Sanders said. "It will have to be with clear and cogent reasoning as to why it goes the way it does."

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