Judge deals out prison sentences in corruption scandal

It worked like a charm.

Video-poker-machine owners slipped the gambling devices across the South Carolina state line and into the backrooms of small restaurants and country convenience stores across Western North Carolina. The money rolled in—as much as $30,000 per machine per year—and players were lured by the prospect of winning cash, rather than the token prizes the law allowed. The machine owners cut deals with store owners and paid local law enforcement to leave them alone. That was the cost of doing business, and business was good. Millions good.

Going to jail: Former Buncombe County Sheriff Bobby Medford talks to reporters after a federal judge sentenced him to 15 years in prison. Photo By Jason Sandford

It was easy money, and there was plenty of it: Enough, it seemed, for everyone. But nobody wanted to stop when North Carolina began restricting the operation of the gambling machines and eventually banned them outright. Federal agents took notice, however. Working the edges of the conspiracy, the feds started marking key players and amassing their evidence. Raids on stores and homes revealed the extent of the bribery-and-public-corruption scandal.

Gradually, the personalities involved began to emerge: a gruff sheriff with a one-eyed parrot; a Greek immigrant living the American dream; a dull deputy who loved the trappings of law enforcement; a slick salesman with a brash attitude. And details came to light that put the case in the realm of pulp fiction: bricks of cash wrapped in foil and stashed in ceilings; videos recording backroom deals; code names such as “Judge” and “J”; and bribes handed over in church parking lots.

Last week, U.S. District Judge Thomas Ellis put his final stamp on the tale as he handed down punishments that varied widely in severity. “You write the pages of your life story,” Ellis told more than one defendant, adding that the chapters having to do with taking part in an illegal gambling operation would end with paying consequences. And so they did.

Medford gets 15 years

On Oct. 6, Ellis sentenced former Buncombe County Sheriff Bobby Medford to 180 months in prison on corruption-and-extortion charges.

Former Lt. Johnny Harrison received a much lighter sentence—30 months on similar charges—in exchange for cooperating with prosecutors and offering key testimony against Medford at the trial.

The sentence came a day after defense attorney Stephen Lindsay filed a lengthy list of objections (97 in all). Judge Ellis overruled many of them, saying he believed Lindsay was rearguing points he’d tried to make during the May trial that saw Medford convicted on 10 counts related to taking bribes from illegal video-poker operators in return for allowing their businesses to operate.

Lindsay also argued that due to Medford’s poor health, he should receive a reduced sentence, and the attorney presented a letter from people in the county praising Medford and petitioning the court to reduce his sentence.

Ellis said he acknowledged Medford’s health situation and his support in the community, but the judge compared corruption to “a cancer on our society” and said the sentence needed to be harsh.

“This [sentence] must stand like a bright beacon warning others that if they think of abusing their office for personal gain, that there will be serious consequences,” Ellis proclaimed. “You have betrayed the trust conferred on you,” he told the former sheriff. “You abused that power in order to enrich yourself.”

Hot Dog King dethroned: Demetre “Jimmy the Greek” Theodossis walks up the courthouse steps. After he was raided by the government, Theodossis became one of the first insiders to cooperate, revealing the scale of the illegal gambling operation. Photo By Jason Sandford

Medford could be released in about 12-and-a-half years with time off for good behavior, but there is no parole in the federal prison system. The powerful nature of Medford’s office and Ellis’ belief that the former sheriff had lied on the stand also argued for a lengthy sentence, said the judge. Medford, said Ellis, will probably be sent to the Butner Federal Correctional Complex north of Durham, N.C.

Harrison’s sentence, Ellis noted, is “remarkably lenient, but it takes into account your cooperation. You promptly admitted responsibility—and your assistance has been very substantial.”

Harrison gave a brief statement before the sentence was ready, talking about his extensive law-enforcement experience and his regret for his actions.

“I’ve done it all—I’m sorry for my actions,” a wheelchair-bound Harrison told the court as he leaned forward to speak into a microphone. “I messed it all up. I’ve done what I could to help, to be truthful.”

Noting that Harrison’s help is ongoing, prosecutor Richard Edwards shook his hand as he exited the courtroom, wishing him luck.

Medford later left the courtroom after Ellis postponed a decision on whether he’d be allowed to have back surgery before entering the federal prison system. Physically supported by friends due to ongoing back pain, he spoke with reporters before lighting a cigarette, though he wouldn’t say whether he would appeal his sentence.

Former deputies learn their fate

Ellis sentenced former reserve Capt. Guy Penland to five years in prison and former Lt. Ronnie “Butch” Davis to 40 months on corruption charges.

Penland, who is 77 years old, was tried and convicted alongside Medford in May. In a brief statement before the sentencing, he admitted his guilt and apologized for his actions.

“I take all the responsibility for what I did,” he said. “I hurt my family, I hurt my community and I hurt the law I love so much. I’ll never see 77 again, and a number of people that I didn’t want to hurt, that used to look up to me, never will again.”

Penland helped illegal video-poker operators scout locations in Buncombe County, using his position to persuade owners to place machines in their stores. He even helped some operators evade court-assigned community service or get tickets fixed.

Penland’s attorney, Paul Bidwell, said his client had tried to cooperate in hopes of securing a plea deal, though he didn’t believe he was guilty of all the charges against him.

“[The prosecution] eventually decided that it would be better for their case to try Penland up there alongside Medford than have him testify against,” said Bidwell, adding that he didn’t fault them for doing so.

Assistant U.S. Attorney Corey Ellis, however, told a different story. Penland, he said, had initially been cooperative, but “that changed. When he later came in, it was like night and day. He gave evasive answers, and the information we did get from him didn’t turn out to be of any use.”

And Judge Ellis (no relation to the prosecutor) noted: “Not all the cards are in the hands of the government. You could have pleaded guilty to all the charges or just some of them, and we would have had a trial on those.”

Balancing Penland’s age and his lesser role as a foot soldier in the conspiracy (“a functionary, not a manager,” the judge termed it) against the “severity of the charge,” Ellis said he believed 60 months would be “a just sentence.”

Penland hugged tearful family members as he made his way out of the courtroom.

Although Davis did not accept a plea bargain, he nonetheless pleaded guilty to all counts before the trial began. And though Ellis pointed out before pronouncing his sentence that the defendant “could have decided to become part of the solution sooner,” he also noted that Davis had entered the conspiracy relatively late, taking over the role of falsifying video-poker-machine registration from Harrison, and had still pleaded guilty. With time off for good behavior, the judge added, Davis will probably serve 37 months, or just over three years.

Both Davis and Penland were given until Oct. 17 to get their affairs in order before going to prison.

Convalescing behind bars

On Oct. 7, Judge Ellis ruled that Medford must begin serving his sentence on Oct. 28, two weeks after surgery to relieve debilitating lower-back pain.

Ellis made his decision after reviewing a letter from Medford’s physician. The judge said he’d worried that the doctor was “a buddy” who would continue to recommend extra time for Medford to recuperate. “Most of his convalescence, after 10 days to two weeks, will be done in the Bureau of Prisons,” the judge said sternly.

Good pages and bad pages: Weaverville businessman and longtime Medford ally Jackie Shepherd, after being sentenced. After his businesses were raided, Shepherd cooperated with the government. He’ll do 25 hours of community service for running an illegal gambling business.
Photo By Jon Elliston

Lindsay, one of Medford’s attorneys, said he planned to appeal the sentence.

The defense attorneys have 10 days to file the paperwork.

The judge’s ruling came at the end of a full day in court that saw a string of key figures sentenced. Both Ellis and prosecuting attorneys indicated that the government intends to aggressively pursue its case against other defendants. Those sentenced on Oct. 7 were:

Jackie Shepherd: The owner of Western Amusement, which operated in convenience stores and other outlets in Buncombe and neighboring counties, he provided Medford with campaign cash, clothes and a speech coach to help him win his first election as sheriff in 1992. Shepherd cooperated with the government after a June 2007 raid on his businesses and testified in court against Medford.

When given a chance to address the court, Shepherd said he’d previously apologized to his family and now wanted to apologize to the court. “Most of all, I ‘d like to apologize to the victims”—the people who played the illegal video-poker machines—he said.

Ellis asked Shepherd to explain his behavior, noting, “It’s important that you understand why you did what you did.” Shepherd said he was trying to help his son, and Ellis interrupted him, saying, “I think the simple word was ‘greed.’”

Shepherd was convicted on one count of conducting an illegal-gambling business. Ellis ordered him to perform 25 hours of community service and urged him to talk to young people about the importance of choosing right from wrong. “You write the pages of your own life story. You’ve written good pages and you’ve written bad pages,” and there are consequences for the bad, the judge intoned.

Besides the community service, Ellis ordered Shepherd to serve four months in a halfway house, which the government refers to as “community confinement.” Placed on two years’ probation, he was ordered to forfeit property valued at more than $684,000. Shepherd is also in the process of paying about $350,000 in back taxes, his attorney, Greg Newman, told the court.
Demetre “Jimmy the Greek” Theodossis: The owner of a string of Hot Dog King restaurants, Theodossis placed illegal video-poker machines in those stores and testified during Medford’s trial that he’d paid the then sheriff $1,000 a month to look the other way. In court on Oct. 7, Assistant U.S. Attorney Richard Edwards described Theodossis as the first “insider” to cooperate with the government. In debriefings, Theodossis explained how deals were made to bring machines into stores and how payments were made directly to Medford. That information proved crucial in getting other suspects to confess, said Edwards.

Theodossis declined Judge Ellis’ offer of a chance to speak. But his attorney, Sean Devereaux, told the judge that after government agents raided Theodossis’ home and found $1.7 million in cash, he fully cooperated with authorities. “His cooperation was pretty incredible,” said Devereaux.

Theodossis, who is 58, came to the United States in 1973, the attorney said. While serving in the Greek navy, Theodossis jumped ship in Jersey City so he could work in the United States. He became a naturalized U.S. citizen in 1979 and came to Asheville in 1983, where he worked hard to be successful in the restaurant business, said Devereaux.

Judge Ellis noted that Theodossis “has lived the American dream.” Ellis added, “One of the reasons we have the kind of opportunity we have in this country is the rule of law,” and in this country, “Lying to the government is a serious crime.”

Theodossis was convicted of one count of conducting an illegal-gambling business and two counts of making a false statement on tax returns (one individual and one corporate). Devereaux said his client had already forfeited $2.7 million and owed another $1.5 million in taxes.

Ellis sentenced Theodossis to one month in prison—which could be served at the Buncombe County Jail—and three years of supervised release. The judge also ordered Theodossis to serve eight months in a halfway house and make good on his back taxes.
Charles McBennett Sr.: In his address to the court, McBennett told Judge Ellis that his involvement in illegal gambling had wiped out a lifetime of hard work. The judge termed McBennett’s statement one of the most eloquent and genuine he’d ever heard.

McBennett said he grew up in an orphanage and began working in a dairy at age 7 for 75 cents a weekend. He said he later learned barbering and earned money cutting hair. At age 16 and with no college education, he said, he got a job as an hourly worker at a textile plant and eventually became vice president.

“When I got mixed up in this video poker” in 2005, “I erased it all,” he told the judge. “I’m very sorry.”

Ellis said he believed McBennett had accepted responsibility for what he’d done and urged him to communicate his story to young people and teach them to choose right from wrong early in life so they don’t become “seduced by greed and temptation of the moment.”

McBennett was convicted on one count of operating an illegal-gambling business. Ellis sentenced him to 25 hours of community service, two years’ probation and two months in a halfway house.
Jim Lindsey: The owner of Mountain Music & Amusement, which had operated pool tables, jukeboxes and video-poker machines since the 1980s, Lindsey had turned the business over to his sons but got involved again later. Lindsey also testified against Medford.

“What I did, I did do it. I knew what I was doing was wrong,” Lindsey told the court. He also apologized to his family and his church. Three men sat in support of Lindsey in court: a former U.S. marshal, the owner of a heavy-equipment business and Lindsey’s pastor.

Lindsey’s attorney, Max O. Cogburn Jr., noted that his client is continuing to cooperate with the government in its ongoing investigation of illegal gambling in the mountains, asking the judge to consider that when deciding Lindsey’s sentence. Judge Ellis said he would and asked the prosecuting attorneys whether Lindsey’s cooperation would help the government advance its case within the next 90 days. They said it would.

Convicted on one count of conducting an illegal-gambling business, Lindsey was sentenced to five months in federal prison, three years of supervised release and five months in a halfway house. But it appears that his sentence will be reduced as Lindsey continues to cooperate with government agents.

Two others also sentenced

Like Harrison, Shepherd and Theodossis, the remaining two figures in the case had their sentences markedly reduced in exchange for the assistance they gave—and perhaps will continue to give—federal prosecutors.
Jerry Pennington: A salesman for Henderson Amusement, Pennington (along with Penland) persuaded convenience-store owners to install his company’s video-poker machines, as well as handling relations with law enforcement. Pennington bribed deputies—and Medford—to keep the scheme going. He earlier pleaded guilty to illegal gambling, bribery and converting the property of another for his own use.

During the trial, Pennington testified extensively about the bribes, how the video-poker operation worked, and even the code names (such as “Judge” for Penland) used to keep track of the bribes. Due to the importance of this testimony, Judge Ellis on Oct. 8 decreased Pennington’s sentence by more than half, from 63 months to 30 months.
Tracy Bridges: A former captain in the Sheriff’s Office, Bridges was working as a magistrate in Madison County when he was hand-picked by Medford to direct the office’s Internal Affairs Division. Ironically, Bridges became a bagman for Medford’s operation, taking cash donations (some of them from illegal video-poker operators) and, at Medford’s direction, turning them into money orders and falsely crediting the money to names taken from a list of Medford donors provided by Davis in an effort to dodge campaign-finance rules.

But Bridges began cooperating with the FBI and prosecutors early, while still employed by the Sheriff’s Office. Just after Medford and his deputies were arrested, Bridges pleaded guilty to money-laundering charges. During the trial, defense attorneys had tried to cast doubt on Bridges’ testimony, asserting that he, not Penland, was the “Judge” referred to in Pennington’s notes.

Due to his early cooperation, Judge Ellis on Oct. 8 reduced Bridges’ 30-month sentence to six months in a halfway house and three years’ probation.

 

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