Guilty

It took the jury in the federal corruption trial of former Buncombe County Sheriff Bobby Medford and former reserve Capt. Guy Penland just two hours on May 15 to find both men guilty on all 10 counts.

Medford faces the music: Former Buncombe County Sheriff Bobby Medford, center, emerged from the federal courthouse after his conviction on corruption charges. Escorting him were Tom Chickos (left), Medford’s defense team investigator, and his longtime friend and former campaign manager, Ron Honeycutt.. Photo By Jason Sandford

The verdict ended one of the largest public-corruption trials in Western North Carolina history. The trial’s final days saw Medford himself take the stand in his defense, as well as sometimes-heated closing arguments by both prosecution and defense attorneys. It may be a month or more before Medford and Penland are sentenced.

Day 9, May 12: Medford takes the stand

After the defense decided not to call either former Chief Deputy George Stewart or Judi Bell, Medford’s longtime girlfriend, a surprise came: the former sheriff himself agreed to testify.

Medford told the court about his law-enforcement career and described how his office had dealt with registering video-poker machines after the General Assembly passed a law in 2000 allowing the machines in North Carolina. Medford said his office, strapped for cash, had not viewed video-poker registration as a top priority.

“I’ve never seen [a registration sticker], except on a machine,” Medford testified. He later added that during a meeting in 2000 to explain the new law to operators, he gave only a brief introduction before turning the meeting over to deputies.

“I was busy. There was an office full of people waiting to see me about other things,” said Medford.

During marathon questioning by his attorney, Stephen Lindsay, Medford flatly denied ever having received bribes from any of the video-poker operators who’d testified the previous week that they’d given the sheriff thousands of dollars in return for protecting their operations.

Hunched over the microphone in a dark-brown suit, hand gripping the witness stand, Medford said he’d met Jerry Pennington, the former operator for Henderson Amusement in this area, only twice. Both times, said Medford, he rebuked Pennington for being too close to then reserve Capt. Penland—who, he felt, was being used by Pennington.

“I felt that [Penland’s riding around with Pennington as he made his sales pitch] didn’t look right and that [Pennington] was taking advantage of Guy,” Medford told the court.

He recalled having been especially angry after learning that Penland had been signing off on video-poker registrations. As an unpaid volunteer, said Medford, Penland wasn’t authorized to carry out such a task.

Medford said he’d prohibited operators from taking one another’s business and had specifically told Jim Lindsey of Mountain Music & Amusement that he couldn’t put his machines in convenience stores owned by businessman Imran Alam after Alam became dissatisfied with his deal with Henderson Amusement.

“I said that he wasn’t to be sent back to my office or brought to me—I wasn’t going to change my mind, and I didn’t have time for it,” Medford said. He added that he would bust video-poker operators giving illegal cash payouts when he got complaints about them, but due to a lack of funding, he didn’t consider it a high priority.

The previous week, however, both Lindsey and Alam had testified that they’d bribed Medford on more than one occasion. Alam in particular said that after giving $3,000 to Medford and the same amount to former Lt. Johnny Harrison (who took a plea deal), Medford relaxed his usual rule and let new machines come in.

Medford’s attorney also showed the jury photos of Medford’s $350-a-month apartment in Weaverville and revealed that he was supporting his grandchild as well.

The former sheriff also asserted that although fundraising golf tournaments were “put on for me” in nonelection years and that the profits went to him in cash, the sums ranged from $2,500 to $3,000 and went to charitable causes—which he said he’d funded out of his own pocket before the golf tournaments came along.

“If someone came in the office and needed some help,” Medford said, he used the money to assist residents with things like heating oil or clothes for their children.

Under cross-examination, however, Medford said, “The money wasn’t mine—it went to the Sheriff’s Office,” asserting that it was all spent on charity. He said he never stayed long at the golf tournaments, which included teams sponsored by video-poker operators, and wasn’t aware of their involvement.

“I just said ‘Hello’ and thanked everybody,” noted Medford. “I had to get back to work.”

The prosecutors also showed records from tournaments in 2005 and 2006, which had each taken in between $9,000 and $11,700 in profits. The previous week, Frank Orr, who managed the tournaments for Medford, testified that in a good year, a tournament would make around $11,500.

“What is the reason for the disparity here—that you say you only got $2,500?” asked Assistant U.S. Attorney Corey Ellis.

“I can’t recall ever getting more,” Medford replied.

The prosecution also pointedly questioned Medford about specific cash deposits going into an account he shared with his girlfriend. Medford said the money came from legitimate sources: an injury settlement with the county, cashing in his 401(k), lines of credit and a credit card. This, he said, accounted for much of the money he spent at Harrah’s Cherokee Casino, including his more than $30,000 in gambling losses in 2005 and more than $50,000 in 2006.

On the stand: Beginning the trial’s final week, Medford took the witness stand in his defense, denying that he’d taking bribes from video-poker owners and operators. Illustration By Adam Altenderfer

“I had credit cards, I had a signature loan—I could get money from anybody,” he said, clarifying that he meant friends and family members.

During repeated questioning about specific transactions, however, he shook his head and said he couldn’t recall them.

“Would you say you have a gambling addiction, Mr. Medford?” Corey Ellis asked toward the end of the day’s questioning.

Lindsay objected to the question, but Judge Thomas Ellis (no relation to the prosecutor) overruled it.

“No,” Medford answered. “For my first eight years [in office], I hardly did it. But I got old and sick; I wanted to do something else.”

Day 10, May 13: Show me the money

On the last day of testimony, an expert witness called by the defense testified that Medford’s gambling losses from 2002 to 2007 had totaled $122,000; under cross-examination, he agreed that Medford had “put in play” more than $800,000 at casinos.

Defense attorney Lindsay questioned Erik Lioy, a CPA and certified fraud examiner for the business-services firm Grant Thornton International. Testifying as an expert witness to determine whether fraud had occurred, Lioy told the jury he’d studied the bank statements, loan records, tax returns and other financial forms for both Medford and his girlfriend, Judi Bell, so that he could offer an opinion in court.

Under questioning by Lindsay, Lioy first gave a year-by-year breakdown of Medford’s salary. With the aid of a bar chart presented to jurors, Lioy said that Medford’s 2002 pre-tax income as sheriff was $80,000, and it gradually increased. During that five-year period, Medford’s income totaled $487,000 in salary as sheriff, plus $122,000 in pension payouts, $8,000 to $9,000 in Social Security payments and about $4,000 in income-tax refunds, according to Lioy.

Lioy said he’d also examined records provided by Lindsay showing Medford’s winnings and losses at Harrah’s Cherokee Casino as well as at other Harrah’s properties in Mississippi and Nevada. During those years, said Lioy, Medford’s gambling losses totaled $122,000. Medford actually had net gambling winnings of $1,500 in 2004, added Lioy. The money is tracked through a casino-issued “player’s card” that’s swiped into a machine and tracks the money a gambler plays.

Bell, said Lioy, had gambling losses totaling $17,000 from 2004 through 2006. During that time, her total net income was $119,000, he said.

Lioy testified that both Medford and Bell had a number of ATM transactions during that time and that they often cashed checks at grocery stores.

In looking at Medford’s finances, Lioy also said he found that Medford lived in an apartment, owned a 2003 Chevrolet that had cost $23,000, and had received money from a mortgage against a home he owned that he allowed a relative to live in rent-free.

Cross-examining Lioy, Assistant U.S. Attorney Richard Edwards asked if it was correct that, between 2003 and 2006, Medford had “put in play” more than $815,000, according to the money tracked by his casino card. Lioy said he had not tallied those specific figures, but he understood that Medford had a high volume of play. When Edwards asked what machines were played, Lioy said it appeared that Medford had gambled at $1-per-play video machines.

Edwards also asked Lioy if he knew that Medford had been at Harrah’s Cherokee Casino on 225 different days during an unspecified period of time. Lioy said he hadn’t noted that number.

Edwards asked Lioy if he knew that Bell had put more than $600,000 into play from 2003 to 2006. Lioy said he didn’t note that.

After the court returned from lunch, Edwards continued his cross-examination, asking Lioy to review records of deposits and noting that cash deposits to Medford’s and Bell’s accounts had dropped sharply after the sheriff lost his re-election bid late in 2006. Poring over financial records, Lioy admitted that during the first three months of 2007, Medford had none of the frequent cash deposits he’d shown in previous years, while Bell had only some much smaller, scattered deposits.

The co-defendent: Former reserve Capt. Guy Penland, who told the judge that he was “nervous, scared,” when he declined to testify. Penland was also found guilty on all counts. Illustration By Adam Altenderfer

“I don’t see any deposits of significance here,” Lioy conceded.

Under questioning, Lioy also revealed that his firm was being paid $425 an hour for his services, including testifying. Finally, Edwards had him read from an article in an academic accounting-fraud journal, which noted that criminals often try to cover up their proceeds as cash hoards, loans from family or friends—or as gambling winnings.

Medford’s attorney also questioned IRS agent Michael Kniffin about a conversation with video-poker operator Jim Lindsey, who testified the previous week that he’d bribed Medford in return for favors. Kniffin said that when he originally interviewed Lindsey, he hadn’t mentioned any such payoffs. Under cross-examination, however, Kniffin said the original conversation had lasted 13 minutes and that he hadn’t asked about the full extent of Lindsey’s activities.

The defense finished up its case with brief appearances by several character witnesses, including Jerry Biddix, a childhood friend of Medford’s who runs Professional Heating and Cooling, the Rev. Bob Carter (a former Sheriff’s Office chaplain) and retired Asheville police officer David Hazlett. All testified to Medford’s honesty.

“I’ve never known Bobby to lie or be anything but truthful,” said Hazlett, who met the future sheriff when he was an investigator for the APD.

Paul Bidwell, Guy Penland’s defense attorney, then called several character witnesses, including another former sheriff’s chaplain, the Rev. Rex Collins, and Judy Jones, a retiree who said Penland had helped her when a man was defrauding her father and had later become a friend.

“I think he’s very law-abiding, very much so,” said Jones, though under cross-examination, she later added that she felt he was “gullible on a lot of things.”

Another witness, Cynthia Roberts, owns City Transmission Service, which often donated to golf tournaments that prosecutors now assert Medford used to get money, especially from video-poker operators.

Penland, said Roberts, is a longtime family acquaintance. She said her business had sponsored a golf team in Medford’s tournaments, always paid by check, and believed the money went to the sheriff’s re-election campaigns.

Under cross-examination, Roberts said she didn’t know how City Transmission’s name had gotten on a money order given to Medford’s 2006 campaign, as her business had never used money orders for its contributions. The previous week, a former sheriff’s captain had testified that Medford’s campaign had funneled cash donations into money orders, then falsely put the names of longtime supporters on them to skirt campaign-finance laws.

Penland himself refused to testify. During brief questioning by Judge Ellis, the 77-year-old said that he was “nervous, scared” but that his decision not to testify was his own and was made in full knowledge of the law.

Earlier Tuesday, prosecutor Corey Ellis finished cross-examining Medford, who’d taken the stand in his defense on Monday. Ellis showed Medford a copy of his 2006 tax return, which reported a total income of $215,000 and $45,000 in charitable giving. Medford said he never gave away that much money.

“I’m big-hearted and I give away, but not that much,” said Medford. “I would think it would be a typographical error or something like that.”

Day 11, May 14: Endgame

The prosecution opened the day with its closing argument, asserting that the evidence against the former sheriff and one of his deputies is overwhelming.

“[Imran ] Alam, [Jerry] Pennington, [Jackie] Shepherd, [Alvin Ledford], [former Capt. Tracy] Bridges, [Jim] Lindsey—they all say, ‘Money to Medford,’” Assistant U.S. Attorney Ellis said, referring to former illegal-video-poker operators and a confessed bagman (Bridges), all of whom testified that the sheriff was receiving bribes in exchange for protection and favors. “The argument that all these people made it up—that’s laughable,” said Ellis.

The prosecutor also asserted that Penland was “no dupe—he was deeply involved in this; he duped others.”

Speaking about Medford, Ellis asked the jury: “Is it credible that he doesn’t remember where all this cash is coming from? Could it be instead that he’s not telling the truth? Mr. Medford’s account shows $31,000 in cash deposits in 2003 alone—and he can’t tell from where it came? His statements are just not credible.

“To believe the argument that nothing was going on—or that he didn’t know about it—you’d first have to drink from the decanter of insanity,” Ellis declared. “All circumstances, all the testimony, all the evidence point to no other conclusion: This cash was not coming from any benign form. It was coming from extortion under color of law; it was coming from him prostituting his office for his own gain.”

Lindsay, Medford’s lead attorney, told jurors that Medford’s behavior had not fit the pattern of a man involved in a conspiracy to get money from illegal-video-poker operators, pointing out that after FBI agents alerted him that Penland had called in an undercover agent’s license plate in 2005 at the behest of operator Jerry Pennington, the sheriff continued his usual activities.

“Is this how someone would behave after they’re aware an investigation is out there?” asked Lindsay. “Wouldn’t he have laid low, covered his tracks? Instead, he eased Guy Penland out so he wouldn’t be aware an investigation was going on. He knew this [the investigation] was on the horizon. Are those the actions he would take if he was in a conspiracy? I’d suggest to you no.”

Lindsay added that Medford’s gambling trips to Harrah’s Cherokee Casino, where the government alleges he spent much illegally gotten money to feed his gambling habit, had increased after he knew the FBI was investigating video-poker operators.

Lindsay also tried to cast doubt on the government’s witnesses, including former video-poker operators who testified they gave bribes directly to Medford. These witnesses, argued Lindsay, had a motive to testify against Medford in order to get more lenient sentences for their own activities.

“Because he put his trust in others, because they could use his name to stir up fear and get power for their own illegal activities, and he provides the perfect way to get out of trouble,” said Lindsay. “He had a great heart and was always a sheriff for the people.”

Bidwell, defending Penland, accused the prosecution of “shock and awe” in an attempt to paint his client as corrupt, asserting that Penland hadn’t broken the law by using personal connections to get new machine locations for Pennington, a salesman for Henderson Amusement.

“Was [Penland] used? Of course he was—but you have to look at the facts. Is there anything he did that was illegal? There wasn’t,” Bidwell said.

When Penland called in the FBI agent’s license plate for Pennington, said Bidwell, the other man had told him it was someone “who was hanging around his business and scaring all the ladies. He was just doing a favor for his pal.”

Bidwell also pointed out that Penland hadn’t hidden his activities, adding that “if this was a conspiracy, it was run by The Three Stooges.”

In his rebuttal, Assistant U.S. Attorney Richard Edwards said that Bidwell’s interpretation of the law was wrong and that Penland merely had to have knowingly furthered an illegal conspiracy, even if he was just a volunteer at the Sheriff’s Office. Edwards also said that Medford hadn’t covered his tracks because the investigation hadn’t targeted him directly—and because he had a gambling addiction.

“The flame needed oxygen, and he kept beating a path to Harrah’s,” Edwards told the jury. “That the conspiracy continued can be attributed to arrogance, power and greed—and what common sense would say was an addiction.”

After receiving instructions from Judge Ellis, the jury decided to begin its deliberations the next morning.

Day 12, May 15: The verdict

After deliberating for just over two hours with the tension almost palpable, the jury found both Medford and Penland guilty of “extortion under color of law,” conspiracy to commit mail fraud, five counts of mail fraud, money laundering, obstruction of justice and conspiracy to further an illegal gambling operation.

The court will now decide how much property each will forfeit and what their sentences will be. Given that each count carries anywhere from five to 20 years in prison, both men could easily spend the rest of their lives behind bars.

Medford trembled, his hands on a table, as the verdict was read, while defense attorney Victoria Jayne put her arm on his shoulder. Friends and family of the two men, who filled several benches in the courtroom, burst into tears as they heard the verdict.

Later, the jury also found that between them, Medford and Penland had accrued $287,776 in illegal funds that would now be subject to forfeiture. That calculation includes proceeds from golf tournaments after 2002 and bribes that video-poker operators said they paid to Medford.

The two men will be sentenced in four to six weeks, Judge Ellis announced. In the meantime, they’ll remain under house arrest with GPS monitoring systems, forbidden to leave the house except for prearranged doctor or lawyer visits, the judge ruled.

Before dismissing the jury, Ellis thanked them, noting that since the case was now over, they could talk to whomever they chose. Nonetheless, he cautioned them not to speak to “the media mill.”

Emerging from the federal courthouse Thursday afternoon, Medford spoke briefly to a group of reporters and photographers. Medford said he wasn’t sure if he would appeal, adding that he’d always worked hard as sheriff. With his defense-team investigator, Tom Chickos, on one arm and longtime friend (and former campaign manager) Ron Honeycutt on the other, Medford walked to a waiting car. In one last statement, he said, “I still believe in the justice system.”

To view documents related to the Medford case, go to www.mountainx.com/xpressfiles.

SHARE
About Webmaster
Mountain Xpress Webmaster Follow me @MXWebTeam

Before you comment

The comments section is here to provide a platform for civil dialogue on the issues we face together as a local community. Xpress is committed to offering this platform for all voices, but when the tone of the discussion gets nasty or strays off topic, we believe many people choose not to participate. Xpress editors are determined to moderate comments to ensure a constructive interchange is maintained. All comments judged not to be in keeping with the spirit of civil discourse will be removed and repeat violators will be banned. See here for our terms of service. Thank you for being part of this effort to promote respectful discussion.

Leave a Reply

To leave a reply you may Login with your Mountain Xpress account, connect socially or enter your name and e-mail. Your e-mail address will not be published. All fields are required.