High roller or honest sheriff?

An expert witness called by former Buncombe County Sheriff Bobby Medford’s defense attorney testified today that Medford’s gambling losses totaled $122,000 from 2002 to 2007, and under cross-examination agreed that Medford “put in play” more than $800,000 at casinos.

Medford defense attorney Steve Lindsay questioned Erik Lioy, a Certified Public Accountant and certified fraud examiner for Grant Thornton, a large accounting, tax and business advisory firm. Lioy testified as an expert witness to determine if fraud had occurred, telling the jury that he had studied the bank statements, loan records, tax returns and other financial forms of both Medford and Medford’s long-time girlfriend, Judi Bell, so 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 income before taxes was $80,000 as sheriff, and it gradually increased. For the 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 testified that he examined records Lindsay had given him showing winnings and losses Medford incurred at Harrah’s Cherokee Casino, as well as Harrah’s properties in Mississippi and Nevada. From 2002 through 2007, Medford’s gambling losses totaled $122,000, Lioy said. Medford actually had gambling winnings of $1,500 in 2004, he added. The money is tracked through a casino-issued “player’s card” that’s swiped into a machine and tracks the money a gambler plays.

For Medford’s girlfriend, Judi Bell, Lioy testified that her gambling losses totaled $17,000 for 2004 through 2006. She had a total net income of $119,000 for that period of time, he said.

Lioy testified that both Medford and Bell had a number of automated-teller-machine transactions 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 car with an original purchase price of $23,000 and had received money from a mortgage against a home he owned and allowed a relative to live in rent-free.

U.S. Attorney Richard Edwards cross-examined Lioy and asked if it was correct that from 2003 to 2006 that Medford had “put in play” more than $815,000, according to the money tracked by Medford’s casino card. Lioy said he didn’t tally that amount, but understood that Medford had a high volume of play. When Edwards asked what machines were played, Lioy said it appeared that Medford gambled at $1-per-play video machines.

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

Edwards asked Lioy if he knew that Bell had put into play more than $600,000 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 he lost his re-election bid for sheriff in late 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 had in previous years, while Bell had only some scattered, much smaller deposits.

“I don’t see any deposits of significance here,” Lioy replied to Ellis’ question about the matter.

Under questioning, Lioy also revealed that Medford’s defense was paying his firm $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.

Lindsay also questioned IRS agent Michael Kniffin about a conversation with video-poker operator Jim Lindsey, who last week testified that he bribed Medford in return for favors. Kniffin said that when he originally interviewed Lindsey, he hadn’t mentioned any such payoffs. However, under cross-examination from the prosecution, Kniffin said the original conversation was 13 minutes in length and that he hadn’t asked about the full extent of Lindsey’s activities.

The defense finished up its case with several brief appearances by character witnesses, including Jerry Biddix, a childhood friend of Medford who runs Professional Heating and Cooling, former Sheriff’s Office Chaplain Rev. Bob Carter and David Hazlett, a retired Asheville Police officer. All said that, in their opinion, Medford was an honest man.

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

Paul Bidwell, defense attorney for former reserve Capt. Guy Penland (on trial with Medford), then called several character witnesses as part of his brief arguments. They also included a 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,” Jones said, though under cross examination, she later added that she felt he was “gullible on a lot of things.”

Another witness was Cynthia Roberts, owner and operator of City Transmissions, a business that often donated to golf tournaments that prosecutors now assert Medford used to get money, especially from video-poker operators.

Roberts said Penland was a long-time family acquaintance. She said her business had sponsored a golf team in Medford’s biannual tournaments, always paid with a check, and believed the money went to Medford’s re-election campaign.

Under cross examination, she said she had no knowledge of how City Transmissions’ name had gotten on a money order given to Medford’s 2006 campaign, as her business never used money orders for their contributions. Last week, a former sheriff’s captain testified that Medford’s campaign had funneled cash donations into money orders, then falsely put the names of long-time supporters on them to skirt campaign laws.

Penland himself refused to testify. During brief questioning by Judge Tim Ellis, the 77-year-old revealed 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, assistant U.S. Attorney Corey Ellis (no relation to the judge) finished cross-examining Medford, who took the stand in his defense on Monday. Ellis also questioned Medford about his finances. Ellis showed Medford a copy of his 2006 tax return, which showed 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,” Medford said. “I would think it would be a typographical error or something like that.”

The trial resumes at 11 a.m. tomorrow in the federal courthouse with closing statements from each side.

— David Forbes, staff writer, and Jason Sandford, multimedia editor

Illustration of Medford on the stand by Adam Altenderfer