Alabama: Gilley testifies on $14M loan from McGregor

Gambling corruption trial: Gilley testifies on $14M loan from McGregor
Written by Sebastian Kitchen

Brash Country Crossing developer Ronnie Gilley said on the witness stand Wednesday that he joined forces with VictoryLand owner Milton McGregor to try to pass gambling legislation with the help of country music stars aligned with him and millions in funding from McGregor.

Also Wednesday in the federal corruption trial of McGregor and five others, a former state senator claimed that Sen. Harri Anne Smith offered him a bribe in exchange for his vote on the gambling legislation; and the head of the Alabama Ethics Commission said former legislative analyst Ray Crosby did not report receiving monthly payments from McGregor until the corruption investigation became public.

Gilley, who has already pleaded guilty to conspiracy, bribery and money laundering in the case, said he was at odds with McGregor in 2007 because he felt McGregor was pushing legislation that would create a monopoly.

But he said he met with McGregor in the casino owner's Montgomery hangar in December 2008 to discuss their operations and legislation. Gilley said they talked about the need to work together to pass gambling legislation to protect both of their sites.

Gilley said McGregor informed him that Country Crossing would put a 22 percent dent in his profits at VictoryLand, located about 20 miles east of Montgomery in Shorter.

Gilley said because of a task force formed by then-Gov. Bob Riley to target what he deemed was illegal gambling in the state, that it was difficult to find funding for his project. He said the financial outlook for Country Crossing was dire.

Gilley, 47, said he and McGregor reached an agreement in early 2009 and that Gilley would run a media campaign, with the help of country stars, to promote the legislation.

In return, McGregor loaned money to Gilley.
Gilley, who is expected to return to the witness stand today, said McGregor eventually loaned him about $14 million. With their original agreement, Gilley said McGregor would receive 14 percent of the gross intake at Country Crossing and that number increased each time McGregor loaned him more money.

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Gilley said electronic bingo was the financial catalyst for the Country Crossing project, a country-themed entertainment complex near Dothan. During Country Crossing's three-day grand opening, Gilley said the gross intake was approximately $18 million.

Gilley said some of the money from McGregor was spent on illegal activity and said he would seek approval from McGregor before spending that money. McGregor's attorneys have argued that he did not know what all Gilley was doing with the money and that he was never repaid.

McGregor attorney Joe Espy has argued that Gilley was a con man who bilked people out of millions.

Gilley said he tried legitimate efforts to pass legislation in 2009 using advertising and the help of country musicians, which included George Jones, Randy Owen of Alabama, Lorrie Morgan, John Anderson and Darryl Worley.

Lead prosecutor Kendall Day, in his first serious line of questioning with Gilley, played a secretly recorded conversation in which Gilley tells his key lobbyist, Jarrod Massey, to have a female lobbyist that works for him expose herself to a senator, let the lawmaker put his mouth on her breast, and film it to help pass gambling legislation. Gilley told Massey in the call, as the two men laughed, to let Jennifer Pouncy know he would give her a $50,000 bonus if she did it.

"I am ashamed of myself," Gilley said in court and apologized to those involved.
He said he never asked Pouncy to expose herself.

"It was a very distasteful joke," said Gilley, who makes a number of angry and distasteful comments in phone conversations secretly recorded by the FBI.

A bribe?

Former state Sen. Steve French testified Wednesday that Smith, the independent state senator from Slocomb, offered him campaign contributions if he would vote for gambling legislation.

French said Smith mentioned to him and other Republicans at a March 9, 2010, dinner at the Olive Room that people were asking her for contributions. French said that was unusual because candidates were generally the ones asking others for contributions.

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Smith, after another senator asked her about it, said she would then remind those seeking contributions that she had endorsed Democrat Bobby Bright, who was then the mayor of Montgomery, in a 2008 congressional race against Republican state Rep. Jay Love of Montgomery, according to French.

French said he joked that her endorsement did not bother him and that he would, as a friend, be willing to take her contribution.

The other Republican senators at the dinner, according to French, included Del Marsh of Anniston, Jimmy Holley of Elba, and Jabo Waggoner of Vestavia Hills.

French said Smith never specified who was asking for contributions and they never asked her.

French said they then moved on to other issues.

French, who lives in Mountain Brook and lost in the 2010 Republican primary, said two days later that Smith called him over to her desk on the Senate floor while the Senate was in session. He said Smith asked him if he was serious about taking contributions and that she told him twice that she would be willing to contribute to him if he supported the gambling legislation.

"I told her we were not going to have that conversation because we were not going to link official action to a contribution," French told Day.

French said it was well known, at least to him, that it is not legal to seek or take campaign contributions in exchange for official action.

He said he eventually walked away.

Smith attorney Jim Parkman questioned how much French had to drink at the dinner and questioned him on other details. Smith is one of the six defendants in the case. French, when asked, said he had a vodka martini before Smith arrived at the dinner and had red wine with dinner.

French said he remembered a lot from the evening, but acknowledged that, in previous testimony, he could not recall how he got to the dinner, whether he walked or not, and where he sat at the dinner.

Parkman pointed out that French said he told other Republicans about the conversation and asked a consultant that knew Smith if she was "wired or stupid," but waited almost a month to go to authorities. And he pointed out that French went to authorities after April 3, when Republicans removed Smith from the ballot for her endorsement of a Democrat.

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French said he reached out to Col. Chris Murphy, who was then the director of the Alabama Department of Public Safety, in early April.

Ethics issues

Jim Sumner, director of the Alabama Ethics Commission, said Crosby did not report receiving monthly income from McGregor in 2008 and 2009 until August 2010, after the corruption investigation became public.

Crosby, who worked for the Legislature researching and writing legislation, was a defendant in this case, but died just before this trial started.

State employees who are paid more than $50,000 must file annual statement of economic interest forms with the ethics commission.

Sumner said that when Crosby filed the amendments that he only listed that he received "miscellaneous passive income" from "MCGP Inc."

According to testimony, Crosby received monthly checks of $3,000 from the Macon County Greyhound Park that were signed by McGregor.

Prosecutors allege McGregor paid Crosby, who wrote the gambling bill in 2010, so that he would craft the bill to favor McGregor.

McGregor's attorneys argue that McGregor paid Crosby for political and election consulting unrelated to the gambling bill and that McGregor filed forms with the Internal Revenue Service and the state to report that income.

Sumner, when asked by McGregor attorney Bobby Segall, said he is not aware that McGregor or the greyhound park have violated any state law. Segall pointed out it is the responsibility of the state employee and not McGregor or the greyhound park to file those economic interest forms.

Sumner said, with the jury out of the courtroom, that he would have forwarded the case to the ethics commission for consideration for a potential violation of the state's ethics law.

Sumner said the statement of economic interest forms are necessary to determine if there is a conflict of interest between a public job and outside interests.