BALLANCE TO PLEAD GUILTY TO CHARGE

Longtime state legislator and former U.S. Rep. Frank Ballance plans to
plead guilty to conspiring to commit mail fraud and to launder money,
essentially admitting he used his political clout to funnel taxpayer money
to himself, his son, his mother and his daughter.

Ballance, a 62-year-old Democrat, likely will serve at least three years in
prison as part of a deal with federal and state prosecutors, his lawyer
said. He could have spent 15 years behind bars had a jury found him guilty.

"With his health, he would have been looking at spending the rest of his
life in prison," said Joseph Cheshire, his lawyer.

Ballance's son, a district judge, faces one misdemeanor count of failing to
file a federal income tax return. He faces up to a year in prison, but
should receive no more than house arrest under the agreement with prosecutors.

A 51-page indictment handed down by a federal grand jury in Raleigh
Thursday accused the elder Ballance, a Warrenton lawyer who served in the
N.C. General Assembly from 1982 until 2002, of a string of shady dealings
going back a decade. Ballance resigned his congressional seat in June,
citing health concerns rather than the ongoing federal and state
investigation against him.

The heart of the government's case involves Ballance's connections to the
John A. Hyman Memorial Youth Foundation. Ballance established the
tax-exempt agency in 1985 to help combat drug and alcohol abuse in Halifax,
Warren and Hertford counties. He was its chairman.

In 1994, Ballance began asking his fellow legislators to give the
foundation state money. They agreed, budgeting a total of $2.3 million for
the foundation between 1994 and last year.

Over that same time, the indictments say, the foundation began giving large
amounts of money to agencies and businesses run by Ballance's family
members and friends. Among the examples cited by prosecutors:

- - The Hyman Foundation gave $5,000 to a company run by Ballance's daughter
for -computer work that had already been done by another business.

- - Garey Ballance, Ballance's 34-year-old son, made a down payment on a new
Lincoln Navigator -- a luxury vehicle that he soon equipped with TV
monitors, according to the indictment -- with $19,234 in Hyman Foundation
grants to a youth group he ran. Gov. Jim Hunt appointed Garey Ballance to
the bench; Garey Ballance also worked on Gov. Mike Easley's 2000 campaign.

- - The foundation paid $69,169 in rent to Ballance's church.

- - The foundation sent $32,500 to a local rural health agency that then
passed the money on to a day care run by Ballance's mother, and later
transferred $104,000 to her for a new foundation she was supposed to be
starting. She returned that money after the state auditor began investigating.

Prosecutors say Ballance tried to hide such transactions from lawmakers by
forging signatures, encouraging his employees to forge signatures and using
his legislative post to keep state regulators from looking too deeply into
the foundation's finances.

"Frank Ballance was an organizer, leader, manager and supervisor of
criminal activity that involved five or more participants and was otherwise
extensive," prosecutors said in the indictment.

Ballance and his lawyers had been negotiating with prosecutors for weeks,
in part to cut down on the amount of time Ballance might serve in prison
and also to avoid criminal charges against other family members, said
Cheshire, his lawyer.

"Congressman Ballance feels like mistakes were made, he made them, and
nobody else should pay for them," he said.

Cheshire did not dispute most of the details in the indictment. But he said
he disagreed with prosecutors' portrayal of Ballance as someone who
knowingly misused his public office for personal gain.

"I prefer to believe that Congressman Ballance was going too far too fast,
doing far too many things and paying far too little attention," he said. "I
don't believe this is some great fraudulent conspiracy."

In the General Assembly, Ballance was known as a champion of poor and black
North Carolinians; he rose to become one of Senate leader Marc Basnight's
closest aides. Ballance won a seat in Congress from northeastern North
Carolina in 2002.

Ballance, who will surrender to the court today, was sitting in his
dentist's chair Thursday afternoon when the indictment was released.

The Fall of Frank Ballance

Former U.S. Rep. Frank Ballance was indicted Thursday on one count of
conspiracy to commit mail fraud and money laundering. POLITICAL BACKGROUND
| A Warrenton lawyer who attended N.C. Central University, Ballance served
in the N.C. House from 1982 to 1988. He won a seat in the N.C. Senate in
1988 and rose to become one of the state's most influential Democrats. In
2002, Ballance was elected to the U.S. House. He resigned in June citing
his struggle with myasthenia gravis, an autoimmune disease that weakens
muscles.

THE CHARGES - The 51-page indictment against him detailed a string of
transactions involving a tax-exempt drug treatment program he founded and
businesses and non-profits run by family members. Ballance's attorney says
his client will plead guilty and expects to be sentenced to between three
and five years in prison. Ballance is 62. His son, District Judge Garey
Ballance, faces one misdemeanor charge of failing to file an income tax
return in 2000.

What's Next for Ballance

Charged with one count of conspiracy to commit mail fraud and money
laundering, Frank Ballance is scheduled to appear in court today. His
guilty plea could come later this year or early next year.