When Hunt ran for a third term in 1992, Carlton was an informal adviser and indulged a taste for Nixonian intrigue. In the last week of the campaign, Beverly Smith, a Democratic activist in Rocky Mount, was caught using a police scanner to eavesdrop on the cell-phone calls of her neighbor, the son of Republican candidate Jim Gardner. She had passed along transcripts to one of Carlton's law partners, who gave them to Carlton.

Carlton won't talk about the incident. He and Gardner reached a confidential settlement in 1993. Word around Raleigh is he paid between $100,000 and $500,000. In November of that year he pleaded guilty to a federal wiretapping charge, which earned him a $5,000 fine, six months' probation and 60 hours of community service. In interviews, he downplays the incident. "I thought everybody had forgotten that," he likes to say. Or, as he told The News & Observer of Raleigh, "Nobody brings that up anymore but your newspaper." Truth is, the event was a major embarrassment that could've spread to the Hunt administration had Carlton not settled it quickly. One influential Republican even grumbles that GOP insiders saw the "tobacco deal as Phil's payoff for taking the fall in Scannergate." Carlton has always insisted Hunt didn't know about the spying.