A Democrat, she was elected to the position of Agriculture Commissioner in November of 2000. Controversy erupted less than a month into her term of office when she selected a new midway vendor for the North Carolina State Fair, replacing a longtime vendor, who filed suit against the state. In May of 2001, allegations emerged of inappropriate use of campaign funds from her 2000 campaign.
After two campaign aids were indicted and one pled guilty to federal fraud and extortion charges, North Carolina governor Mike Easley asked her to resign her position, a position she held fast to through a month of additional investigations. Phipps finally resigned her position on 6 June 2003 and was replaced by interim commissioner Britt Cobb.
In October 2003, Phipps was tried and found guilty on perjury and obstruction of justice charges; soon afterwards, she pled guilty to 30 federal charges, including fraud, conspiracy, and witness tampering. Sentencing in both cases is anticipated to take place in March 2004.