State auditor McMahan and wife indictedMUSKOGEE — A federal grand jury indicted state Auditor and Inspector Jeff McMahan and his wife today, accusing them of accepting improper cash and gifts from a southeast Oklahoma businessman.
The nine-count indictment alleges Jeff and Lori McMahan received jewelry, trips and excessive contributions to Jeff McMahan's first campaign in 2002.
In return, the indictment alleges, the auditor granted special favors to an unnamed abstract company owner. That businessman is Steve Phipps of Kiowa, The Oklahoman confirmed.
McMahan's office regulated the abstract industry until Jan. 1. The Legislature last year created a separate agency for that purpose amid reports of McMahan's ties to Phipps.
"Political offices should not be for sale," U.S. Attorney Sheldon Sperling said upon the indictment's release.
The indictment came shortly after Phipps testified behind closed doors this morning. Phipps has appeared several times before the grand jury since cutting a deal with federal prosecutors nearly a year ago. He awaits sentencing on a conspiracy count.
The McMahans weren't arrested Friday. Sperling said he expects them to appear in Muskogee's federal courthouse next week.
Jeff McMahan's attorney, Rand C. Eddy, said the McMahans have cooperated fully with investigators.
"While they are capable of errors in judgment or in association, Jeff and Lori are innocent of the charges," Eddy said.
Lori McMahan's attorney, Kevin Krahl, called the indictment "unfortunate."
"We answered every question they posed to her," Krahl said.
What indictment alleges
Both Jeff McMahan and Lori McMahan, a Tecumseh schoolteacher, face the same nine counts: one conspiracy count, six mail fraud counts and two counts of violating the Travel Act to promote bribery.
The maximum total prison time possible for the nine counts is 135 years.
The Travel Act allegations concern trips the McMahans allegedly took on Phipps' tab. One trip was to New Orleans in the summer of 2003; the other was to Boston for the 2004 Democratic National Convention.
During the New Orleans trip, Phipps gave Lori McMahan — with her husband's knowledge — a ring that cost $1,640, the indictment alleges.
The indictment actually mentions two other trips allegedly paid for by Phipps: a fishing trip involving McMahan and his teenage son; and a second trip to New Orleans by Jeff and Lori McMahan in October 2004.
Phipps also contributed, either directly or indirectly, $77,600 to McMahan's 2002 campaign through straw donors, according to the indictment.
In addition, Phipps handed an envelope containing $10,000 to Lori McMahan on Oct. 22, 2002, the indictment states.
The cash exchange allegedly occurred at a Shawnee restaurant. Lori McMahan told her husband she and Phipps had business to conduct, the indictment states.
Reaction swift
Gov. Brad Henry said today it would be "appropriate" for McMahan to take an administrative leave of his office.
"Before I pass judgment, I want to review all the available information and hear the auditor's public response to the charges," the governor said. "In the meantime, however, I believe it would be appropriate for the auditor to step aside on administrative leave and turn over the office's day-to-day operations to his chief deputy while the allegations are resolved."
Oklahoma Republican Party Chairman Gary Jones, who opposed McMahan in the 2002 and 2006 general elections, called for McMahan to resign.
"The honorable thing to do would be for him to step down," Jones said. "The problem is that he's not known to do the honorable thing."
Jones alleged during his 2006 campaign that McMahan received questionable contributions in the 2002 campaign.
He repeated his request Henry name a special prosecutor to look into a scheme uncovered by federal authorities in which state money was used for business ventures and to reimburse "straw donors" on political campaigns.
"They need somebody without a conflict of interest," Jones said.
When Jones made his original request in June, Henry, a Democrat as is McMahan, said a separate probe is unnecessary because "an extensive investigation" is under way, said his spokesman, Paul Sund.
Auditor's staffers testified
FBI agents searched the McMahans' home in Tecumseh in August, looking for jewelry and campaign records. The agents later went to the home of Lori McMahan's sister and recovered jewelry thought to have been bought by Phipps.
The McMahans have been using separate attorneys since last summer, when prosecutors told the couple they might have conflicting legal interests.
Witnesses who testified before a federal grand jury in Muskogee include several current and former employees of the auditor's office, along with McMahan's predecessor, Clifton Scott.
The same grand jury indicted former state Sen. Gene Stipe and his brother Francis in October as part of an ongoing probe of political corruption.
The panel's investigation prompted former state Rep. Mike Mass to plead guilty last year to a conspiracy count. He will be sentenced after testifying at Francis Stipe's upcoming trial.
Separate investigation netted former insurance commissioner
McMahan is the second statewide elected official in four years to be indicted on corruption charges.
A state grand jury indicted then-Insurance Commissioner Carroll Fisher in 2004 in an unrelated case. He eventually was convicted of embezzling money from his campaign and lying on a campaign report. He is serving a three-year prison term and still faces felony charges, including tax evasion and accepting bribes in return for favorable treatment.
No comments:
Post a Comment