A federal grand jury on Friday indicted Oklahoma State Auditor and Inspector Jeff McMahan and his wife, Lori McMahan, on nine felony counts involving conspiracy, fraud and racketeering.
The indictment alleges that McMahan and his wife received cash, other items of value, supplies and straw donor contributions far exceeding the amount limited by law. U.S. Attorney Sheldon Sperling said he expects the McMahans to be arraigned next week.
The conspiracy began in February 2002 and ran through August 2007, indictment alleges. Sperling said the object of the scheme was for the McMahans to receive bribes and gratuities in exchange for favorable treatment.
"This is a sad day," Sperling said. "Political offices should not be for sale."
Count 1, conspiracy to commit mail fraud, is punishable by up to five years in prison and a fine of up to $250,000. Counts 2 through 7 are mail fraud and are punishable by up to 20 years in prison and a fine of up to $250,000 for each count.Counts 8 and 9 are tied to bribery allegations; they are punishable by up to five years in prison and a fine up to $250,000 for each count.
The FBI has questioned McMahan several times regarding his connections to Steven Phipps, a former business partner of former state Sen. Gene Stipe.
McMahan has admitted that Phipps took him on a fishing trip, a trip to New Orleans and a trip to a casino in Biloxi, Miss. He also has admitted that Phipps has sponsored several fundraisers for him.
Phipps co-owned several abstract companies with Stipe. McMahan's office regulates the abstract industry.
FBI investigators obtained a search warrant and in August went to the home of McMahan's sister-in-law, where they seized an unidentified item of jewelry.
Kevin Krahl, attorney for Lori McMahan, said she received a pair of earrings from Phipps.
Sources have said that FBI agents also went to McMahan's home to confiscate campaign records.
Phipps has pleaded guilty to paying kickbacks to lawmakers who funnelled state money to his businesses and has agreed to cooperate in the ongoing grand jury investigation.
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