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U.S. Attorney Sheldon Sperling.
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U.S. Attorney Sheldon Sperling.
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McMahan turns over day-to-day duties after pleading not guilty to conspiracy, mail fraud and bribery.
Can He do this ?
Oklahoma Auditor and Inspector Jeff McMahan announced Friday afternoon that he will turn over the day-to-day operations of the office to assistant State Auditor Michelle Day.
McMahan and his wife Lori McMahan were arraigned Friday morning in federal court in Muskogee on nine felony counts of conspiracy, mail fraud and state bribery. The couple pleaded not guilty.
"I will continue to be available to the office for consultation during the ongoing efforts to prove my innocence," McMahan said in a statement.
Oklahoma Auditor and Inspector Jeff McMahan and his wife, Lori McMahan, pleaded not guilty in federal court Friday on nine counts of conspiracy, mail fraud and state bribery.
The McMahans were ordered to report the federal probation office in Oklahoma City by Jan. 28, pending a trial that has been set for March 3.
As part of the conditions of their release, the McMahans were ordered to stay within the eastern and western federal districts of Oklahoma and not to speak to any potential witnesses in the case. Jeff McMahan, a Democrat, remains in office, despite a public calling by Gov. Brad Henry and Attorney General Drew Edmondson to step down.
McMahan is in the second year of his second term in office.
The McMahans had no comment following their court appearance.
The indictment alleges that McMahan and his wife received more than $100,000 in cash, other items of value, supplies and straw donor contributions far exceeding the amount limited by law through Kiowa businessman Steven Phipps, who was a former business partner of former state senator Gene Stipe.
Conspiracy to commit mail fraud is punishable by up to five years in prison and a fine of up to $250,000. The six counts of mail fraud are punishable by up to 20 years in prison and a fine of up to $250,000 for each count. The two counts of bribery are punishable by up to five years in prison and a fine of up to $250,000 for each count.
Governor says allegations are very serious.By Beth Myers
Friday, January 18, 2008Governor Henry says the grand jury allegations against State Auditor and Inspector Jeff McMahan are very serious allegations and he is greatly concerned about them. In a statement he says, "Before I pass judgement, I want to review all the available information and hear the auditor's public response to the charges. 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. It is important to protect the public interest in this matter and ensure that the daily functions of the auditor's office are not impeded by the ongoing legal proceedings."
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.
State auditor McMahan and wife indicted
MUSKOGEE — 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.
Thu December 27, 2007
Property transfers could bring more legal troubles for StipeBy Nolan Clay
Staff Writer
Indicted former state Sen. Gene Stipe has transferred his oil and gas interests in counties across Oklahoma to a new company, records show.
A state representative who learned about the transfers confirmed Wednesday he notified the FBI.
Stipe on Nov. 20 assigned his oil and gas interests in Oklahoma County and at least 16 smaller counties to Gene Stipe Exploration LLC, records show. An attorney filed paperwork to start the company Nov. 15.
Stipe has been on house arrest since a judge found him mentally incompetent to face probation revocation proceedings. Stipe was put on probation after admitting to illegal fundraising schemes involving a protege's 1998 failed congressional campaign.
Stipe also faces new accusations after being indicted in October. A federal grand jury accuses him of paying a kickback and other crimes.
Rep. Mike Reynolds, R-Oklahoma City, said he gave information to the FBI because he questioned how Stipe legally could transfer property after being found to be mentally incompetent.
"It seemed rather ironic to me,” Reynolds said.
Stipe's attorneys could not be reached for comment.
U.S. Attorney Sheldon Sperling said, "I would encourage anyone with actionable information in this case or any case to contact either our office or the appropriate investigative agency.”http://newsok.com/article/3185646/1198734527
McMahan turns over day-to-day duties after pleading not guilty to conspiracy, mail fraud and bribery.
