Randall Erwin Indicted By Federal Jury

Muskogee ~ Former Rep. Randall Erwin of Nashoba on Thursday was indicted by a federal grand jury for allegedly steering state funds to a phony nonprofit entity and receiving kickbacks from its owner, southeast Oklahoma businessman Steven Phipps, as part of a scandal that has rocked southeastern Oklahoma and implicated at least four former lawmakers and Auditor and Inspector Jeff McMahan and his wife, Lori.

Read The Indictment

Erwin, 56, a Democrat, is charged with one count of conspiracy, three counts of mail fraud and three counts of money laundering.

The indictment alleges that Erwin, former Rep. Mike Mass and another, unnamed person were involved in the conspiracy to steer state funds to the Rural Development Foundation.

The third, unnamed alleged co-conspirator is former Rep. Jerry Hefner, a source close to the investigation confirmed to the Tulsa World. He was not charged in Thursday’s indictment.

Money from the phony nonprofit foundation was then funnelled to Indian Nation Entertainment, a company owned by Phipps, the indictment alleges.

Erwin, Mass and Hefner used their influence to have INE gaming machines placed in Indian casinos, according to the indictment.

Phipps then periodically paid the three an agreed upon percentage of gross profits from the machines in cash, the indictment alleges.

The indictment does not say how much was paid to the former lawmakers.

Neither Phipps nor Mass, who earlier this year entered into plea deals with federal prosecutors in exchange for their cooperation, were charged in Thursday’s indictment.

Conviction of any of the seven counts in the indictment is punishable by 5 to 20 years in prison and a fine of $250,000 to $500,000 each, U.S. Attorney Sheldon Sperling said.

Phipps is the former business partner of former longtime Democratic Senator Gene Stipe. Stipe’s brother, Francis, pleaded guilty to conspiracy, mail fraud, witness-tampering and engaging in an illegal monetary transaction. The charges included an allegation that Francis Stipe engaged in an illegal monetary transaction that directly dealt with a $48,000 kickback paid to Mass and drawn on Gene Stipe’s account.

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