McMahan Asked For, Got, $3,500 Cash

By The Oklahoman's Tony Thornton, Blogging From Muskogee ~ It was July of 2004. Oklahoma Democrats had named state Auditor and Inspector Jeff McMahan and his wife, Lori, to be delegates at the Democratic National Convention in Boston.

McMahan called staffer Tim Arbaugh into his office and announced the good news, then tempered it by saying the McMahans couldn’t afford the trip, Arbaugh testified Thursday.

Arbaugh, who headed the abstract division of the auditor’s office, said his boss asked him to call abstract company owner Steve Phipps and ask for $3,500 to help pay their expenses.

Phipps was no stranger to helping McMahan. In earlier testimony, Phipps said he provided more than $150,000 illegally to McMahan’s 2002 campaign, including $27,000 he gave directly to Lori McMahan. He said he also paid for trips for the McMahans and bought expensive jewelry for the auditor’s wife.

Arbaugh testified he knew about some of the previous crimes. But this was the first time McMahan had asked so overtly for Arbaugh to be a bag man, Arbaugh said.

He said he called Phipps from his cell phone while sitting in McMahan’s office and explained the situation. The request surprised Phipps as much as it had surprised him, Arbaugh said.

However, Phipps agreed to provide the cash, Arbaugh testified.

A few days later, Phipps met Arbaugh for lunch and gave him an envelope containing the $3,500, Arbaugh testified.

Upon his return to the state Capitol, Arbaugh said, he went straight to McMahan’s office and delivered the envelope.

“What did he do?” Assistant U.S. Attorney Ryan Roberts asked.

“He put the envelope in the pocket of his coat and said, ‘Thank you,’" Arbaugh said.

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