Scott Records Show Same Straw Donors

By The Oklahoman's Tony Thornton, Blogging From Muskogee ~ Records from Clifton Scott’s last two political campaigns tend to validate at least part of a claim made Wednesday on the witness stand by the prosecution’s star witness, Steve Phipps.

Phipps claimed that he channeled money into the former state auditor’s campaigns beginning around 1988 and ending in 1998, the last time Scott ran for office.

Earlier this year, The Oklahoman pulled Scott’s campaign records from a warehouse near the Capitol to see whether Phipps attemped to buy influence with Jeff McMahan’s predecessor.

Those records show thousands of dollars in contributions from the same people who Phipps said acted as straw donors, at his request, for other campaigns. Many of them worked for Phipps’ abstract companies.

Phipps claims Scott, like McMahan, knowingly took the money and provided special favors to benefit his abstract companies, which the auditor’s office regulates. Both Scott and McMahan deny that claim.

Share |

Clif Scott Denies Phipps' Allegations

Former Auditor & Inspector Clifton Scott says allegations he accepted illegal campaign donations from Steve Phipps and provided favors in return are wrong.

"I really don't know what to think of it," Scott said of Phipps' testimony in the federal trial of current Auditor & Inspector Jeff McMahan and his wife, Lori.

Scott said he knew that Phipps held fundraisers for his campaigns and added, "If there were straw donors, I wasn't aware of it."

In testimony Wednesday, Phipps detailed illegal donations to Scott's campaign and the favors he alleges Scott provided in return.

Phipps admitted from the stand that he funneled illegal money into six other campaigns, including those of Governor Henry, Congressman Dan Boren and the John Edwards presidential campaign. There was no assertion by Phipps that any of those candidates were aware he was the source of donations to their campaigns.

Share |

Phipps Implicates Clifton Scott In Illegal Campaign Donation Schemes

By Tony Thornton/The Oklahoman ~ Southeast Oklahoma businessman Steve Phipps testified today that he provided $70,000 in illegal campaign contributions to Gov. Brad Henry in January 2003, about the time Henry took office.

Phipps also claimed that former state Auditor and Inspector Clifton Scott knowingly accepted Phipps' illegal campaign money for years and provided favors to Phipps in return.

The testimony came during Phipps' third day on the witness stand in the federal trial of Scott's successor as state auditor, Jeff McMahan.

McMahan and his wife, Lori, face nine felony counts related to their relationship with Phipps, an abstract company owner whose businesses were regulated by the auditor's office. Phipps, who is cooperating with prosecutors as part of a plea agreement, admitted Tuesday that he and two business partners, including former state Sen. Gene Stipe, funneled $157,882 into Jeff McMahan's 2002 campaign. The legal limit is $5,000 per person.

Phipps' testimony about Henry and Scott came during cross-examination by Jeff McMahan's attorney, Rand C. Eddy.

Phipps admitted he had engaged in ""numerous" criminal acts over the years.

"Did you give illegal campaign contributions to Clif Scott?" Eddy asked.

"Yes," Phipps answered.

"Did he know about it?"

"Yes."

Scott was the state auditor from 1983 until he retired after the 2002 election. He now is executive director of the state Commissioners of the Land Office.

Phipps said he gave excessive contributions to Scott's campaign through "straw donors" around 1988, and then the three elections thereafter.

"Did you expect favors in return?" Eddy asked.

"Yes."

"Did you get favors in return?"

"Occasionally, yes."

"If Mr. Scott denies that, he's lying; is that correct?" Eddy asked.

"Yes sir," Phipps responded.

Phipps didn't elaborate on how much beyond the legal limit he provided, nor did he specify what favors Scott provided. He said his intent for giving was to receive favors aimed at helping enhance profits for his companies.

Phipps also amplified testimony given Monday by Nita Magdalena, a Democratic Party organizer from Pottawatomie County, where McMahan lives.

Magdalena referred to a fundraiser for Henry at the Pollard Theater in Guthrie in January 2003. It was around the time of Henry's inauguration, she said.

That event, which the new governor attended, raised $105,000, she said. Phipps said $70,000 of it was his money, provided through "straw donors," or people who illegally claimed it was their money.

Share |

Prosecutor: McMahan 'Bought'

By Susan Hylton/Tulsa World ~ Prosecutors vow that when they present their case in U.S. District Court (in Muskogee) this week, the jury will see what happens when a public official — State Auditor and Inspector Jeff McMahan — allows himself to be bought.

But defense attorneys for McMahan and his wife, Lori McMahan, claim that the prosecution's key witness, multimillionaire Kiowa businessman Steve Phipps, is not reliable because he is a master manipulator and a career criminal.

Jeff McMahan's attorney Rand Eddy said Phipps knew he would be going to prison anyway in connection with the bilking of more than $2 million from the Legislature to pay bribes and kickbacks. In a plea agreement, he pleaded guilty to one count of conspiracy to commit mail fraud in exchange for assisting the prosecution in a sprawling investigation of political corruption in southeast Oklahoma.

"He thought he needed to give the government a big fish," Eddy said.

The prosecution's first witness was former state Auditor and Inspector Clifton Scott, who testified that he has known Phipps since 1984 or 1985, when the Auditor's Office began regulating the abstracting industry.

The McMahans are accused of accepting excessive campaign contributions, gifts and trips in exchange for political favors for Phipps.

In his opening statement, Assistant U.S. Attorney Ryan Roberts said Phipps and his former business partner Gene Stipe — a state legislator for more than 50 years — would gladly give someone $100,000 when they knew that they'd receive 10 times that in return.

Scott said Phipps was placed on an abstract board that advised the Auditor's Office. Phipps owned abstract offices with Stipe, and Scott said he was aware of that relationship. Scott testified that he received support from the abstracting industry in his own campaigns but that he had concerns about how McMahan's trips to New Orleans with Phipps and his employees could be perceived. Phipps allegedly purchased expensive jewelry for Lori McMahan on these trips.

After Jeff McMahan was elected and Scott was working in the Land Commission Office, Scott said, Phipps called him in 2005 when Phipps was in a civil dispute with Stipe. Scott said a meeting was set up with Phipps, McMahan, an insurance commission representative and himself to talk about revoking Stipe's insurance license after Stipe was convicted of perjury and campaign violations.

Lori McMahan's attorney Kevin Krahl said the Tecumseh fifth-grade teacher is guilty of violating state campaign laws by taking money from Phipps for signs, radio spots and a campaign jingle. But Krahl said she never told her husband that trips to political conventions were paid for by Phipps.

At the end of his opening statement, Roberts said that Lori McMahan had said in a recorded conversation that she would "go to the pen" if Phipps was secretly recording her conversations. The prosecutor urged jurors to do exactly what Lori McMahan had feared. "Send 'em to the pen," he said.

Several others testified that Phipps asked them to contribute to McMahan's 2002 campaign and would reimburse them — sometimes a little more than they gave — for their trouble.

Some of the contributors also admitted to being "straw donors" in the campaigns of Gov. Brad Henry, U.S. Rep. Dan Boren, and former state Rep. Mike Mass, all Democrats.

Nita Magdalena, a Democratic Party organizer, said Phipps asked her to organize a fundraiser for Henry in January 2003 — after Henry had won his election. The fundraiser was successful, Magdalena said, and Phipps was able to give Henry about $100,000 in checks. Henry's spokesman Paul Sund said Monday that the Governor's Office did not have an immediate comment on Magdalena's testimony.

Share |

Senate Panel Clears Retirement Loophole Bill

Members of a Senate committee voted Thursday to close a loophole that allows some state workers to obtain greater retirement benefits than they ever earned in monthly pay as a state employee.

Senate Bill 1641, by Rep. Dan Sullivan, would ensure that elected officials will not receive retirement benefits "greater than their single highest annual compensation received as a member of the Oklahoma Public Employees Retirement System."

"Currently, it is possible for some individuals to receive a bigger paycheck from the retirement system than they ever earned working for the state," said Sullivan, R-Tulsa. "That doesn't make sense and itis undermining the financial soundness of our state retirement systems."

Under existing law elected officials can pay a 10 percent contribution rate and elect to receive a 4 percent multiplier in their pension calculation formula. In contrast, regular state employees pay a 3.5 percent contribution rate and receive a 2 percent multiplier. However, if an individual who worked for state or county government retires as an elected official with at least six years of elected service, that person can have his or her benefit calculated using the 4 percent multiplier for all years of service, including years when the individual was not in elective office and paid only the 3.5 percent contribution rate.

Officials have indicated that more than 500 people receive enhanced benefits because of the loophole, which is costing the state hundreds of thousands of dollars each year.

The most famous beneficiary of the loophole may be former Auditor and Inspector Clifton Scott, who now draws a pension of nearly $147,000 for a job that paid $83,510.

Under Senate Bill 1641, benefits would be calculated using the higher multiplier for only the years of service in elective office.

"This is a common-sense reform that will bring equity to the system so that all state employment retirees are treated fairly and with more equality," Sullivan said. "It shores up our retirement system for all workers."

Senate Bill 1641 passed the House Economic Development & Financial Services Committee on Thursday and now proceeds to the floor of the House.

Share |

McMahan Under Increasing Pressure To Step Down?

Facing his first federal court appearance on nine criminal counts next Friday, Auditor and Inspector Jeff McMahan is under increasing pressure to take a leave of absence or resign, several sources tell The McCarville Report Online.

McMahan's attorney said last week he will not step aside despite calls from fellow Democrats Governor Brad Henry and Attorney General Drew Edmondson that he do so.

There is word that former Auditor and Inspector Clifton Scott is among those who have counseled McMahan, Scott's longtime protege, to at least take a leave of absence and turn the operations of his office over to a top deputy and his staff.

A veteran Democrat member of the State Senate, who asked not to be quoted by name, said he is aware of several other top Democrats who have told McMahan that, given the seriousness of the charges against him and his wife, Lori, he should step aside and devote his time to defending himself. The senator said he participated in a Saturday conference call in which it was suggested the participants and other Senate Democrats send McMahan a personal letter urging him to take a leave of absence; the senator said no decision on that suggestion was reached.

Another Democrat senator told TMRO he is not aware of such a conversation, although there have been "numerous conversations" among Democrat senators about the indictments and the allegations that McMahan misused the power of his office and took cash from abstract company owner Steve Phipps: "It's just so...disheartening," the senator said. "It's just another huge black eye."

Share |

Clifton $cott: How $weet It I$

By Jaclyn Houghton, CNHI News Service ~ After 40 years in state government service, Clifton Scott traded in a five-figure salary for a six-figure retirement check. Now he draws both, collecting $146,000 a year in a government pension for a job where his final salary was $82,004, as well as $77,000 a year in his post-retirement job as secretary for the Commissioners of the Land Office, a state agency that manages school land trust funds used for the upkeep of schools in the state. Read the entire story here.

Share |