Muskogee (By Susan Hylton/Tulsa World) ~ Former state Sen. Gene Stipe had 30 percent interest in a dog food plant that received more than $400,000 in taxpayer money, his former longtime secretary testified in federal court Wednesday.
And his ownership was never put in writing because he was a senator at the time, former secretary Charlene Spears said.
The trial of Francis Stipe is the result of a four-count grand jury indictment against him and his brother, Gene Stipe. Francis Stipe is charged with conspiracy, mail fraud, witness tampering, and engaging in an illegal monetary transaction.
Spears said she and Gene Stipe, D-McAlester, with whom she worked closely for 29 years, talked about National Pet Products on numerous occasions.
About $190,000 went to purchase an auction house Stipe owned that was going to be refurbished to be used for NPP, records show. Spears said Stipe owed more on the property than it was worth and didn't like making the payments on it. At the property closing, Spears said Steve Phipps, who also had 30 percent interest in NPP, was trying to urge Francis Stipe to persuade his brother to keep quiet about his ownership of the property to be used by NPP.
"Francis said, 'That's the worst kept secret in McAlester,' " Spears said.
Records show Francis Stipe signed the check at the closing as president of the McAlester Foundation, which received the state funds to buy the property.
"Francis signed the check but said he wished someone else would sign it since his brother was getting money out of it," Spears said.
Also at the closing was former legislator Mike Mass. Spears said that Phipps told her previously that Mass, a Democrat, would also get a check at the closing, but she said she never wrote checks to anyone until Gene Stipe told her to.
A common practice was to write "loan" on the memo line when it was never intended to be paid back, Spears said.
The check was written for $48,000 and Mass testified that he accepted it in return for his steering of state monies to NPP.
He testified that his finances weren't very good at the time and he was battling a "horrible gambling addiction."
Mass said he became disillusioned with NPP when he found out that Phipps was building slot machines there. Part of his disappointment was because Phipps was receiving profit from the machines and he thought Phipps was cutting him out after he had secured state money in that venture, Mass said.
Mass said that in 2000, Stipe loaned him and his wife, Suzanne Mass, $32,870 to pay off debts. Mass said he told Stipe he didn't know if or when he could ever pay it back.
"(Gene Stipe) put his arm around me and said he never intends for us to pay him back, he just wanted to help us," Suzanne Mass testified.
Stipe and the Masses signed a real estate mortgage in connection with the loan but records show the $32,870 document was never filed against his home until August 2006.
Mass testified that he found out when Francis Stipe bought the original note on his house and was trying to insure the property. Mass said he called Francis Stipe who informed him that he didn't expect Mass to make house payments to him, he wanted the entire lump sum owed -- about $150,000. Mass said he was in bankruptcy at the time and was getting ready to sell the property to former legislator Joe Hutchinson, which killed the deal.
"I was devastated," Suzanne Mass said. "We were just very hopeless after that." In fear he would lose his home, Mass said he asked a friend to plead his case to Francis Stipe.
But Mass testified that he never felt Francis Stipe pressured him to not cooperate in the grand jury investigation.
"I don't think anyone could threaten me enough not to tell the truth," Mass said.
Mass testified that he is still in the same home.
The government is expected to wrap up its case Thursday. The defense team plans to call several witnesses. The jury is expected to get the case Monday.
