Federal Jury Acquits Randall Erwin

A federal jury in Muskogee has acquited former State Rep. Randall Erwin of seven felony charges.

The jury, the second one to hear the case against Erwin, found Erwin innocent on counts of conspiracy, money laundering and failure to provide honest public service.

Erwin was accused of involvement in the conspiracy involving southeastern Oklahoma businessman Steve Phipps. Phipps, former State Senator Gene Stipe and former Auditor & Inspector Jeff McMahan all were implicated in the federal investigation. McMahan and his wife just began serving prison terms after their convictions.

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Federal Jury Hears Arguments In Erwin Case

Closing arguments were delivered this afternoon in the federal corruption trial of former Rep. Randall Erwin.

The southeastern Oklahoma Democrat faces seven felony counts, including conspiracy, money laundering and failure to provide honest public services.

This is the second federal jury to hear the case; a first jury failed to reach a verdict last year.

Erwin’s defense rested today without calling any witnesses, officials said.

Prosecutors allege Erwin took kickbacks from Steve Phipps in exchange for $1.1 million in taxpayer money Erwin earmarked for Phipps' businesses in 2003 and 2004. Phipps was involved with former Senator Gene Stipe and others in what prosecutors said was a criminal enterprise that included campaign contributions in the names of straw donors, money laundering and conspiracy. The case sent former Auditor & Inspector Jeff McMahan and his wife, Lori, to prison.

Image courtesy The Oklahoman.

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Paying The Price: McMahans Head To Prisons

Disgraced former State Auditor & Inspector Jeff McMahan and his wife, Lori, will surrender Friday at lower-security federal prison sites in Tennessee and Texas to begin serving prison terms for accepting bribes.

The couple must report by noon.

U.S. Attorney Sheldon J. Sperling in Muskogee said Jeff McMahan is to turn himself in at a satellite prison camp at the Federal Correctional Institution in Memphis, Tenn. Lori is to surrender at the Federal Medical Center Carswell in Fort Worth, Texas.

Sperling said even though doing time inside a "satellite camp" facility is less severe than a maximum-security site, it still is a prison and the couple will be far from their home in Oklahoma.

Jeff McMahan was sentenced to eight years and one month for accepting bribes from a southeastern Oklahoma businessman. Lori McMahan was sentenced to six years and six months.

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Reynolds To McMahan: Fess Up

Rep. Mike Reynolds today urged former State Auditor and Inspector Jeff McMahan to cooperate with federal investigators working to weed out corruption in Oklahoma government.

“When he was sentenced this week, Mister McMahan indicated he was simply a ‘naïve’ man caught up in a corrupt system,” said Reynolds, R-Oklahoma City. “If that’s the case, Mister McMahan should specifically identify all the individuals engaged in corruption. There’s no reason to shield those people from prosecutors.”

McMahan was sentenced this week to eight years and one month in federal prison as the result of a public corruption case that involved illegal campaign contributions and the acceptance of bribes.

In court papers, McMahan claimed that he and his wife were “politically naive newcomers” who got caught up in an already corrupt system, according to the Tulsa World.

“I agree with Mister McMahan on one thing: He was involved in a corrupt system,” Reynolds said. “However, so far he has refused to identify that corruption and provide evidence to federal investigators. It’s time he backs with rhetoric with action. I agree with Mister McMahan on one thing: He was involved in a corrupt system,” Reynolds said.

“However, so far he has refused to identify that corruption and provide evidence to federal investigators. Rather than looking for sympathy, I suggest he instead look for atonement by revealing the names of the people that corrupted him and help rid Oklahoma of this corruption.”

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McMahan Given Eight Years In Prison

Former Auditor and Inspector Jeff McMahan was sentenced today to a federal prison term of eight years and one month in his public corruption case. His wife, Lori McMahan, a former school teacher, was sentenced to six years and six months.

U.S. District Judge James Payne levied the sentences today. Jurors last year found the McMahans guilty of conspiracy and other crimes.

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No Surprise: McMahan Sentences Delayed

MUSKOGEE ~ The sentencing of former state Auditor & Inspector Jeff McMahan and his wife Lori McMahan for conspiracy and bribery was delayed Thursday so that attorneys can present arguments for or against lessening the recommended prison time.

U.S. District Judge James H. Payne said there may be issues that could justify a variance in the federal sentencing guidelines but probably not a departure from them.

U.S. Attorney Sheldon Sperling said that a departure would typically result in more years off the sentence as opposed to a variance.

A pre-sentence investigation recommends Jeff McMahan serve 8 to 10 years in prison and Lori McMahan 6 to 8 years. The prosecution accepted the recommendations, but attorneys for the McMahans, Kevin Krahl and Rand Eddy, pleaded for a lesser sentence, such as probation and house arrest, in the interest of the couple's two children.

Assistant U.S. Attorney Gay Guthrie said there were no unique circumstances that would warrant a departure from the federal sentencing guidelines.

Guthrie said the former auditor and his wife have not accepted responsibility for their crimes, which revolves around accepting campaign contributions beyond the legal limits through straw donors. They were also convicted in connection with accepting gifts and trips from Kiowa businessman Steve Phipps, an abstractor, which is an industry regulated by the auditor's office.

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Take A Minute To Study This Graphic

The Oklahoman has posted a graphic showing links to those involved in the Steve Phipps/Jeff McMahan/Gene Stipe/Mike Mass/Richard Lerblance/Tim Arbaugh/Randall Erwin/Jerry Hefner/Randy Dittman/Larry Witt campaign finance scandal. Take a moment to view this insightful graphic at http://static.newsok.biz/flash/stipe/stipe.html.

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Ethics Commission Raps McMahan's Knuckles

The Ethics Commission issued a "public reprimand" today against former Auditor and Inspector Jeff McMahan for soliciting a campaign donation from an employee in his office.

The employee, Martha Grubb, is one of the dozens of McMahan employees identified by The McCarville Report Online in 2006 as donors to his campaign.

McMahan was convicted in June on three counts of conspiracy and accepting public bribes.

The Ethics Commission said that on July 14, 2005, McMahan sent the letter in violation of an ethics rule which states than an elective officer shall not knowingly solicit, directly or indirectly, a campaign contribution from an employee.

The reprimand does not carry a fine or any other punishment except for the issuance of a letter from the Ethics Commission.

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Henry To Name New Auditor

Governor Henry is expected to appoint a new auditor & inspector today to replace the disgraced Jeff McMahan, who resigned after his federal conviction on multiple felony counts.

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Noted (Old) Quote

“My estimation is (McMahan) will be indicted,” he said. ~ Gary Jones, 11/8/06.

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Noted Quote

"He (Governor Henry) will appoint a Democrat (to replace Jeff McMahan). The right thing to do is appoint Gary Jones to the position. That is the most fair thing to do," Gaddie said. "In politics, we never do the fair thing. We do the political thing." ~ OU political science professor, pollster, author and political observer Keith Gaddie, as quoted in the Tulsa World.

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Jones, Butkin Top Online Poll

Republican Gary Jones (left) and Democrat Robert Butkin (right) are leading thus far in The McCarville Report Online's unscientific poll concerning a replacement for resigned Auditor & Inspector Jeff McMahan.

Jones has about 47 percent, and Butkin about 16 percent among readers who have cast their votes. If you've not yet voted, please do so at right; to view current results, click on the "view" button.

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Is Banker Steve Burrage A Candidate To Replace McMahan In Auditor's Post?

The name of Antlers banker Steve Burrage is the latest to surface as Governor Brad Henry ponders a replacement for resigned Auditor & Inspector Jeff McMahan.

Sources tell The McCarville Report Online that Burrage likely is "a very strong candidate if he's really interested."

An inquiry to Burrage, chairman of the board of FirstBank of Antlers, about his interest, if any, as yet has not been answered.

Burrage is a longtime Democratic Party donor, comes from a politically-connected family, is a former chairman of the Oklahoma Bankers Association, serves on the board of the Oklahoma City branch of the Federal Reserve, is a member of the board of The State Chamber and is highly respected as a banker and businessman. He and other family members won praise from the Banking Board in 2000 when they took over a troubled bank in Atoka and turned it around.

Burrage supported John Edwards for president and was a donor, along with other prominent family members, including former U.S. District Judge Michael Burrage and Senator Sean Burrage of Claremore. The Burrages contributed a combined $13,000 to the Edwards campaign, including $2,300 from Steve Burrage. He also was a substantial donor to Congressman Dan Boren.

Burrage is a graduate of Antlers High School and the University of Oklahoma.

Other names in the speculation include Democrats Robert Butkin, former treasurer; Laura Boyd, former House member and gubernatorial nominee; Republicans Michelle Day, who has been running the auditor's office since January; and Gary Jones, present GOP chairman who lost to McMahan in 2002 and 2006.

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Tulsa Blogger Supports Jones

The widely-read BatesLine, Tulsa-based blog of Republican activist Michael Bates, is calling for the appointment of Republican State Chairman Gary Jones to replace convicted former Auditor & Inspector Jeff McMahan.

Bates notes that McMahan narrowly defeated Jones in their 2002 race for the office and that testimony in McMahan's trial showed a huge influx of illegal donations near the end of the campaign probably allowed McMahan to win.

Bates writes, "We now know that Jeff McMahan won that election in part because of massive amounts of illegal campaign money, including $157,882 from Steve Phipps, a business partner with Gene Stipe in abstract companies regulated by the State Auditor's office."

Read all of Bates' editorial at www.batesline.com and vote in our poll on the right side of this page.

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Is This An Argument For Gary Jones?

In 2002, the election that disgraced former Audior & Inspector Jeff McMahan stole from Republican Gary Jones based on court testimony in McMahan's trial, Jones received 487,646 votes.

In that same election, Democrat Brad Henry got 448,143 votes in the governor's race, about 39,500 less than Jones, and became governor.

Is that an argument in favor of Henry appointing Jones to replace McMahan? Offer your comments below and vote in our poll at right.

Meanwhile, for considerable background and insight into Affair McMahan, read David Arnett's story at www.tulsatoday.com.

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Memo To Lori McMahan: Shame On Who?

Two years ago, Auditor & Inspector Jeff McMahan's wife, now a convicted felon, issued this, in which she outlined "Gary Jones’ Five Most Shameful Lies."

She wrote, "Republican Gary Jones is running for State Auditor of Oklahoma with the motto 'an auditor you can trust.' So just how much can he be trusted? I’m Lori McMahan, and I’m tired of the trash-talking, headline grabbing nonsense about my husband coming from Gary Jones and his supporters. Jeff has been advised to ignore these frantic efforts to tarnish his reputation since they’re an obvious attempt to gain traction in a race where Jones is hopelessly behind. They’ve told Jeff to remain on the positive message of his exceptional accomplishments as State Auditor. But I’m not going to sit by and let Jones drag a courageous, honest public servant through the mud with appalling lies and outlandish innuendoes. It would be almost impossible for me to respond to them all, but here are Gary’s five most shameful lies, along with the truth. Shame on you, Gary!"

[The "shameful lies" that Mrs. McMahan outlined formed the basis of the federal charges against her and her husband, and their convictions on conspiracy and bribery counts.]

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McMAHAN RESIGNS

Auditor & Inspector Jeff McMahan has just resigned.

"It is with sadness and regret that I resign my position as Oklahoma State Auditor and Inspector effective immediately," read the one sentence letter of resignation submitted to Governor Henry.

A federal jury in Muskogee on Saturday convicted McMahan and his wife Lori of one count of conspiracy and two counts of accepting bribes.

Meanwhile, Oklahoma Republican Party Chairman Gary Jones said appointing him would be the only fair thing to do. Jones lost two elections to McMahan, whose campaign received illegal donations.

"I'll probably ask to have a meeting with the governor," Jones said.

Paul Sund, a spokesman for Henry, said Henry's office will begin the process of finding someone to replace McMahan. He said he would not get into "who is in and who is out."

Said Sund: “Gov. Henry received Jeff McMahan’s resignation letter this morning. The governor will now begin the process of appointing a new state auditor and inspector.

“Gov. Henry believes it is critical to restore public trust in the auditor’s position, and he will move carefully and as expeditiously as possible to select an individual who can do just that.”

McMahan's resignation came first thing this morning and as sources began saying it had occurred, it was the Tulsa World's Capitol Bureau that first reported it as official.

TVPoll, working for KWTV, asked Oklahomans several months back how they would prefer such a vacancy be filled and found that most of those polled wanted either a special election or legislative confirmation of a replacement named by the governor.

EDITOR’S NOTE: On Monday morning, State Auditor and Inspector Jeff McMahan delivered a letter of resignation to the governor’s office. Under the Oklahoma Constitution, the governor is charged with appointing a replacement when a statewide elected official leaves office before the end of his or her term. During his time in office, Gov. Henry has made three such appointments: Insurance Commissioner Kim Holland, State Treasurer Scott Meacham and State Corporation Commissioner Jim Roth.

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Pressure Builds On McMahan To Resign

Pressure is building today on Auditor & Inspector Jeff McMahan to resign that post after his Saturday conviction on three felony counts in federal court.

Governor Henry has called on him to resign immediately and The Oklahoman's lead editorial today said he "must" do so.

House Speaker Chris Benge said he should resign and if he does so, he will save time and money since if he does not, a House committee formed to consider his impeachment will have to begin work. With his conviction, it seems likely the committee would recommend that Articles of Impeachment against McMahan be adopted.

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Henry: McMahan Should Resign

Governor Henry said today Auditor & Inspector Jeff McMahan should resign immediately.

The statement by Henry: “Auditor McMahan has had his day in court and a jury of his peers has spoken. In light of the guilty verdict, I believe he should resign his office immediately so the State of Oklahoma can move forward under the leadership of a new state auditor and inspector. It is critical to restore public trust in that position.

“As governor, it will be my duty to appoint a successor. I will begin that process as quickly as possible.”

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