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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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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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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Lori McMahan: 'I can go down for that...'

"The cash that you gave me, you know, I can go down for that, if you, you know, if you have to tell about it. It'll be me that goes down with it. I took it, and I did it." ~ Lori McMahan to Steve Phipps, as secretly recorded by Phipps for the FBI in a Shawnee restaurant last year.

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Lori's 'Memory Gaps' To Be Trial Issue?

By Tony Thornton/The Oklahoman, Blogging From Muskogee ~ The table was set. Lori McMahan would either testify against her husband or, preferably, convince him to plead guilty to a felony and resign as the state auditor and inspector.

In return, she would receive immunity for her admitted crimes involving businessman Steve Phipps, whose companies were regulated by the auditor’s office.

The deal was nixed when Lori McMahan couldn’t recall whether her husband attended a 2002 dinner meeting where Phipps handed her $10,000 in cash.

Jurors will hear about that Wednesday at the criminal trial of Jeff and Lori McMahan. They’re likely to also hear prosecutors question Lori McMahan about her memory gaps concerning key events.

The proposed deal for her immunity was made at the FBI office in Oklahoma City in late October. The fifth-grade teacher remembers the approximate date because she was wearing a Halloween sweater, the same one she’d worn to school that day.

The meeting occurred two months after the FBI served a search warrant on the McMahans’ home in Tecumseh. During the search, Lori McMahan admitted she had accepted cash and jewelry from Phipps. A prosecutor suggested she gave conflicting versions when confronted with inconsistencies.

“I had made a mistake, and I was willing to take responsibility for my sins,” she said, explaining her reason for the admission.

Assistant U.S. Attorney Gay Guthrie wasn’t impressed with some of Lori McMahan’s answers during a hearing outside the jury’s presence to determine whether she could testify about the immunity offer.

“The point of all this is, she lied then (to the FBI), and she’s lying now,” Guthrie told U.S. District Judge James H. Payne.

Payne ruled that the auditor’s wife can testify about the immunity offer.

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Lori McMahan: I Did It All, He Never Knew

By Susan Hylton/Tulsa World In Muskogee ~ The wife of Oklahoma State Auditor and Inspector Jeff McMahan shed tears on the witness stand Tuesday as she recounted the day she said she told her husband everything.

She had accepted cash — about $10,000 — to buy signs and radio spots for his 2002 Democratic political campaign from an abstract company owner whose industry her husband regulated. She said he never knew that until the day the FBI searched their house five years later.

Lori McMahan's testimony for the defense started Tuesday in U.S. District Court in Muskogee, where she and her husband face eight counts of conspiracy, mail fraud and accepting bribes from Kiowa businessman Steve Phipps in exchange for favors. She offered to pack her bags and leave, but her husband told her he loved her and that they would solve everything, she testified.

The McMahans are accused of accepting more than $157,000 in illegal donations, two all-expenses-paid trips to New Orleans, more than $2,000 in jewelry, and a trip to Boston for the 2004 Democratic National Convention, all bankrolled by Phipps.

Lori McMahan said her husband told her they couldn't let Phipps pay for the first New Orleans trip, so she told him she would reimburse Phipps but never did. It was on this first trip that Lori McMahan said Phipps gave her a ring, which records show cost $1,640, that she had admired in a jewelry shop showcase earlier that day. She said Phipps handed her a box with the ring inside in the presence of her husband as they were gathered in the McMahans' hotel room overlooking Bourbon Street to ride out a tropical storm.

"It kind of made me uncomfortable because it was not from a husband, father or son," she said. Later, she said, her husband told her the gift was inappropriate because his office regulated the abstract industry.

Lori McMahan said she justified her acceptance of the gift to her husband by convincing him that the ethics rules allowed gifts of up to $300, even though she suspected that the ring was worth more than that. In addition, she said, the women on the trip told her that Phipps bought jewelry for women he knew all the time. She said she never considered it a bribe, nor did she return any favors to Phipps by influencing the activities of her husband's office. Her husband asked her to return the ring after it was publicized that Phipps was under investigation for allegedly bribing lawmakers to steer state funds to a dog food plant he owned with former state Sen. Gene Stipe, D-McAlester, she said. She told her husband that the ring was gone, but she said she had actually loaned it to her sister to wear to a wedding.

About 30 people were on the second trip to New Orleans that McMahans attended with Phipps and many of his abstract company employees. She said she used the ethics manual again to convince her husband that their acceptance of the trip was proper if they considered it a continuing education trip in which he would teach a course for the abstract employees.

Several witnesses have testified that Jeff McMahan has little if any knowledge of the abstract industry.

Lori McMahan said her husband did not end up teaching on the trip. She said he relied on Tim Arbaugh, a former employee of the Auditor's Office, to devise an outline to teach a course but that he never followed through.

Lori McMahan said she accepted a pair of earrings that matched the ring from Phipps on the second New Orleans trip as they stood in the hotel lobby. "It was either that or make a scene," she said. But she said she still didn't feel bribed. "I just thought he was a nice man with lots of money because he bought lots of gifts for people," she said.

While Phipps and Arbaugh have testified that Jeff McMahan asked Phipps to pay for a $3,500 trip to Boston to attend the Democratic National Convention, Lori McMahan said she told her husband that the trip was funded by their tax return. She kept their household checkbook, and they didn't discuss financial matters much, she said. "He trusted me," she said of her husband.

She said Arbaugh was in his office when he gave her the cash for the DNC trip, which she remembers as $3,000 originating from Phipps. Arbaugh has previously testified against his former boss, saying he was aware of the "straw donors" to McMahan's campaign and many other parts of a conspiracy.

But other employees and former employees from the Auditor's Office testified Tuesday and vouched for Jeff McMahan as being truthful and honest.

Those witnesses included Terri Jo Ross, Jim McGoodwin, Mickey Gunkel and Chris Stephens.

When testimony continues Wednesday, defense attorney Kevin Krahl is expected to ask Lori McMahan about a purported deal offered by the U.S. Attorney's Office. With the jury absent, Lori McMahan said she was told that she wouldn't be indicted if she would testify that her husband was present during a cash transaction with Phipps at a Garfield's restaurant in Shawnee. Tearful again, she said she would have taken the deal if the account were true because she doesn't want to go to prison and leave her children.

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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.

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Tony Thornton Blogs About McMahan Trial; Illegal Phipps-McMahan Money Detailed

By Tony Thornton/The Oklahoman at http://blog.newsok.com/newsroom/2008/06/03/state-auditors-trial-day-2/?tm=1212548938 ~ Straw donors gave a total of $77,600 to Jeff McMahan’s campaign, using money supplied — illegally — by businessman Steve Phipps.
Turns out, that barely scratched the surface of Phipps’ generosity to McMahan’s first political campaign.

Phipps testified Tuesday that he and business partners Gene Stipe and Larry Witt contributed a total of $157,882 in cash and in-kind contributions. Most of that amount was his own money, Phipps said.

The breakdown:

$77,600 through straw donors.

$27,000 in cash to Lori McMahan.

$24,000 for radio spots on four McAlester radio stations owned by Stipe.

$23,157 for materials and labor for political signs built at Phipp’s house in rural Pittsburg County.

$5,000 to rent the Pollard Theater in Guthrie for two fundraisers.

$1,125 for roughly half the cost of recording a campaign jingle.

By contrast, McMahan’s Republican opponent, Gary Jones, raised a total of about $150,000 most of which was his own money.

Jurors heard Phipps describe numerous times when he either gave Jeff and Lori McMahan (money), took them on expensive trips or bought Lori McMahan fine jewelry.

One new revelation involved the 2004 Democratic National Convention in Boston. The indicment against the McMahans has alleged Phipps provided $3,500 — at Jeff McMahan’s request — so the couple could attend. Jeff McMahan’s campaign also paid $2,600 toward the Boston trip, a campaign and auditor’s office staffer testified.

Phipps said Tuesday that in addition to his $3,500, he also said he provided an extra $3,000 to save McMahan from embarassment.

A Democratic Party tradition required certain office holders to sponsor a meal for all that state’s delegates. Phipps said he learned from Obera Bergdall, a retired employee (and longtime Democratic Party official) from the state auditor’s office, that McMahan didn’t have the necessary $3,000 to sponsor a meal. As a former state Democratic Party chairman, Bergdall knew all about the tradition.

Phipps said he agreed to front the money. Party officials rejected his ideas to either pay it by credit card or to make a donation to the Democratic Party.

“Ultimately, she (Bergdall) took the funds out of her retirement account, and I reimbursed her,” Phipps said.

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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.

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McMahan Trial Underway In Muskogee; Hall, Scott, McElderry Expected

By Tony Thornton/The Oklahoman ~ The jury that will begin hearing evidence this afternoon against state Auditor and Inspector Jeff McMahan includes a nurse, a postal worker and a computer network administrator.

Excluded from the jury were several people tied to law enforcement and two abstract company employees.

McMahan and his wife, Lori, are accused in a nine-count felony indictment of a conspiracy involving a former abstract company owner.

Essentially, prosecutors claim they accepted jewelry, trips and illegal contributions for Jeff McMahan's 2002 campaign from Pittsburg County businessman Steve Phipps. In return, the indictment alleges, the auditor provided special favors to Phipps' abstract companies.

The auditor's office regulated the abstract industry until legislators changed that last year amid reports of McMahan's ties to Phipps.

Phipps pleaded guilty to conspiracy last year in a separate case and is cooperating with investigators. He has not been charged in this case.

Jury selection took three hours this morning in Muskogee's federal courthouse. U.S. District Judge James H. Payne said he expects a two-week trial.

The list of potential witnesses includes lobbyist Pat Hall, who was McMahan's campaign manager and a former Democratic Party executive director; Betty McElderry, former Democratic Party Chairman and Democratic National committee member; several people who allegedly acted as "straw donors" to McMahan's campaign on Phipps' behalf; state Rep. Jerry Ellis, D-Valliant; several current and former members of the auditor's staff; and McMahan's predecessor, Clifton Scott. Scott is expected to be the first prosecution witness this afternoon.

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Hall, McGoodwin Likely To Testify At McMahan Trial, Sources Say

Capitol lobbyist Pat Hall and Office of State Finance official Jim McGoodwin are likely to be among those called to testify in the federal trial of Auditor & Inspector Jeff McMahan and his wife, Lori, sources tell The McCarville Report Online.

The trial is scheduled to begin next week.

A source said he would not be surprised if Tulsa Mayor Kathy Taylor, former secretary of commerce, also is called as a witness.

Another almost-certain witness will be Tim Arbaugh of Guthrie, deputy auditor fired by McMahan as the scandal unfolded. Arbaugh is identified in FBI affidavits. One affidavit provides partial transcripts of conversations between Steve Phipps, Arbaugh (McMahan's then-abstract division chief) and Lori McMahan concerning alleged cash payments totaling $27,000 from Phipps. In return, according to the indictment, the auditor gave special treatment to Phipps' companies.

Asked if it is true he will appear as a witness, Hall told TMRO, "I would prefer for the U.S. Attorney to answer that question or Mr. McMahan's attorney."

Hall, a former Oklahoma Democratic Party executive director, is among the state's most influential lobbyists. A source says he's likely to be questioned about his knowledge of the activities of the McMahans and Phipps, the eastern Oklahoma abstract company owner implicated in the scandal that has engulfed McMahan and other public officials. Hall was also a consultant for Phipps' Rural Development Foundation and, according to an FBI affidavit, was paid $15,000 by RDF for work as a "water consultant."

McGoodwin now is deputy director of operations for the Office of State Finance and previously served as deputy state auditor and inspector and was director of special investigations in the auditor's office at the time laws allegedly were violated by McMahan and his wife. They face nine felony counts.

Taylor held the state office when a huge state grant was given to Phipps' interests by the Department of Commerce.

McMahan also faces a House committee formed to consider his impeachment.

McMahan and his wife were indicted by a federal grand jury in January on nine counts including conspiracy, mail fraud and violating the Travel Act to commit bribery. The McMahans have pleaded not guilty.

The charges stem from dealings with Phipps, who is identified in the nine-count indictment as a co-conspirator. Federal prosecutors say the charges are tied to favoritism shown to Phipps by McMahan as well as excessive political donations to McMahan during his 2002 campaign.

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McMahan Panel Stymied By Feds' Reluctance To Share Probe Results

By Tim Talley/The Associated Press ~ One of the biggest tasks facing Oklahoma lawmakers remained unfinished when the Legislature adjourned its 2008 regular session.

The need to complete that task could force lawmakers back to the Capitol for a special session this summer.

Two weeks after it convened in February, the state House ordered an investigation of indicted Auditor and Inspector Jeff McMahan, the first step in a possible impeachment vote of the second-term Democrat who faces federal charges of accepting improper trips and illegal campaign contributions.

House Speaker Chris Benge appointed eight House members — four Republicans and four Democrats — to a special investigating committee to collect evidence on whether McMahan violated his constitutional duties, particularly whether he took something of value for the performance or nonperformance of his job.

But the panel’s progress has been stymied by the pending criminal case and the reluctance of federal prosecutors to share information with state investigators prior to the auditor’s trial, which is scheduled to begin in one week in U.S. District Court in Muskogee.

Before the Legislature adjourned on Friday, members of the committee met only once to hire Edmond attorney Andrew W. Lester as special counsel to gather evidence that will help the panel decide whether to recommend that the full House impeach McMahan.
Lester has done a considerable amount of background work, but obtaining evidence from the criminal case will have to wait until witnesses begin testifying at McMahan’s trial, said Rep. David Braddock, D-Altus, co-chairman of the House committee.

“I understand the concern on the part of the federal prosecutor. They don’t want to take any action at all,” Braddock said.

“We’ll be watching the trial. We’ll see what witnesses say. We’ll try to get a good handle on the testimony and then develop a plan,” he said.

Braddock said that depending upon the length of the trial, the investigating committee could be ready to begin taking testimony as early as July. An impeachment recommendation would force the House to return for a one-day special session to consider an impeachment vote. A vote to impeach would lead to a trial in the Senate and removal from office if McMahan is convicted.

McMahan and his wife, Lori, were indicted by a federal grand jury in January on nine counts including conspiracy, mail fraud and violating the Travel Act to commit bribery. The McMahans have pleaded not guilty.

The charges stem from dealings with southeast Oklahoma businessman Steve Phipps, who is identified in the nine-count indictment as a coconspirator. Federal prosecutors say the charges are tied to favoritism shown to Phipps by McMahan as well as excessive political donations to McMahan during his 2002 campaign.

If convicted on all counts, the McMahans could face up to 135 years in prison.

McMahan, who lives in Tecumseh, has not been to his state Capitol office since he turned over daily operations to Deputy State Auditor Michelle Day. But he continues to collect his $109,000 annual salary.

Key witnesses in the criminal case, including Phipps and Tim Arbaugh, former head of the abstract division of McMahan’s office, will likely testify before committee members following their appearances in federal court.

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Judge: McMahans Will Face All Charges

A federal judge ruled today that State Auditor and Inspector Jeff McMahan and his wife, Lori McMahan, will face all nine counts of conspiracy, mail fraud and Travel Act violations at their joint trial on June 2..

Attorneys for the McMahans, present in U.S. District Court Friday morning, tried to persuade District Judge James H. Payne to dismiss several of the counts during a hearing.

Payne later issued a written order in which he denied the request.

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McMahan Seeks Dismissal Of Four Charges

Muskogee (By Tony Thornton/The Oklahoman) ~ Defense attorneys want a judge to dismiss four of nine criminal counts facing state Auditor and Inspector Jeff McMahan, saying in part there's no clear link between his acceptance of trips from businessman Steve Phipps and the alleged help the auditor later provided Phipps.

Motions filed Wednesday also seek dismissal of eight of the nine counts against McMahan's wife. Defense attorneys claim the corruption-related counts don't apply to her because she's not a public official.

A federal grand jury in Muskogee indicted the McMahans in January, alleging a tit-for-tat relationship with Phipps, who owns several abstract companies.

The auditor's office regulated the abstract industry until Jan. 1.

Phipps pleaded guilty last year to a separate conspiracy involving other politicians. He awaits sentencing. The McMahans have pleaded not guilty. Their trial is set for June.

Two counts allege the McMahans went on Phipps-funded trips to New Orleans in July 2003 and October 2004.

A year after the second trip, McMahan issued an administrative action that prosecutors say aided Phipps in a lawsuit filed against him by former state Sen. Gene Stipe, who co-owned the abstract companies.

However, that lawsuit wasn't filed until nine months after the McMahans went on the second trip.
The trips weren't bribes, the defense motion argues, because the McMahans couldn't have intended to help Phipps "in a lawsuit that had not even been filed yet and could not have been anticipated.”

"Common sense dictates there could be no connection between the trips and the civil litigation which led to the administrative action,” attorneys Kevin Krahl and Rand C. Eddy wrote.

Prosecutors haven't alleged that Lori McMahan went on the trips "for anything other than a vacation and/or merely as an attendee with her spouse,” the defense motion states.

Two counts accuse the McMahans of depriving the state of the honest services of a public official. Defense attorneys want those counts against Lori McMahan, a schoolteacher, dismissed.
They say she had no standing to help Phipps, "and there are no state or federal statutes or constitutional provisions conveying legal capacity to act as a public official simply by being married to a public official,” attorneys wrote.

The indictment alleges Lori McMahan accepted jewelry for herself and illegal campaign money for her husband from Phipps. In return, she agreed to use her influence on her husband, if necessary, to benefit Phipps, the indictment alleges.

Her attorney said there is no allegation that she ever actually used her influence concerning the administrative action.

Attorneys for both McMahans seek dismissal of two mail fraud counts involving the second New Orleans trip and a trip to Boston for the 2004 Democratic National Convention. The basis for both counts are materials the couple sent by mail to Phipps. One was a poster from Boston to thank Phipps for his support. The defense says the poster wasn't an aspect of any bribe.

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McMahan Impeachment Committee Meets Today

A House committee looking into possible impeachment proceedings against state Auditor and Inspector Jeff McMahan is scheduled to meet today at the Capitol.

House Speaker Chris Benge said the Republican co-chairman of the committee told him it is possible the work could be finished before the session ends May 30.

The Democratic co-chairman, Rep. David Braddock of Altus, said members are expected to discuss and perhaps make a decision on hiring an outside attorney to head up the investigation.

"We're going to try to follow the process that was followed with the (Carroll) Fisher (impeachment committee) meetings,” Braddock said. "That was a good format.”

Whether the committee will address McMahan's absence from his office since the federal indictment isn't known; some argue he has abandoned the office and thus, is subject to removal on that grounds.

McMahan and his wife, Lori, have been indicted on federal charges of mail fraud, bribery and conspiracy. Their trial is set for June.

It took about four months for the Fisher impeachment committee to complete its work but the McMahan committee's Republican co-chairman, Rep. Rex Duncan of Sand Springs, believes it won't take that long.

If the committee recommends removal, the full House will vote on articles of impeachment and the case moves to the Senate for a trial.

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Speculation Increases About McMahan Probe Panel

With certain House approval next week of a resolution calling for an investigation of Auditor and Inspector Jeff McMahan that could result in his impeachment, there's speculation today about those who might serve on the committee.

New House Speaker Chris Benge of Tulsa will name the eight committee members, four Democrats and four Republicans, with a member of each party serving as co-chairman.

Rep. Mike Reynolds, Oklahoma City Republican, authored the resolution and is said by some to be able to cite line-by-line from the lengthy, nine-count federal indictment of McMahan and his wife, Lori. He told Oklahoma City radio station KTOK he would like to serve on the committee. His problem is that he's viewed as a maverick always on the outs with his own party's leadership and he's butted heads with Benge in the past.

Others mentioned as possible members are all attorneys and include Reps. Rex Duncan of Sand Springs, chairman of the House Judiciary Committee; T. W. Shannon of Lawton, assistant majority whip; Dan Sullivan of Tulsa, assistant majority floor leader and chairman of the Civil Justice Committee; and John Trebilcock of Broken Arrow, whose resolution authorized the panel that investigated former Insurance Commissioner Carroll Fisher.

Capitol sources say that while the Benge appointments won't be certain until they are announced, three top members of Democratic Leader Danny Morgan's team, and a highly-respected former Oklahoma Highway Patrol trooper, are possible members of the committee. They are Reps. David Braddock of Altus, James Covey of Custer City, Paul Roan of Tishomingo and Dale Turner of Holdenville. Covey is the minority floor leader and Braddock and Turner are deputy minority floor leaders. Roan is a retired OHP trooper and the former deputy sheriff of Pontotoc County. He's also a former first vice president of the Oklahoma State Troopers Association and is vice chairman of the House Civil Justice Committee.

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McMahan's Alleged Abuse Of Power Likely Focus Of House Impeachment Proceedings, Sources Say

Federal allegations that Auditor and Inspector Jeff McMahan misused and abused the powers of his office to help abstract company owner Steve Phipps likely will be the focus of an investigation by a House committee to be formed next week, sources tell The McCarville Report Online.

The House panel will decide if impeachment proceedings are warranted.

"It's a slam dunk" that the committee will proceed, said one House member.

House Speaker Chris Benge, Tulsa Republican, placed Rep. Mike Reynold's House Resolution 1051, which calls for the formation of a committee to look into allegations against McMahan, a Democrat, on Wednesday's House floor calendar.

Late this morning, Benge issued a statement in which he said if the resolution passes next week, he intends to name an eight-member committee made up of four Republicans and four Democrats. The committee will have two co-chairs, one from each party.

“We need to take the politics out of this situation as much as possible,” said Benge. “Considering impeachment of a statewide-elected official is very serious, and we plan to move forward in a bipartisan manner so the charges can be fully reviewed without bias.”

The course laid out in the resolution mirrors the process followed during the investigation of former Insurance Commissioner Carroll Fisher, who resigned in 2004 before an impeachment trial was held.

If the committee comes back with a recommendation to remove McMahan from office, and the entire House approves the articles of impeachment, the Senate would then hold a trial. Members could act on taking the first step toward impeachment proceedings against McMahan as early as next Monday.

While the nine-count federal indictment of McMahan and his wife, Lori, also alleges the laundering of thousands of dollars into McMahan's 2002 campaign, it is the allegations that McMahan conspired with Phipps and McMahan's abstract division head, Tim Arbaugh, to eliminate an abstract company competitor and help Phillips in a legal battle with his then-partner, former State Senator Gene Stipe, that are viewed as those most likely to detail the extent of McMahan's alleged corruption and abuse of power.

Phipps is now a convicted felon, one of many snared in the scandal.

GOP House members who have reviewed the federal indictment cite sections 25, 28, 29, 30, 31 and 32 as the possible focus of the House probe.

"Taking funny money is serious enough," said one House insider. "Abusing the official power of your office to financially assist a corrupt provider of straw donations is even more serious. There's a clear, and continuing, quid pro quo. The evidence the feds got is overwhelming and they've got witnesses as well. McMahan is a disgrace."

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Judge Delays McMahan Trial Date

A federal judge in Muskogee has postponed the criminal trial of Auditor and Inspector Jeff McMahan and his wife, Lori, until June 2nd. It had been scheduled to begin on March 3.

A federal grand jury indicted the McMahans last month on nine counts, including conspiracy, mail fraud and violating the Travel Act to commit bribery. They are accused of accepting improper trips and illegal campaign contributions from southeast Oklahoma abstract company owner Steve Phipps.

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