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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McMAHANS CONVICTED

MUSKOGEE ~ A federal jury today convicted state Auditor and Inspector Jeff McMahan and his wife on three corruption-related counts.

The Oklahoman's Tony Thornton reports: The jury acquitted the McMahans on five mail fraud counts, but convicted them on one conspiracy count and two Travel Act violations. The Travel Act violations involve trips the couple took at the expense of a businessman whose companies were regulated by the auditor's office.

A judge allowed the McMahans to remain free on their own recognizance pending sentencing.

Prosecutors previously said convictions would result in likely prison terms under federal sentencing guidelines.

Three jurors appeared to wipe tears as or after the sentences were read. As they filed out of the courtroom about 2:15 p.m., none looked at the McMahans.

Jeff McMahan, 48, seemed to choke up as the guilty verdict on the first count of conspiracy was read, then exhale as the judge announced "not guilty" to the first of the five mail fraud counts.

His wife,43, sat clutching her husband's wrist but showed no emotion as the verdicts concerning her were read.

Jeff McMahan's attorney, Rand C. Eddy, said he was "extremely disappointed" by the verdicts. He said it's unclear whether his client will resign.

The auditor faces a likely impeachment trial if he doesn't step down.

Lori McMahan's attorney, Kevin Krahl, said his next step is to "just go figure out the sentencing possibilities ... evaluate our options and go from there."

Assistant U.S. Attorney Gay Guthrie, who has led the government's prosecution of several corruption cases that began with Phipps, said he has "tremendous respect" for the criminal justice system.

"In that respect, I accept this jury's verdict. I will move on to the next case."

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McMahan Jury Resumes Deliberations

Jurors resumed deliberations today in the federal corruption trial of Auditor & Inspector Jeff McMahan and his wife, Lori, after failing to reach a verdict in eight hours of discussions on Friday.

Jurors were given the case about 3 p.m. Friday after four hours of closing arguments from prosecutors and defense attorneys.

After prosecutors finished their arguments, U.S. District Judge James H. Payne dismissed one of the nine counts against the couple.

Eight felony counts, including conspiracy, mail fraud and accepting bribes, stem from the McMahans' association with southeast Oklahoma businessman Steve Phipps and could mean prison terms for them.

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McMahan Case Goes To Jury

The jury in the federal trial of Auditor & Inspector Jeff McMahan and his wife, Lori, began deliberations around 3 p.m. Friday after hearing nearly four hours of the attorneys' closing statements.

The Tecumseh couple face eight counts of conspiracy, mail fraud and accepting bribes.

Assistant U.S. Attorney Gay Guthrie asked the jury to pay attention to the word "deniability" for Jeff McMahan.

It was a word used in taped conversations Lori McMahan had with ex-auditor's employee Tim Arbaugh and Kiowa businessman Steve Phipps whose abstract companies the auditor's office regulated.

Lori McMahan has testified that she was talking about "cover stories" that she would tell authorities regarding accepting illegal cash donations from Phipps.

Guthrie said that Jeff McMahan used Arbaugh and even his own wife to do his dirty work. "He can't just take the cash envelope himself," Guthrie said.

Rand Eddy, attorney for Jeff McMahan, asked jurors not to believe Phipps' testimony.

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McMahan: Crimes Came As A Surprise

By Susan Hylton/Tulsa World In Muskogee ~ Oklahoma State Auditor and Inspector Jeff McMahan testified Thursday that he didn't know of the crimes being committed during and after his 2002 campaign and that he didn't know that his wife, Lori McMahan, was involved.

But it all became clear on Aug. 23, 2007, he said in the eighth day of testimony in Muskogee federal court, where he and his wife are on trial on charges of conspiracy, mail fraud and accepting bribes.

That was the day the FBI served a search warrant at his Tecumseh home and his wife confessed her illegal activities to him, he said.

Jeff McMahan's voice became shaky and his eyes watery at that point in his testimony. What did he learn that day? "That my wife had done something wrong," he said softly. Lori McMahan dabbed her own tears with a tissue.

While Jeff McMahan said he accepts responsibility for the things that went wrong in his campaign, he also said the following crimes occurred without his knowledge: $157,882 in illegal "straw donor" and in-kind contributions were made to his 2002 campaign, bankrolled by Kiowa businessman Steve Phipps, whose abstract companies were regulated by the auditor's office. The McMahans took all-expense paid trips to New Orleans and Boston, funded by Phipps. Lori McMahan accepted cash donations from Phipps for campaign signs and radio spots.

Lori McMahan failed to return a ring and matching earrings that she had received from Phipps, who purchased them at a New Orleans jewelry shop for about $2,140, after Jeff McMahan said he told her to return them.

But he did not admit that Phipps ever received anything in return for the money and gifts. "I haven't done any political favors for anyone," he said.

McMahan said he didn't learn that Phipps' partner in the abstract companies was former state Sen. Gene Stipe, D-McAlester, until that partnership was publicized in 2005. "Everything I knew about Gene Stipe was not favorable," said McMahan, also a Democrat.

Because Stipe is a convicted felon, McMahan said he thought the abstract companies' certificates of authority were invalid by law and that he felt public pressure to do something about it.

Despite legal advice from his office as well as from the Attorney General's Office, McMahan moved to revoke the license of Phipps and Stipe as owners of Phipps Enterprises, a holding company of several abstract companies, as well as a third partner, Larry Witt, who operated an abstract office in Stillwater.

"I wanted to shut them down," he said. Phipps and Tim Arbaugh, a former employee of the auditor's office, have previously testified that McMahan's action was exactly what Phipps wanted him to do.

At the time, Stipe had filed a civil suit against Phipps over ownership of the abstract companies, and Phipps thought the state's move to revoke their license because of Stipe's status as a felon would help him in that lawsuit, they both said. McMahan said he "wasn't real thrilled" that the majority of his campaign contributions were coming from the abstract industry.

"However, it became clear to me that if we didn't raise $300,000, we weren't going to win," he said.

Jeff McMahan said his predecessor, Democrat Clifton Scott, introduced him to Phipps and described him as a good man who could help him raise campaign funds.

In describing what he thought was supposed to be an educational trip with Phipps' abstract company employees aboard a bus bound for New Orleans, Jeff McMahan said Phipps instead played a video of the new auditor being hypnotized during a party.

"I should have got off the bus. It was embarrassing," McMahan said.

Assistant U.S. Attorney Gay Guthrie tried to suggest in his cross-examination that McMahan must have known that his wife's jewelry was worth more than $300, the legal limit for gifts in 2003. "It didn't look that expensive," McMahan said.

McMahan said he tried to return a $5,000 contribution from Stipe but that political consultant Pat Hall assured him that it wasn't illegal as long as it was accompanied by a contributor's statement. "He said, 'Jeff, you don't raise money — you don't win,' " McMahan said.

Both the defense and prosecution have rested. The jury will hear closing statements Friday and then are expected to begin deliberations.

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McMahan's Memory Seems 'Mistaken'

By Tony Thornton/The Oklahoman, Blogging From Muskogee ~ During his testimony Thursday, Jeff McMahan made repeated references to taking action or being unaware of alleged improprieties until “after it came out in the paper.”

In some cases, his memory was mistaken. However, jurors don’t know that.

A couple examples: In answer to a question from his attorney, Rand C. Eddy, McMahan said he was unaware of an alleged effort to stall a permit request for a new abstract company in McCurtain County until he read it in the paper. However, that matter didn’t surface until last week, when witnesses testified about it at the auditor’s trial. A new company would have broken up a monopoly by admitted co-conspirator Steve Phipps.
Under cross-examination, McMahan said he told a campaign worker for his 2006 campaign not to accept any money from so-called “Phipps people.” The reason, he said, was that the media had begun reporting possible straw contributions involving Phipps to various political campaigns, including McMahan’s 2002 campaign. However, that information didn’t become public until March 2007.

Prosecutors didn’t confront the auditor about those time lapses.

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McMahan Admits He Lied To FBI Agents

By Tony Thornton/The Oklahoman In Muskogee ~ State Auditor and Inspector Jeff McMahan admitted in federal court today that he gave investigators different stories about jewelry given to his wife, Lori, by southeast Oklahoma businessman Steve Phipps.

McMahan and his wife are on trial on eight federal felony counts related to their association with Phipps, whose abstract companies were regulated by the auditor's office.

Yesterday, Lori McMahan, 43, spent nearly three hours under cross-examination by Assistant U.S. Attorney Ryan Roberts, who tried to point the inconsistencies in her stories.

Jeff McMahan said under oath today that the first time he was questioned by the Federal Bureau of Investigation, he said Phipps only gave his wife a set of $50 earrings. The second time he questioned, however, McMahan said his wife received two pieces of jewelry, but he thought she had returned them.

McMahan also denied being present at dinner at a restaurant in Shawnee, where his wife was given $10,000 in cash for McMahan's election campaign. McMahan told the jury that he has never done any political favors for anyone.

McMahan was expected to be on the witness stand the rest of the day today.

Earlier, Lori McMahan, a fifth-grade schoolteacher, admitted telling lies to her husband, to her alleged co-conspirators and to the FBI but said she began telling the truth on Aug. 23, 2007. That was the day FBI agents searched the McMahans' home in Tecumseh.

Assistant U.S. Attorney Ryan Roberts tried repeatedly to elicit an admission that Jeff McMahan, 48, knew about cash, jewelry and trips Phipps provided. Each time, Lori McMahan said she kept her husband in the dark.

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McMahan Expected To Take The Stand

By Tony Thornton/The Oklahoman In Muskogee ~ State Auditor and Inspector Jeff McMahan is expected to testify this afternoon in his federal court trial.

McMahan and his wife, Lori, face eight federal felony counts related to their association with businessman Steve Phipps, whose abstract companies were regulated by the auditor's office.

Yesterday, Lori McMahan, 43, spent nearly three hours under cross-examination by Assistant U.S. Attorney Ryan Roberts, who tried to point the inconsistencies in her stories.

The fifth-grade teacher admitted telling lies to her husband, to her alleged co-conspirators and to the FBI but said she began telling the truth on Aug. 23, 2007. That was the day FBI agents searched the McMahans' home in Tecumseh.

Roberts tried repeatedly to elicit an admission that Jeff McMahan, 48, knew about cash, jewelry and trips Phipps provided. Each time, Lori McMahan said she kept her husband in the dark.

Her testimony followed a nearly four-hour delay in the trial Wednesday, caused by what was described only as a juror issue. U.S. District Judge James H. Payne resumed the trial Wednesday afternoon with no explanation about the issue. All 12 jurors plus two alternates were present for the afternoon testimony.

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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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Is All Not As It Seems With McMahans?

By Tony Thonton/The Oklahoman, Blogging From Muskogee ~ Outside Muskogee’s federal courthouse, cameras have captured Jeff and Lori McMahan holding hands while walking toward their trial site.

Inside the courthouse is another story.

During lengthy conferences between attorneys and U.S. District Judge James H. Payne, the couple rarely speak to each other. Lori McMahan reads a novel. Four feet way, her husband studies papers or stares downward.

Wednesday morning, 50 minutes passed that way, neither acknowledging the other, as attorneys met in Payne’s chambers to discuss a juror issue.

However, one moment during his wife’s testimony apparently touched the state auditor. It happened Tuesday as his wife tearfully recalled telling him one day last August what she had just told the FBI: that she had committed crimes to help him win election in 2002 and had accepted jewelry and cash from a businessman whose companies her husband’s office regulated.

“I offered to pack my bag and leave if he wanted to,” Lori McMahan said, adding that her husband declined her offer.

That testimony, followed immediately by Lori McMahan’s statements about her husband’s integrity, caused the auditor to wipe an apparent tear from the corner of one eye.

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McMahan Trial: Does This Make Sense?

Muskogee (From www.tulsaworld.com) ~ Jeff McMahan spent a career probing the misuse of public funds as a former investigative auditor and now the Oklahoma state auditor and inspector, but he's had few dealings with his personal checkbook, his wife, Lori McMahan, testified Wednesday.

In the seventh day of testimony in U.S. District Court, where the McMahans are on trial on eight counts alleging conspiracy, mail fraud and the acceptance of bribes, Lori McMahan said she has always handled the family finances.

Read the entire story: http://www.tulsaworld.com/news/article.aspx?articleID=20080612_11_A1_hDAYOF579317.

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'Juror Issue' Delays McMahan Trial

MUSKOGEE ~ The federal trial for state Auditor and Inspector Jeff McMahan and his wife was delayed nearly four hours today for what was described as a juror issue. It's not clear what the issue was.

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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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Pat Hall Defends McMahan As 'Truthful'

By Tony Thornton/The Oklahoman In Muskogee ~ The political consultant who oversaw both of Jeff McMahan's campaigns testified today he considers McMahan to be truthful and honest, but added that he was sickened to learn that McMahan's wife accepted jewelry from businessman Steve Phipps.

Pat Hall testified as a defense witness at the criminal trial of Jeff and Lori McMahan. The state auditor and his wife each face nine felony counts related to Phipps, whose abstract companies were regulated by the auditor's office.

Hall testified that he still finds Jeff McMahan to be truthful, "even when it might hurt him."

However, on cross-examination by a federal prosecutor, Hall testified about a "damage control meeting" held at his house as McMahan faced increasing newspaper scrutiny over his association with Phipps. Outside the courtroom, Hall said he thinks the meeting was in March 2007.

The meeting included the McMahans, Hall and two staffers from the auditor's office: Terri Watkins, his liaison to the media; and Michelle Day, the office attorney. Hall said the meeting was designed to make sure "things didn't spin any further out of control."

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McMahan's Campaign Manager Says 'Hands Off List,' 'The Dead List' Raised Suspicions

By Tony Thornton/The Oklahoman, Blogging From Muskogee ~ Jeff McMahan’s chief fundraiser for his 2006 re-election campaign faced two huge obstacles. She dubbed them “The Hands Off List” and “The Dead List.”

Combined, those two lists accounted for the largest single source of money for McMahan’s first campaign in 2002. Now, the people on those lists were untouchable, Erin Bradshaw testified Monday.

Bradshaw had worked a governor’s race in North Dakota and two other political races in Kansas when, in 2005, she was brought in to help get McMahan re-elected as state auditor and inspector.

As she delved into McMahan’s campaign contribution reports from 2002, she noticed a large number were tied to abstract company owner Steve Phipps. Some were clerical workers who gave as much as $5,000, which Bradshaw said raised red flags.

She said McMahan instructed her not to contact those people.

“Anybody that was somebody Phipps might be involved with, I was to be hands off with,” Bradshaw testified.

That included former state Sen. Gene Stipe and the 2002 donors tied to him. Stipe and Phipps were secret business partners in 2002. By 2006, they were suing each other, and both were under FBI investigation.

“The Stipes were completely off the table (for campaign money), because there was so much publicity by then,” Bradshaw testified.

The dead list, Bradshaw explained, includes donors from a candidate’s previous campaign who have either died since then or indicated they don’t want to be bothered for another contribution.

One such person was Ancel Arrington, an Edmond accountant who gave $2,700 in 2002. Bradshaw said she was sitting across from McMahan, making fundraising calls, when McMahan relayed this message that Arrington had just told him: “I only gave in ‘02 because somebody told me to, and I will never give again.”

Arrington did accounting work for Larry Witt, who in 2002 co-owned some abstract and title insurance companies with Phipps. By 2006, Phipps was under FBI investigation, and both Witt and McMahan were distancing themselves from him.

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Agent Says McMahan Gave Conflicting Stories; Prosecution Rests In Auditor's Trial

By Tony Thornton/The Oklahoman ~ State Auditor and Inspector Jeff McMahan gave conflicting stories during three interviews about Pittsburg County businessman Steve Phipps, an FBI agent testified today.

Agent Steve Kaitcer was among the final prosecution witnesses at the criminal trial of Jeff and Lori McMahan, who face nine felony counts related to Phipps.

Prosecutors rested their case shortly before 3 p.m. today. Jurors were dismissed for the day an hour later.

Lori McMahan's attorney indicated she will testify. It's unclear whether her husband will testify.

A federal grand jury indictment accuses the McMahans of benefiting from trips, jewelry and more than $100,000 in illegal contributions to the auditor's 2002 campaign, all provided by Phipps. In return, an indictment alleges, the auditor, sometimes at his wife's urging, gave special favors to Phipps' abstract companies, which the auditor's office regulated.

Kaitcer testified about his interviews with both Jeff and Lori McMahan. All three interviews with the auditor occurred at his state Capitol office between August 2006 and August 2007, Kaitcer said. The one with Lori McMahan occurred during a search of the couple's Tecumseh home on Aug. 23, 2007, he said.

After first denying in August 2006 that he attended any business meetings with Phipps, McMahan later acknowledged going to New Orleans on a "teaching" trip funded by Phipps, Kaitcer said.

That bus trip involved about 30 people, many of them Phipps' abstract company employees. Kaitcer said the McMahans told him the auditor could teach courses on the trip if Phipps paid for no more than $300 of his expenses. Other witnesses testified that the auditor did no teaching on that trip, and that the McMahans' expenses far exceeded $300.

Kaitcer said during a second interview with Jeff McMahan, the auditor admitted meeting with Phipps and two legislators at the Capitol between November 2002, when he was first elected, and January 2003, when he took office, Kaitcer testified.

McMahan also gave conflicting accounts about two pieces of expensive jewelry Phipps bought for the auditor's wife, Kaitcer said.

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Jerry Hefner Says He's Retiring

By D. E. Smoot/Muskogee Phoenix ~ Wagoner County Commissioner Jerry Hefner, District 2, announced on Tuesday his decision to retire from public service.

Hefner, who has been implicated in an alleged kickback scandal involving former state Sen. Gene Stipe and his business partner Steven Phipps, said he is proud of his accomplishments during the past 20 years as state representative and county commissioner.

“In my public service to Wagoner County I’m proud of all my accomplishments,” Hefner said in a written statement that noted the completion of the Oklahoma 51 widening project, Wagoner Airport improvements, and additional support for veterans, senior citizens and rural fire departments. “During my service as county commissioner, I am particularly proud of meeting the challenges during the extraordinary rain and ice storms of the last two and a half years and seeing the Wagoner County Courthouse completed.”

A section of Oklahoma 51 in Wagoner has been named in Hefner’s honor and the airport has been named the Hefner-Easley Airport in honor of Hefner and former state Sen. Kevin Easley.

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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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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.

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