McMahan's Treasurer Realized Money Came From Straw Donors, Oklahoman Reports

By Tony Thornton/The Oklahoman ~ As a treasurer for Jeff McMahan's 2006 re-election bid looked over the contributor list to his first campaign, she noticed a disturbing trend.

Numerous donors tied to abstract company owner Steve Phipps had given large amounts of money to the state auditor's race in 2002, even though many lacked financial means to do so, Erin Bradshaw determined.

"It became very obvious to her that many of these people were straw donors," FBI agent Gary Graff testified at a recent court hearing.

Bradshaw and McMahan's staff had a common phrase for those contributors: "Phipps people."

Read the entire story at http://newsok.com/witnesses-expected-to-detail-campaign-bribery-scheme/article/3250945/?tm=1212200662.

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Run, Don't Walk, To Get Your Sunday Oklahoman

"How $441K grant aided Stipe," the headline on investigative reporter Tony Thornton's Page One story in The Sunday Oklahoman reads, but the story is much more than that if you have any idea of former State Senator Gene Stipe's influence and connections over the years to certain southeastern Oklahoma officials. Thornton also recalls (it was first reported in The Oklahoman in the 1970s) Stipe's business connections to a Tahlequah real estate agent who "joined him in a business venture a year after his acquittal" in a 1968 federal income tax evasion case in which the real estate agent "served on the federal grand jury that indicted Stipe...." Stipe was acquited and a year later, Thornton reports, the agent and Stipe began doing business together. Thornton also reports that some of those involved with Stipe in the $441,000 grant land deal "also helped Stipe obtain state and local tax money for land to be sold for a McAlester dog food plant in 2002." That deal is a part of the ongoing federal investigation into the business dealings of Stipe and others. The Oklahoman's website is http://www.newsok.com/.

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FBI CLOSES IN ON JEFF McMAHAN

Federal Bureau of Investigation agents seized campaign records from Auditor and Inspector Jeff McMahan's home in Tecumseh and seized at least one piece of jewelry from his sister-in-law's home at the same time, The Oklahoman's Tony Thornton reports today.

The jewelry allegedly was purchased by Steve Phipps of Kiowa, abstract company owner under investigation by the FBI in a wide-ranging scandal in southeastern Oklahoma. Phipps has been in business with disgraced former Senator Gene Stipe; both are targets of the investigation, which thus far has implicated other former state officials, employees of the Phipps-Stipe abstract companies, and employees of Stipe.

McMahan's office licenses and regulates the abstract industry, members of which poured tens of thousands of dollars into his 2002 and 2006 campaigns. (For details of TMRO's extensive reports on the donations last year, click on McMahan's name below.)

Thornton reports the seizures occurred last Thursday, the same day two agents spent 90 minutes interviewing McMahan in his Capitol office. It was McMahan's third visit by FBI agents.

A retired federal agent told TMRO today that agents would not have seized jewelry, or anything else, from a relative's home unless agents possessed "positive proof" that the items were "the product of an illegal act." The seizure almost certainly indicates that McMahan is a target of the investigation, he said. He added that the seizure of finance records in a state campaign by federal agents could indicate there is suspicion that federal funds somehow wound up in the campaign, or that they are searching for evidence of a criminal conspiracy.

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Feds Move To Revoke Stipe's Probation

Federal authorities want Gene Stipe to go to prison. As expected, a move is underway to revoke Stipe's present probation and make him serve prison time for allegedly being part of a scheme to make illegal campaign donations while on probation for doing the same thing.

The 2-page document seeking to revoke Stipe's probation was sealed in federal court in Muskogee, but investigative reporter Tony Thornton of The Oklahoman obtained a copy before the seal was ordered. The document also accuses Stipe of continuing to associate with another known felon, Steve Covington, a former Stipe business partner. Probation officials have photos of Stipe and Covington together since they were ordered to avoid each other in October 2005.

Stipe, 80, has undergone a series of operations to relieve fluid pressure in his brain. His attorney says he has had "multiple brain surgeries."

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FBI Probes College Housing Project Financing; Morgan Got Thousands, Oklahoman Reports

The Federal Bureau of Investigation wants to know why some Oklahoma colleges used non-traditional private financing to build housing projects and why Senate Co-President Pro Tem Mike Morgan (pictured) was paid $230,000 as a result, The Oklahoman reports.

The newspaper's exhaustive study of records shows that Morgan, a Stillwater attorney, was paid huge sums as the attorney on some of the projects. Reporters Tony Thornton and Randy Ellis also report that huge sums were paid to a title company co-owned by former State Senator Gene Stipe, target of an exisiting FBI probe into alleged corruption in southeastern Oklahoma. Stipe's partners in the title company are businessman Larry Witt and Steve Phipps, both mentioned prominently in the FBI investigation into straw donations made to political campaigns. The three have been partners in an abstract company empire that includes title and abstract companies.

The Oklahoman's stories can be accessed at www.newsok.com (registration required) or by purchsing a copy of the Sunday edition.

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Feds Move To Revoke Stipe's Probation

Federal prosecutors are trying to revoke former State Senator Gene Stipe's probation and send him to prison, The Oklahoman's Tony Thornton reports.

A probation revocation petition against Stipe could be filed next week, sources told Thornton.

Stipe, 80, was placed on probation following his conviction in an illegal campaign donation scheme that also cost him his license to practice law and his seat in the Senate. He now is the primary target of a federal grand jury investigation into alleged corruption and illegal campaign donations unrelated to the earlier scheme that resulted in his probation.

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Former Legislator Paid By Agency He Helped Fund

The Oklahoman's Tony Thornton reports today that former State Rep. Joe Hutchison was paid $62,500 by Little Dixie Community Action Agency in 2005, the year after he obtained $100,000 in state funds for it.

The agency is not in what was Hutchison's legislative district and apparently there's no record showing how the $100,000 was spent.

Oklahoma's Constitution prohibits any legislator from being interested in any contract with the state or govermental subdivision within two years of leaving office.

The executive director of Little Dixie is former Rep. Randall Erwin, who has been accused by the Federal Bureau of Investigation of accepting kickbacks when he was a legislator. He left office in 2004 to head up Little Dixie. The agency is under investigation by the auditor and inspector's office even though Auditor Jeff McMahan faces allegations his office was the site of a meeting at which the funneling of state funds to those under investigation was discussed.

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McMahan-Phipps Trip Companions Identified

The Oklahoman reports today that some of those involved in the federal investigation into alleged public corruption in southeastern Oklahoma took out-of-state trips with Auditor & Inspector Jeff McMahan and embattled abstract company owner Steve Phipps.

Taking a trip to New Orleans in 2003 with McMahan and Phipps and their wives, the newspaper's Tony Thornton and Nolan Clay reported, was Karla Hall, chairman and executive director of Rural Development Foundation; the FBI alleges that state money was directed to RDF to benefit Phipps and his business partner, former Senator Gene Stipe.

Taking a trip to Biloxi, Mississippi were Roy Hatridge and Suzie Carper of National Pet Products, the McAlester dog food company that is part of the federal investigation.

Some of those involved in the Phipps-Stipes enterprises have been revealed as straw donors to multiple political campaigns, including McMahan's.

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Oklahoman Nails Jeff McMahan; Trips With Steve Phipps May Have Violated Ethics Rules

The Oklahoman's Tony Thornton reports today that Auditor & Inspector Jeff McMahan took three trips with controversial abstract company owner Steve Phipps (left) and that two of them, apparently paid for by Phipps, may have violated Ethics Commission rules.

Phipps is under investigation by a federal grand jury, in part for his alleged involvement in a campaign money-laundering conspiracy in which straw donors were used to funnel money into multiple campaigns, including McMahan's campaigns.

Thornton reports confirmation of the three trips two days after McMahan's spokeswoman, Terri Watkins, insisted he took only one trip with Phipps. Watkins then said, "It's not a matter of trying to hide things. It's my not asking the right questions."

Watkins said Phipps paid for a fishing trip to Lake Texoma in 2002 and a trip to a Biloxi, Mississippi casino in 2004. McMahan paid his own way on the third trip, to New Orleans in 2003, Watkins said. McMahan and his wife went with Phipps and his wife.

The trips are further evidence that McMahan's relationship to Phipps is much closer than McMahan has insisted; he's indicated he barely knows Phipps.

Thornton quotes Marilyn Hughes of the Ethics Commission as saying rules preclude an office-holder accepting anything of value from a person or entity the office-holder regulates. McMahan regulates abstractors.

For the complete story, go to http://www.newsok.com/ or pick up a copy of today's newspaper.

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Oklahoman Finds More Straw Donors To McMahan, Henry, Mass; McMahan Cites Donor Forms

The Oklahoman reports today it has identified more straw donors to the campaigns of Auditor & Inspector Jeff McMahan, Governor Brad Henry and former legislator Mike Mass.

Investigative reporters Nolan Clay and Tony Thornton report that about a dozen donors to the McMahan and Henry campaigns contributed about the same amounts they were paid by companies tied to abstract company owner Steve Phipps and former Senator Gene Stipe. The companies, Phipps, Stipe and others are now the focus of a federal investigation.

Clay and Thornton report they were able to identify the previously-unnamed donors by matching the names on "internal financial records" they obtained to campaign donor lists.

McMahan said his campaign obtained "contributor statements from everyone who contributed" and he thus assumed the donations to his campaign were legal.

Read more at www.newsok.com or by obtaining a copy of Sunday's edition of The Oklahoman.

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