Donors don't change course

By Tony Thornton

Published: November 19, 2007

A criminal investigation hasn't impaired state Auditor and Inspector Jeff McMahan's ability to raise money.

McMahan collected more than $11,000 between July and September for his 2006 re-election campaign, according to his most recent quarterly report to the state Ethics Commission.

That campaign ended more than a year ago when voters returned McMahan for a second, four-year term.

None of the contributions came after late August, when the FBI visited McMahan's office and served a search warrant on his Tecumseh home.

McMahan said all of the $11,185 he collected was related to a July 20 golf tournament at FireLake Golf Course in Shawnee.

Of the total collected, $6,000 went toward repayment of an unspecified loan, his Ethics Commission filing shows.

McMahan said he applied the $6,000 toward the $10,000 personal loan he took out for the campaign. The remaining $4,000 balance left him with $16,500 in loans owed to four people. The total debt also includes $5,000 each to Richard Gilbert and Dustie Butner, both of Tecumseh, and $2,500 to Terry O'Rorke, also of Tecumseh, according to his campaign report.

McMahan said he couldn't explain why he repaid his personal loan first instead of his other creditors.

"The bank sent me a letter requesting payments. But I intend to pay my debts,” he said.

McMahan is under investigation by a federal grand jury and the Ethics Commission.

Both investigations concern his relationship with southeastern Oklahoma businessman Steve Phipps, who until recently co-owned several abstract companies.

Phipps pleaded guilty in June to a federal conspiracy charge and is cooperating with prosecutors. He admitted paying kickbacks to three former legislators who obtained state money for two of his businesses, a dog food plant and a gambling machine company, both in McAlester.

After previously saying he hardly knew Phipps, McMahan admitted in March that he went on three trips with him. Phipps paid for two of them: a guided, one-day bass-fishing trip at Lake Texoma in 2002, and a bus trip to a casino hotel in Biloxi, Miss., in 2002 or 2003, during which McMahan says he taught a private educational course on abstracting for Phipps and some of his employees. Phipps' attorney said that trip actually occurred in 2004.

A federal grand jury investigating McMahan questioned his spokeswoman last month also asked how her boss paid for his trip to the 2004 Democratic National Convention in Boston. The spokeswoman, Terri Watkins, has said McMahan told her his campaign paid for it.

In late August, the FBI seized jewelry from the home of McMahan's sister-in-law. Sources said it is believed to have been bought by Phipps for McMahan's wife, who then gave it to her sister.

McMahan and his wife have separate criminal defense attorneys who have met several times with the FBI and federal prosecutors.

State Ethics Commission rules prohibit McMahan from receiving anything of value from entities he regulates.

The auditor's office has overseen the abstract industry for more than 20 years. The criminal investigation prompted legislators earlier this year to create an independent governing board for abstractors.

The new oversight takes effect in January.

McMahan referred questions about the investigation to his defense attorney, Rand C. Eddy, who said his client has cooperated fully with federal authorities.

"At no time during his tenure as auditor and inspector has Jeff McMahan knowingly accepted anything of value from Steve Phipps or anybody else,” Eddy said.

"Any omissions Jeff McMahan has made in previous statements to the press are the result of innocent lack of memory or knowledge,” the attorney said.

Eddy said prosecutors haven't indicated whether his client will be indicted.

At least 75 people paid $150 each to participate in McMahan's July 20 golf tournament, said his predecessor, Clifton Scott, who played in the tournament. Unlike previous fundraiser tournaments to benefit McMahan's campaigns, this one featured no prizes, he said.

Such tournaments have become annual events for statewide office holders seeking to improve their campaign war chests in non-election years.

Scott said his longtime friend and former employee didn't mention the investigation during the scramble tournament, but it was discussed by those who participated. Scott said his knowledge of the investigation didn't scare him out of playing in the tournament.

"Even though he was under investigation, there was no clear evidence at that time that he was going to be indicted,” Scott said. "Most people feel that Jeff's just a good old boy who maybe got caught up in something he shouldn't have, and now he's getting ready to pay for it.”

Golf tournament participant J.T. Walker, who owns a bar in Shawnee, said the investigation didn't make him think twice about contributing.

Two other people who played, Gary Mask of Holdenville and Edd Dennis of Broken Arrow, said they weren't aware of the investigation at the time.

McMahan's campaign report shows he spent $500 on invitations, refreshments and supplies for the tournament. However, there is no indication of either a payment to FireLake Golf Course or in-kind contribution for the tournament green fees.

In 2005, his campaign paid nearly $3,000 on green fees for that year's tournament, records show. "We still haven't gotten a bill” from the golf course for this year's event, McMahan said.

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