State auditor McMahan and wife indicted

The nine-count indictment alleges Jeff and Lori McMahan received jewelry, trips and excessive contributions to Jeff McMahan's first campaign in 2002.

In return, the indictment alleges, the auditor granted special favors to an unnamed abstract company owner. That businessman is Steve Phipps of Kiowa, The Oklahoman confirmed.

McMahan's office regulated the abstract industry until Jan. 1. The Legislature last year created a separate agency for that purpose amid reports of McMahan's ties to Phipps.

"Political offices should not be for sale," U.S. Attorney Sheldon Sperling said upon the indictment's release.

The indictment came shortly after Phipps testified behind closed doors this morning. Phipps has appeared several times before the grand jury since cutting a deal with federal prosecutors nearly a year ago. He awaits sentencing on a conspiracy count.

The McMahans weren't arrested Friday. Sperling said he expects them to appear in Muskogee's federal courthouse next week.

Jeff McMahan's attorney, Rand C. Eddy, said the McMahans have cooperated fully with investigators.

"While they are capable of errors in judgment or in association, Jeff and Lori are innocent of the charges," Eddy said.

Lori McMahan's attorney, Kevin Krahl, called the indictment "unfortunate."

"We answered every question they posed to her," Krahl said.

Both Jeff McMahan and Lori McMahan, a schoolteacher, face the same nine counts: one conspiracy count, six mail fraud counts and two counts of violating the Travel Act to promote bribery.

The maximum total prison time possible for the nine counts is 135 years.

The Travel Act allegations concern trips the McMahans allegedly took on Phipps' tab. One trip was to New Orleans in the summer of 2003; the other was to Boston for the 2004 Democratic National Convention.