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Papers cite more in illegal election funds

By Tony Thornton and Michael McNutt Modified: January 26, 2008 at 1:10 am •  Published: January 26, 2008
Court records unsealed Friday accuse two abstract company owners — including the chairman of a new state board assigned to regulate the industry — of making illegal campaign contributions to state Auditor and Inspector Jeff McMahan.

McMahan had to rely heavily on Randy Dittmann for his 2006 re-election campaign because the main money source for his 2002 campaign, Steve Phipps, was under grand jury investigation, according to an FBI agent's affidavit.

Also included in the affidavit are transcripts of taped conversations in which McMahan's wife allegedly tells Phipps that “as long as we all stick to the same story, we'll be fine.”

The affidavit is part of FBI agent Gary Graff's request in August for a warrant to search the McMahans' Tecumseh home.

The affidavit remained sealed in Oklahoma City's federal courthouse for the last five months, as did a separate court filing showing what was seized.

They were unsealed Friday, when Jeff and Lori McMahan appeared in Muskogee's federal court to face a nine-count indictment accusing both of accepting bribes and illegal contributions from Phipps.

The affidavit is based primarily on information provided by two unnamed informants. Those informants are Phipps and Tim Arbaugh, who oversaw the auditor's abstract division for McMahan, The Oklahoman confirmed. FBI agents recorded conversations between Arbaugh and Lori McMahan, according to the affidavit.

Phipps pleaded guilty in June to conspiracy involving bribes paid to former legislators. He is cooperating with investigators as part of his plea agreement.

The affidavit alleges Phipps spoke to Jeff McMahan in code when discussing illegal campaign contributions he made through other people, called “straw donors.”

Dittman denies claims
Gov. Brad Henry appointed Dittmann in November to the Oklahoma Abstractors Board, which legislators created amid reports of McMahan's ties to Phipps.

Dittmann, 51, was recommended by the Oklahoma Land Title Association and state Reps. Chris Benge, R-Tulsa, and Lucky Lamons, D-Tulsa, said Paul Sund, Henry's spokesman. Dittmann is on the land title association's board.

According to the affidavit, Arbaugh told McMahan in 2006 that Dittmann was reimbursing employees who made straw donations to McMahan's campaign.

“How many more employees does he have?” the affidavit quotes McMahan as asking Arbaugh.

Asked last week if he was aware of any illegal contributions being made to McMahan's campaign, Dittmann said, “Any of the campaign stuff, I don't know anything about.”

On Friday, he said: “I have no idea what employees donated funds to anybody's campaign by the use of a credit card. I have never given an employee an illegal bonus for anything. I'd like to see this affidavit ... before I make any further comments,”

Dittmann said he owns American Eagle Title Insurance Co, a domestic title insurance company; Lawyers Title of OKC, a title agency specializing in commercial transactions; Buffalo Land Abstract Co., which has a certificate of authority in Johnston County and a main office in Tulsa; Logan County Abstract Co.; Coal County Abstract Co.; and Union-Creek Abstract Co., which has a certificate of authority in Creek County.

Sund said Dittmann underwent and passed an Oklahoma State Bureau of Investigation background check before his appointment.

“The governor's staff went a step further, asking each appointee if they had any involvement or relationship with Steve Phipps or Gene Stipe. Indictment: McMahan Statement from Jeff McMahan's attorney McMahan statement of Jan. 25, 2008

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