Stipe brother awaits fate in federal case
Stipe brother awaits fate in federal case

By Tony Thornton

Published: April 15, 2008

MUSKOGEE — Francis Stipe's defense attorneys told jurors Monday that three of the four felony counts against him are groundless because of his lack of involvement in a $48,000 bribe paid to a legislator.

As for the fourth count, the defense said Stipe wasn't trying to corrupt former Rep. Mike Mass' testimony by purchasing Mass' mortgage and demanding immediate payment.

The judge dismissed the jurors at 9 p.m., and told them to come back at 9 a.m. today.

The case revolves around taxpayer money used to build a dog food plant in McAlester.

Francis Stipe's older brother, Gene Stipe, 81, then a powerful state senator, was a secret partner in the plant, which was built on property he sold.

Mass and Gene Stipe are Democrats.

A grand jury indicted Francis Stipe and Gene Stipe last fall on a four-count indictment alleging conspiracy, mail fraud, witness tampering and paying a bribe. The last two counts involve Mass, who has admitted receiving a $48,000 bribe in October 2002 for steering $419,000 in state taxpayer money to the dog food plant.

"The fix was in,” to buy Gene Stipe's property with his brother's help, Assistant U.S. Attorney Ryan Roberts told jurors.

The purchase went through McAlester Foundation, which served as a conduit for the state money. Francis Stipe was a member of the foundation at the time of the transaction.

Defense attorney John Carwile noted that Mass was paid "bribe after bribe, after bribe” but no one testified Francis Stipe was involved in any of the bribes.

"Should he be convicted ... because he's Gene Stipe's brother? Would you want to be held to that?” Carwile asked jurors.

Francis Stipe testified Monday that he fully expected Mass, a bankrupt former legislator, to repay a $104,521 mortgage after Stipe acquired it from a McAlester bank last year.

Mass pleaded guilty to a conspiracy charge last year for his testimony. Evidence showed Pittsburg County businessman Steve Phipps paid Mass more than $400,000 between 2002 and January 2006.

Federal prosecutors allege the mortgage was an attempt by Francis Stipe and his older brother to prevent Mass from cooperating in a political corruption investigation.

Francis Stipe takes the stand

Earlier in the day, Francis Stipe took the stand on his 77th birthday. It was a bit of a shock, as evidenced by an audible gasp in the courtroom, possibly by a female juror, when defense attorney Warren Gotcher called Francis Stipe's name as the next witness.

Gene Stipe owned the property where the National Pet Products plant was built, and received $191,609.78 for it — more than double its market value. He also was a secret owner in the company.

The case against Gene Stipe is on hold after U.S. District Judge Ronald A. White declared him mentally incompetent in a related matter.

Francis Stipe said he was aware at the closing that his brother owned the property, but said he had no knowledge of his brother's secret partnership in the dog food plant.

Investment or intimidation?

Under cross-examination by prosecutors, Francis Stipe said he was worth roughly $16.3 million when he acquired a mortgage on Mass' 47-acre homestead near Hartshorne in February 2007.

By then, Mass was known to be bankrupt and a target of the FBI investigation. A banker previously testified that Mass hadn't made any payments in months, and foreclosure proceedings were near.

Francis Stipe said he acquired the loan in hopes of making $4,000 to $6,000. The bank forgave overdue interest owed by Mass when he acquired the mortgage, Francis Stipe said.

Gene Stipe held a second mortgage on the house, thanks to a loan to Mass that he kept hidden for more than six years. That increased Mass' total debt on the property $163,497.20 — far more than the property was worth.

Assistant U.S. Attorney Gay Guthrie asked Francis Stipe what he was thinking when he assumed the overdue mortgage.

"I thought it would be paid off pretty quickly, and I'd make four to six thousand dollars,” the defendant responded.

"You have a net worth of $16 million, and you buy a mortgage from a bank for a guy who's in bankruptcy?” Guthrie asked.

Francis Stipe said he considered it a solid business investment.

Mass testified earlier that when he learned who acquired his overdue mortgage, he called Francis Stipe, who demanded the entire amount within two weeks.

Correction: The story originally said "Francis Stipe was chairman of the foundation at the time of the transaction." Francis Stipe was a member, and not the chairman during the transaction.