New names emerge in auditorcase
'Operations turned over to deputy official

By Tony Thornton Modified: January 26, 2008 at 12:45 am •  Published: January 26, 2008
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MUSKOGEE — State Auditor and Inspector Jeff McMahan is considering resigning in the wake of a federal indictment accusing him of corruption, his attorney said Friday.

"We expect to make an announcement in the near future,” defense attorney Rand C. Eddy said.

Later Friday, McMahan issued a written statement saying he was turning over his office's daily operations to Deputy State Auditor Michelle Day, who also is the office attorney.

"I will continue to be available to the office for consultation during the ongoing efforts to prove my innocence,” McMahan wrote.

McMahan and his wife, Lori, pleaded not guilty Friday to the nine felony counts listed in the indictment.

A day earlier, a Republican lawmaker filed legislation to create a special committee to decide whether articles of impeachment should be prepared.

"It's a difficult question,” Eddy said of his client's resignation dilemma. If Jeff McMahan resigns, "he's going to forfeit a significant part of his pension and his career based on unproven allegations that he denies.”

If he stays in office through January 2009 and avoids a criminal conviction, McMahan would be eligible for monthly pension payments of between $5,098 and $7,283, depending on whether he begins collecting retirement checks at age 55 or 61, The Oklahoman previously reported.

However, if he quit now or is removed from office, his pension range would be $2,249 to $4,082.

Resolving his job status
If convicted of a corruption crime, the auditor could forfeit his entire pension except what he has contributed during his 19 years in state government.

The auditor hasn't shown up for work at the Capitol since being indicted Jan. 18.

"We want to resolve the issue” (of his job status) so the auditor can focus on defending himself in the criminal case, Eddy said.

U.S. Magistrate Kimberly E. West allowed Jeff and Lori McMahan to remain free without bail.

The indictment accuses the McMahans of accepting illegal cash, out-of-state trips and jewelry from Steve Phipps, who until last year co-owned several abstract companies with former state Sen. Gene Stipe.

McMahan's office regulated the abstract industry until Jan. 1. Legislators created a separate entity last session amid reports of the auditor's alleged ties to Phipps.

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State Auditor and Inspector Jeff McMahan and his wife, Lori, leave Muskogee's federal courthouse Friday. By David McDaniel, THE OKLAHOMAN

State auditor and his wife
U.S. Magistrate Kimberly E. West allowed Jeff and Lori McMahan to remain free without bail but ordered them to report to the federal probation office in Oklahoma City by Monday. She restricted their travel.

West set a jury trial for March 3, but defense attorney Rand C. Eddy said he may seek a delay.

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