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 indictment’s nine felony counts. 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 a pension 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. 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. Excessive campaign money alleged Jeff McMahan, 47, and Lori McMahan, 42, each face the same nine counts: one count of conspiracy, six counts of mail fraud and two counts of violating the Travel Act to promote bribery. If convicted of all nine counts, the McMahans face a maximum of 135 years in prison. Many of the allegations involve Jeff McMahan’s first campaign for the office in 2002. He and his wife are accused of taking more than $100,000 in campaign contributions from Phipps. The legal limit is $5,000. Phipps pleaded guilty last year to a conspiracy charge involving his admission of paying bribes to three former legislators. He awaits sentencing and has not been charged in connection with his alleged involvement with the McMahans. Most of the allegedly excessive campaign contributions involve “straw donors” who gave to Jeff McMahan’s campaign under their own name, using money that prosecutors say was supplied by Phipps. This is illegal for the named contributor, the money supplier and the recipient. The statute of limitations for most federal felony crimes is five years. However, a conspiracy charge allows prosecutors to go back further. West ordered the couple to report to the federal probation office in Oklahoma City by Monday. She restricted their travel to the eastern and western federal districts of Oklahoma, unless they receive prior approval to go elsewhere. She also ordered both to have no contact with any potential witnesses, have no firearms and avoid excessive alcohol use and any illegal drug use. West set a jury trial for March 3, but Eddy said he may seek a delay. Lori McMahan’s attorney, Kevin Krahl, said the couple will “fight it (the indictment) every way we can.” Gary Jones, the state Republican Party chairman who was Jeff McMahan’s opponent in the 2002 and 2006 general elections, sat in the back of the courtroom Friday. Jeff McMahan declined to comment following his court appearance. After being processed by federal marshals and the court clerk’s office, the McMahans slipped out a basement door of the federal courthouse moments before their attorneys left through the front door.
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