New charges accuse Shoffner of misusing campaign funds

A superseding indictment Thursday charges former state Treasurer Martha Shoffner, seen in June with attorney Chuck Banks, with 10 counts of mail fraud over allegations she used campaign funds to pay off a personal credit card. She has previously pleaded innocent to 14 charges, including bribery and extortion.
A superseding indictment Thursday charges former state Treasurer Martha Shoffner, seen in June with attorney Chuck Banks, with 10 counts of mail fraud over allegations she used campaign funds to pay off a personal credit card. She has previously pleaded innocent to 14 charges, including bribery and extortion.

Federal prosecutors added 10 mail-fraud charges Thursday to already-pending extortion and bribery charges against former state Treasurer Martha Shoffner, accusing her of using $9,800 in re-election campaign funds for personal expenses.

Shoffner, 69, a Democrat from Newport, faces a March 3 jury trial before U.S. District Judge Leon Holmes on six counts of extortion, one count of attempted extortion and seven counts of receipt of a bribe by an agent of state government. Those charges stem from accusations that between 2009 and her indictment in June, she accepted $36,000 in cash payments from a bond broker to whom she in turn handed over the lion’s share of the state’s bond business.

Shoffner has denied the extortion and bribery charges. Defense attorney Charles “Chuck” Banks said Thursday evening shortly after learning of the new charges that he and Shoffner had no idea they were coming. He said Shoffner wasn’t questioned about the new allegations or given an opportunity to discuss them before a federal grand jury.

Late Thursday afternoon,the grand jury issued a superseding indictment to add the 10 new counts. Banks said he will “probably” file something in response, questioning the timing of the new allegations so close to the trial date, but in any event, “I intend to be ready for trial on March 3.”

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Banks said he had spoken to Shoffner “just briefly” after learning of the indictment but hadn’t yet read the new allegations and didn’t want to comment extensively.

Banks said that although the U.S. attorney’s office has discretion to file whatever charges it thinks apply in a case, it’s his job to challenge the validity of those charges,and, “We’re gonna make ’em prove each and every one of these charges, and each and every element of each charge.”

“They’re in the business of accusing, and we’re going to challenge their ability to prove,” he said.

A news release from U.S. Attorney Christopher Thyer and David Resch, special agent in charge of the Little Rock FBI office, said Shoffner mailed campaign checks ranging from $200 to $5,000 to pay off charges on a personal Wells Fargo credit card between Nov. 5, 2010, and Oct. 9, 2011. Thyer and Resch said the credit-card charges were for “clothing, cosmetics and other personal expenses.”

The news release said the new charges stem from an investigation by the FBI’s ArkTrust Public Corruption Task Force - the formation of which was announced in conjunction with the original indictment against Shoffner. It includes officers from the FBI, the Arkansas State Police, the Pulaski County sheriff’s office and the Little Rock Police Department.

Mail fraud is punishable by up to 20 years in prison and a fine of up to $250,000, as is extortion and attempted extortion. The charges of receipt of a bribe are each punishable by up to 10 years in prison and a fine of up to $250,000.

When entering an innocent plea to the first round of charges, Shoffner told reporters that she was looking forward to going to trial,which she said is “where you get the truth.”

Shoffner resigned May 21, a day after a federal complaint was filed accusing her of accepting the cash payments, as well as at least $6,000 in cash campaign contributions, from the unnamed broker.

Broker Steele Stephens, from whom the treasurer’s office purchased $1.69 billion in bonds during the previous few years, resigned from his job with Russellville-based St. Bernard Financial Services on the same day without giving a reason, according to the firm’s chief investment officer, Robert Keenan.

In August, after Keenan narrowly won election to represent small firms on the Financial Industry Regulatory Authority Inc. Board, the country’s largest independent regulator of securities firms that conduct business with the public, Keenan told a reporter, “I think everybody has decided me and my firm hadn’t done anything wrong.”

In a document filed Thursday afternoon responding to Shoffner’s Jan. 23 request for more details about the allegations against her and asking the judge to compel prosecutors to release additional information, Assistant U.S. Attorney Jana Harris said prosecutors have already turned over all required information, and if Banks wants anything else,he is free to subpoena it.

Harris answered Banks’ demand for the identity of any expert witnesses the government plans to call at trial by saying prosecutors have provided both the name and curriculum vitae of their “expert witness,” whom she didn’t identify.

She said Banks’ request for any agreements that prosecutors have made with witnesses to give them preferential treatment or refrain from prosecuting them in exchange for their testimony wasn’t necessary. She said prosecutors told Banks before he filed the motion that there are no plea agreements and that “only one witness was given immunity.” She said the defense was given the name of that witness.

Banks argued in his Jan. 23 motion that prosecutors should have to turn over any documents in possession of the Arkansas Securities Department or the Arkansas Legislative Audit Division that could be considered “exculpatory,” or favorable to Shoffner’s defense. Harris responded by calling Banks’ argument that prosecutors “constructively possess” the documents, because they have issued subpoenas to both agencies, a “novel proposition” for which no authority has been cited.

She noted that prosecutors have obtained only a single document, which isn’t relevant to the case, from the Securities Department and that any documents prosecutors have received from the Legislative Audit Division have already been made available to, or copied for, the defense.

While prosecutors must disclose any favorable evidence known to others acting on the government’s behalf, the two state agencies “are not and never have been in a position to be considered a part of the prosecution team,” Harris noted.

She pointed out that the defense can issue subpoenas for any other documents or witnesses, “just as the United States can,” and that “the same holds true for any emails and/or phone records.”

Prosecutors are turning over all emails and phone records in the government’s possession, she noted.

Harris added that prosecutors already have provided, or made available, “investigative documents in the United States’ possession.”

Front Section, Pages 1 on 02/07/2014

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