Shoffner seen taking pie-box cash in video

 Former Arkansas Treasurer Martha Shoffner walks to the federal courthouse in Little Rock Monday during a break in her bribery trial.
Former Arkansas Treasurer Martha Shoffner walks to the federal courthouse in Little Rock Monday during a break in her bribery trial.

Federal prosecutors rested their case Monday against former state Treasurer Martha Shoffner after a bond broker admitted earning about $2.5 million in commissions from trades he made under her watch, and jurors watched a videotape of her taking $6,000 out of a pie box he delivered to her home last year.

After the expected testimony of three defense witnesses this morning, followed by closing arguments, a jury of five men and seven women must decide if the transactions constituted extortion or bribery. Shoffner, 69, of Newport faces seven counts of each and up to 20 years in prison if convicted.

Defense attorney Charles “Chuck” Banks told U.S. District Judge Leon Holmes that he expects to conclude his case by noon and that Shoffner won’t testify.

Holmes has scheduled testimony to resume at 10 a.m. in his Little Rock courtroom.

On Monday, after jurors went home for the evening, Holmes said he will reserve ruling on whether prosecutors presented sufficient evidence to sustain the federal charges until after jurors reach a verdict, if they convict her. He noted that defense attorneys Banks and Grant Ballard had raised significant issues regarding federal jurisdiction, and the matter would need to be further examined through written briefs.

The day began with jurors watching a video and audio recording of former broker Steele Stephens of Little Rock taking an apple pie to Shoffner’s home on May 18 of last year. Shoffner didn’t know that Stephens, now 52, was secretly cooperating with the FBI and was recording the meeting as agents listened nearby.

Inside the white cardboard pie box, as Stephens acknowledged he’d done on two previous occasions, he had tucked a wad of $100 bills totalling $6,000 into a corner - alongside, in this case, an apple pie.

The pie box sat unopened on the edge of Shoffner’s green Formica countertop as the two friends went outside into the carport of the red brick and white frame house and discussed whether the FBI knew that he had given her cash over the past three years, and if an investigation fueled by legislative audit committee hearings might “blow over” soon.

They never mentioned a specific amount of money and covered an array of topics unrelated to the investigation, including Shoffner’s possible plan to run for mayor of Newport and whether she should downsize from her 4,500-square-foot house and buy a neighboring house. For most of the discussion, Shoffner, wearing a long white T-shirt and bluejeans, waved a lighted cigarette as she talked.

“Don’t worry about it. You’re too paranoid. We haven’t done anything wrong,” Stephens told her at one point.

“I know,” she replied, reminding him not to tell anyone about his visit that day. Shoffner said she looked forward to the situation calming down at some point, noting, “I’m going to start exercising and get all this out of my system.”

When they re-entered the house after several minutes, Shoffner could be seen reaching into the pie box and grabbing the wad of cash, which agents found a short time later tucked inside a Marlboro cigarette box in a nearby kitchen drawer, an FBI agent testified.

Prosecutors - Assistant U.S. Attorneys Jana Harris, Stephanie Mazzanti and John Ray White - say Stephens gave Shoffner six payments of $6,000 each, as well as another $6,000 in cash campaign contributions - between mid-2010 and that day, in return for her using her position to steer him an increasingly greater share of the state’s bond business, which was previously divided evenly among 10 to 15 brokers.

Stephens acknowledged Monday that between 2008 and 2012, he earned about $2.5 million in commissions as a result of the roughly $2 billion worth of bond-trading business he did with the state. Other testimony and documents showed that while most brokers’ share of the state’s bond inventory was kept at roughly $100 million to $150 million, Stephens’ inventory grew to more than $600 million at its highest level in 2012.

Shoffner’s first four-year term as treasurer began on Jan. 1, 2008, and she was serving her second term when arrested last May in the FBI sting operation, which resulted in her resignation the following week.

Stephens, a bond broker first with Apple Tree Investments in Little Rock and later with the Russellville-based St. Bernard’s Financial Services, testified both Friday and Monday as the state’s star witness - albeit a visibly reluctant one who acknowledged he had been promised immunity from prosecution in exchange for his cooperation. Stephens isn’t connected to the well-known Stephens Inc. investment firm.

Stephens testif ied on both days that he gave Shoffner $6,000 about every six months simply because he “felt sorry for her” and “thought she needed it.” He noted that her mother had recently died and she had to buy out her sister’s half of her house, and then an investigation of public officials driving state cars caused her to give up her state car and buy one.

“She was pretty much financially strapped, and she was only making about $50,000 a year before taxes,” Stephens said.

At White’s urging, he conceded that he thought giving Shoffner the cash also “would improve my chances with her.”

Stephens had testified Friday that he didn’t know Shoffner until she was running for her first term in office, though his father, also from Newport, had known Shoffner and her family for years. He said he was new to the state bond business at the time, and at first traded bonds through Shoffner’s chief investment officer, Autumn Sanson, but came to distrust Sanson so he started talking to Shoffner directly.

On Monday, Stephens acknowledged under cross-examination by Banks that until he began explaining the workings of the bond business to Shoffner, she didn’t know a bond trade from “an onion.” He said she appreciated his instruction, and, “she said she felt like she was my older sister.”

Banks pointed out that Stephens didn’t seem to remember exactly how many times, or precisely when, he gave Shoffner cash, saying, “The $6,000 … had absolutely nothing to do with any confirmation on trades, did it?”

“Not directly, no,” Stephens replied.

“You didn’t think for a minute you’d committed a federal crime, did you?” Banks asked.

“I knew it was wrong,” Stephens replied, but denied that he considered he was committing extortion or bribery.

He said he agreed to cooperate with the FBI out of fear that he “could possibly have to pay back my commissions for ill-gotten gains. … I was worried and scared.”

Jurors also heard Monday from Hunter Johnson, whom Shoffner hired as investment manager for the treasurer’s office in late 2012, after two contentious legislative hearings into bond transactions handled by Stephens that caused the state a loss of expected profits.

He testified that Shoffner resisted his idea to remove St. Bernard’s from the state’s list of brokers. He also said he had examined some of the trades that Stephens had made and couldn’t determine a valid reason for Stephens being given a bigger share of the state’s bond business than other brokers.

While Stephens’ trades were legal, “I wouldn’t say they were the best trades, by far,” Johnson testified. He added, “I have never seen an offer from Steele Stephens that was better than anybody else’s.”

Katherine Black, a forensic accountant for the FBI, testified that in examining the state’s bond inventory between January of 2006 and May of last year, she noticed St. Bernard’s share of the inventory start increasing in April 2010, and that he had more than $600 million of the inventory by August 2012 - when the next-highest amount of inventory was held by Morgan Keegan and Co., which had a share of about $200 million.

Front Section, Pages 1 on 03/11/2014

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