Shoffner guilty on all 14 counts

A federal jury convicted former state Treasurer Martha Shoffner on 14 extortion and bribery charges Tuesday after deliberating a little more than three hours.

Shoffner, 69, declined to comment to reporters as she left the courthouse about 6 p.m. with her sister, friends and defense attorney Charles “Chuck” Banks in tow after five days of trial. She faces up to 20 years in prison when sentenced at a later date, after a pre-sentence investigation is completed.

Minutes after the verdict, First Assistant U.S. Attorney Pat Harris told reporters outside the federal courts building in downtown Little Rock, “You know, as I come here and talk to you, I think about the sadness of the state treasurer being prosecuted and being convicted.”

“Justice was done,” Harris said. “This is just a sad day when you prosecute politicians for being greedy and taking money when they shouldn’t do it.”

In response to a reporter’s question, Harris said, “I know that Chuck Banks said that she didn’t commit a crime and it might be an ethics problem. Actually, it’s an ethics problem and a criminal problem.”

Harris said Shoffner’s guilt was “pretty clear,” especially when FBI agents searched her Newport home May 18, just after a secretly recorded visit from state bond broker Steele Stephens, a reluctant informant, and found $6,000 in FBI-marked cash in a kitchen drawer.

Stephens had left the $100 bills rolled up in a pie box, alongside an apple pie that he delivered to her. A video he recorded showed Shoffner’s fingers reaching into the box, which sat on her kitchen counter, and removing the money, which the agents found a short time later inside a Marlboro cigarette box in the nearby drawer.

FBI Agent Carrie Land testified Monday that when agents showed up with a search warrant for the cash, Shoffner was cooperative and readily told her where it was. She said Shoffner also directed her where to find the rest of another wad of cash that Stephens had given her months earlier, and Land then found another $4,020, mostly in $100 bills, in a drawer in a dining room table.

“She took it because she was treasurer and she gave Steele Stephens more business and because he paid her. That’s what the jury found,” Harris said as he stood in front of the U.S. attorneys who prosecuted the case in the courtroom - his wife, Jana Harris, along with Stephanie Mazzanti and John Ray White, chief of the office’s criminal division.

Shoffner nearly avoided a trial, when on May 31, she appeared before U.S. District Judge Leon Holmes to plead guilty to a single federal extortion charge. He refused to accept the plea because she wouldn’t admit that she had the intent to commit a crime. A federal grand jury later indicted her on 14 charges.

She still faces mail-fraud charges accusing her of using campaign funds to pay off a personal credit card. Those charges will be tried separately at a later date.

CHARGES CHALLENGED

On Monday, Holmes said he would reserve judgment until after a verdict was rendered on whether to grant a defense motion, made just after the government rested its case, that challenged whether the charges were properly brought under federal law.

Although Holmes had denied a similar motion before the trial, saying the charges were properly brought in federal court, defense attorney Grant Ballard raised the issue again after the government rested, pointing specifically to testimony from Richard Weiss, director of the state Department of Finance and Administration, that the federal funds received by the state didn’t flow directly from the federal government into the treasurer’s office but went through state agencies first.

Holmes told attorneys he wanted them to file written briefs before he decides the “significant issue” of jurisdiction. Harris explained that the judge wants to ensure that “some interstate nexus” exists to support bringing the charges under federal law.

Earlier in the day, while jurors deliberated, Pulaski County Prosecuting Attorney Larry Jegley said he “wouldn’t be comfortable in talking about” the possibility of Shoffner being prosecuted in state court if the federal charges didn’t hold up. He said it was too “speculative.”

Last year, the director of the state Ethics Commission told a reporter that it didn’t make sense for the commission to investigate Shoffner on allegations that she failed to report thousands of dollars she received in cash campaign donations at the same time that a federal investigation was underway.

In her closing argument on Tuesday, Mazzanti told jurors that all they had to do was look at Shoffner’s behavior during an investigation by state auditors and federal agents to determine her intent when she took at least $36,000 in cash from Stephens between mid-2010 and last May.

She said Shoffner’s behavior indicated that she thought her actions were more than a campaign violation for which she could be fined or even removed from office.

Otherwise, Mazzanti asked jurors, why would Shoffner have been captured on audio and videotape worrying that her house and phones were bugged, and going out of her way to admonish Stephens not to discuss the cash?

Mazzanti reminded jurors of Stephens’ words on one of the recordings reassuring Shoffner that “the only people who know about any money changing hands between us is you and me,” and Shoffner replying that she was careful not to list the cash on her tax returns nor anywhere else where it could be traced.

Mazzanti also reminded jurors of the cloak-and-dagger manner in which Stephens testified that Shoffner gave him her office’s private bond portfolio, which gave him an advantage over other brokers, on at least four occasions.

Stephens testified that he would visit Shoffner at her Little Rock apartment, called the Rainwater Flats, at night, and they would sit outside and smoke cigarettes and talk. Then when he was leaving, he said, they would stand up and she would give him a hug while slipping him a copy of the portfolio.

Mazzanti told jurors, “It’s not a coincidence: Every time he gave her money, his business goes up.” FOR THE DEFENSE

Banks blamed career employees in the treasurer’s office who disliked Shoffner for alerting state auditors to the portfolios, which showed Stephens receiving an ever-increasing amount of the state’sbond business between 2010 and late 2012 - the same period of time that he gave Shoffner $6,000 cash payments every six months.

While the other 10 to 15 brokers who had a share of the state’s bond business were limited to $100 million to $200 million of the inventory, Stephens’ inventory soared to more than $600 million in 2012.

Shoffner denied, during legislative audit hearings in September 2012 and again in December 2012, that she had ever accepted any items of value from Stephens, who made a $110,000 commission off a single $100 million trade that was unheard of in the treasurer’s office but was specifically authorized by Shoffner, over the objections of the office’s chief financial officer.

Stephens, 52, who has been suspended from the bond business by a state board, has not been asked to repay the money, which was earned during legitimate bond trades. He was given immunity from federal prosecution in exchange for his testimony. He isn’t affiliated with the well-known investment firm Stephens Inc.

Mazzanti noted the irony in the fact that during her testimony before the Legislative Audit Committee, Shoffner was photographed wearing some expensive reading glasses that Stephens gave her after she admired them one day while he was wearing them.

Stephens testified at Shoffner’s trial that although he hoped the cash he gave Shoffner would help him continue to receive a large share of the state’s bond business, he gave her the money primarily because he “felt sorry for her” after she went through a rough patch financially.

Shoffner was paid $52,000 annually as state treasurer. She regularly commuted from Newport to Little Rock, but after a series of articles in the Arkansas Democrat-Gazette about the use of state cars by state officials, she was forced to give up her state-owned car and buy one herself. She also lost her apartment, in which she had been living rent free through an agreement with an out-of-state law firm that owned the building, when the building went into foreclosure. At that time, Shoffner told Stephens that she couldn’t afford an apartment, which she said would cost about $1,000 a month.

Stephens said Shoffner first suggested that he buy the building and allow her to keep living there rent-free, but he didn’t like the building, and instead suggested giving her the money to rent an apartment. He said they met for him to give her the cash every six months, rather than monthly, to avoid arousing suspicion.

Stephens testified that when he gave Shoffner the first wad of cash in an office at the state Capitol, she looked up at the ceiling and said, “I hope there’s no camera in here.”