Former state Treasurer Martha Shoffner appeared in federal court Friday to plead guilty to a federal extortion charge, but as a packed courtroom watched, she refused to admit that she had any criminal intent when she accepted $36,000 from a bond broker whose business with her office skyrocketed during the same period.
Shoffner’s refusal to admit to certain “elements” of the extortion charge forced the judge to reject the plea and led U.S. Attorney Chris Thyer to vow minutes later to carry through with his earlier plans to present her case to a federal grand jury, which meets next week.
But this time, Thyer said, he plans to seek an additional charge or two against the Newport Democrat - though he didn’t say what they would be.
Meanwhile, Shoffner’s attorney, Chuck Banks of Little Rock, told reporters he was surprised by Shoffner backing out of a negotiated plea agreement at the last minute but that he considers it “an opportunity” to take her case to trial.
Shoffner told reporters on the courthouse steps, “There were just some questions I didn’t want to answer, some questions I wasn’t comfortable with.”
She added, “I just want to tell the people of Arkansas I apologize.”
The questions asked in the courtroom by U.S. District Judge Leon Holmes were meant to prompt Shoffner into stating in her own words what she did that constituted a crime.It is standard procedure in a plea hearing, to ensure that the defendant understands exactly what he is pleading guilty to.
Assistant U.S. Attorney Jana Harris had just finished reading aloud the facts of the case that she said prosecutors planned to present at trial to prove that Shoffner committed extortion. They included that while the state of Arkansas had historically evenly divided the state’s bond business among about 10 brokers, one broker has admitted paying Shoffner $36,000 in six cash payments, beginning in the fall of 2009, in return for him receiving an increasing amount of bond business from the state.
Harris said the six payments, meant to cover Shoffner’s $1,000 monthly rent on a Little Rock apartment for six months at a time, were surreptitiously handed off to Shoffner in different places - two at the state Capitol, two at her Newport home and two at the apartment.
In the last transaction at Shoffner’s Newport home on May 18, the broker wore a hidden microphone while FBI agents listened outside. The broker, acting as a confidential informant, handed Shoffner a pie box containing an apple pie as well as $6,000 in $100 bills rolled up inside the box, agents said.
When agents executed a search warrant at the house a short time later, they found the cash in a cigarette case in Shoffner’s kitchen, and she handed over an additional $4,020 in cash that she told officers she still had remaining from an earlier payment, Harris said.
Shoffner was then held in the Pulaski County jail over the weekend on a criminal complaint stemming from the stakeout and conversations with the broker and other unnamed witnesses.
In court Friday afternoon, Shoffner agreed with Harris’ account, but when asked to describe what she did in her own words, she balked, at first telling the judge that it was “what she said,” referring to Harris.
“Were you taking money from this broker?” asked Holmes.
“Yes, but it was offered. I didn’t demand it,” Shoffner replied.
“Did you direct business to that broker?” Holmes asked.
“Not intentionally,” she replied.
When Holmes asked Shoffner if she expected a reward for directing business to the broker, she didn’t answer. Finally, Holmes asked if the money she received had anything to do with her position as state treasurer, to which she replied, “No.”
“To accept your plea, I have to find that you agree to all the elements of the charge,” Holmes said.
After Shoffner briefly huddled with Banks at a courtroom lectern, Banks told the judge that Shoffner had just “reaffirmed” to him what she told the court. “Her answers just now were truthful, and she wants to be indicted and stand trial,” Banks said.
At the beginning of the hearing, Shoffner waived her right to have her case reviewed by a federal grand jury, a group of 16 to 23 people selected randomly from the state’s Eastern District who will decide whether prosecutors have probable cause to indict someone. Shoffner, 68, said she was prepared to enter a negotiated guilty plea to a “criminal information,” a charging document that was to be filed in open court.
Thyer said later that the extortion charge in the criminal information was filed under a different section of law and varied slightly from the extortion charge leveled against Shoffner in a federal criminal complaint filed May 20, which placed her under the court’s authority pending the next regular meeting of the monthly grand jury.
Under federal statutes, extortion is punishable by up to 10 years in prison, to be followed by up to three years’ probation, and a fine of up to $250,000, as well as an order to make full restitution. Federal sentencing guidelines,which are advisory, generally suggest a lower range within the statutory framework, based on the specific circumstances surrounding the crime and the particular defendant’s background, in an effort to help judges mete out similar punishment for similar crimes across the country.
Federal defendants are credited at sentencing for waiving indictment and pleading guilty to a criminal information, thus saving the government the time and effort of taking the case before a grand jury. When prosecutors present a case to the grand jury, which meets in secret, at least 12 of the grand jurors must agree there is probable cause to charge someone with a crime in order to hand up an indictment.
Before the plea hearing went awry, Harris told the judge that Shoffner had agreed to surrender the $4,020 in cash that she turned over to agents at her house, admitting it was left over from an earlier payment from the broker.
Shoffner’s contention Friday that she didn’t intentionally steer business to a bond broker in return for cash payments from the broker is an echo of her testimony to a legislative committee in December.
In December, Shoffner told lawmakers that she didn’t “consciously show preference” to Russellville-based St. Bernard Financial Services. But Shoffner’s chief investment officer, Autumn Sanson, told lawmakers that Shoffner instructed her to do more business with the firm.
Legislative auditors said the treasurer’s office purchased $1.69 billion in bonds from broker Steele Stephens of Apple Tree investments from May 2008 through May 2009, and from St. Bernard Financial Services since June 2009, almost double the amount purchased from any other broker.
Stephens is not connected with the investment house Stephens Inc.
The auditors said they found that eight bond transactions involving St. Bernard Financial Services, in which the bonds were sold early, resulted in forgone earnings of $783,835 for the state.
In September, Sanson told lawmakers that she had advised Shoffner against selling bonds before their maturity, and Shoffner denied Sanson’s assertion.
Shoffner said she couldn’t recall why her office sold bonds from its investment portfolio before their maturity dates and purchased similar bonds from the same brokers.
At one point in the legislative hearing in September, Sanson asked lawmakers whether she would be protected under the state’s whistle-blower law because she feared for her job.
Shoffner’s testimony before a legislative committee in September came after she didn’t attend the committee’s previous meeting, leading the committee’s co-chairmen to authorize a subpoena to compel her to attend.
In September 2011, Shoffner said her then-chief deputy Karla Shepard of Benton had been relieved of her duties and planned to retire, saying she is taking the office “in a different direction.” But she declined to elaborate on what that meant.
In July 2010, Shoffner apologized to Gov. Mike Beebe and state police Col. Winford Phillips for saying the governor is driven by a “manservant” state trooper. She said her comments were “made with intent to lighten up a very frustrating situation” about the personal use of state vehicles. She insisted at that time that she was entitled to tax-free use of her state vehicle.
Information for this article was contributed by Michael Wickline of the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 06/01/2013