McMahan resigns; impeachment off

By John Estus

Published: June 16, 2008

State Auditor and Inspector Jeff McMahan delivered his resignation letter to Gov. Brad Henry this morning.

McMahan's one-sentence letter said, "It is with sadness and regret that I resign my position as Oklahoma State Auditor and Inspector effective immediately."

Paul Sund, Henry's spokesman, said the governor will begin the process to appoint a new state auditor immediately, but there is no timetable for the appointment process.

Jurors convicted McMahan and his wife, Lori, of federal crimes Saturday.

“Gov. Henry believes it is critical to restore public trust in the auditor’s position, and he will move carefully and as expeditiously as possible to select an individual who will do just that,” Sund said in a statement.

Jurors found that the McMahans illegally accepted excessive campaign money, jewelry and trips from southeastern Oklahoma businessman Steve Phipps. In return, the state auditor, with his wife's help, provided favors for Phipps' abstract companies, the jury determined.

After 13 hours of deliberation over two days, jurors found the couple guilty on a conspiracy count and two counts of violating the Travel Act to promote bribery. The Travel Act counts involve trips the McMahans took at Phipps' expense in 2003 and 2004.

Jurors acquitted both on five mail fraud counts.

Prison sentences are likely. Federal sentencing guidelines treat public officials more harshly in corruption cases, which would portend a longer sentence for Jeff McMahan than his wife.

House Speaker Chris Benge said McMahan did the right thing by stepping down.

"I am pleased Mr. McMahan did the honorable thing for the people of Oklahoma and decided to step down today,” said Benge, R-Tulsa. “The House will now not have to have an expensive and redundant impeachment process that would have cost the taxpayers money."

Former state Insurance Commissioner Carroll Fisher was impeached in 2004 at a cost to taxpayers of nearly $200,000, said House communications director Jennifer Mock.

McMahan’s resignation letter was dated Saturday from his Tecumseh home.

The Democrat has not returned to the auditor’s office at the Capitol since his conviction, nor has he been in touch with his former staff, auditor’s spokeswoman Terri Watkins said.

Watkins said the staff is doing “just fine” and that “nothing’s changed” since January, when McMahan was indicted and handed his official duties over to deputy state auditor Michelle Day.

Watkins said she doesn’t know if McMahan will address his former staff to tell them goodbye.

State Republican Party Chairman Gary Jones, who lost to McMahan in statewide elections in 2002 and 2006, has been openly campaigning for the auditor job recently. Jones publicly questioned the financing of McMahan’s campaign during this past election cycle.

“I knew there were some things that had happened that had affected the outcome of the race,” Jones said this afternoon.

Jones said the jury’s verdict shows that McMahan stole the election. He said that puts Henry in a unique position “to fix a wrong” by appointing him as the next state auditor and inspector.

Jones had asked to speak with the governor about the possibility of replacing McMahan before the conviction and said Monday that he will renew his call to Henry to discuss the issue.

Sund didn’t rule out the possibility that Henry could appoint a Republican to the post.

“The bottom line is he’ll pick who is the best person for the job,” regardless of party, Sund said this morning.

However, the three statewide elected officials Henry has appointed in his time in office are all Democrats: Insurance Commissioner Kim Holland, State Treasurer Scott Meacham and Corporation Commissioner Jim Roth.

The indictment accused the McMahans of accepting more than $100,000 in illegal contributions from Phipps to Jeff McMahan's campaign and of later letting Phipps buy Lori McMahan expensive jewelry and letting him pay their way on two trips to New Orleans and one to Boston.

The state auditor regulated the abstract industry, including Phipps' lucrative companies, at the time of the alleged acts. Legislators created a separate agency for that purpose in 2007 as the investigation of Jeff McMahan intensified.

Four of the five mail fraud counts dealt with administrative complaints McMahan filed in 2005 concerning abstract companies that were owned by Phipps and former state Sen. Gene Stipe. Testimony indicated Phipps requested the complaints in hopes of forcing Stipe to settle his lawsuit against Phipps.

Contributing: Staff Writer Kristen M. Daum

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