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Federal Grand Jury Indicts Auditor

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State Auditor and Inspector Jeff McMahan indicted State Auditor and Inspector Jeff McMahan indicted

Oklahoma Auditor Jeff McMahan and his wife have been indicted by a federal grand jury for conspiracy, fraud and racketeering. News On 6 crime reporter Lori Fullbright reports McMahan is accused of accepting campaign donations over what is allowed by law and, once in office, he is accused of paying back big donors with special favors.

Both Governor Henry and Attorney General Drew Edmondson are encouraging Jeff McMahan to step down while all the allegations are sorted out, but he says he's not leaving office.

"Public offices must not be for sale," said U.S. Attorney Sheldon Sperling.

Sperling says it's always hard investigating elected leaders of the state, but when the truth comes out, it's very rewarding. The indictment says when Jeff McMahan ran for state auditor in 2002; he accepted donations from Steve Phipps of around $77,000, which is above the legal limit of $5,000.

"The alleged scheme involved fundraisers, production of campaign signs worth $16,500, advertisement song production, radio advertising, cash payments, requests for favorable treatment, fishing trips, trips to resorts, a trip to a national political convention and a trip to Texas," said U.S. Attorney Sheldon Sperling.

Some say, with all that money, it's no wonder McMahan got elected and once in office, it was time for payback. The indictment says when a lawmaker was going to pass a law that would hurt one of Phipps' businesses, McMahan got it stopped.

When a man wanted to start a business that would've competed with Phipps, it says McMahan didn't allow it.

When Phipps needed help in a lawsuit with his former business partner, Gene Stipe, it says McMahan filed an official action even after he was told not to by Attorney General Drew Edmondson.

The indictment also says McMahan's wife, Lori, was in it up to her eyeballs, accepting a $1,600 ring and $500 matching earrings from Phipps and handling cash and making deals.

"Over the course of 30 plus years of doing this work, my only comment is, idealism, where art thou?" asked Assistant U.S. Attorney Gay Guthrie.

The attorney for the McMahans says the investigation has been difficult and disappointing for them, that they made mistakes with whom they associated, but are innocent and have cooperated with federal investigators. The lawyer also says McMahan plans to keep working as Oklahoma Auditor.

The indictment isn't that much of a surprise since Steve Phipps recently cut a deal with the feds. He pleaded guilty to one count of mail fraud, in exchange for giving them information.

To read the indictment, click here.

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