Gene Stipe Due In Court Tuesday

Monday, August 27th 2007, 12:35 pm

By: News On 6

OKLAHOMA CITY (AP) _ Former state Sen. Gene Stipe of McAlester has escaped prison in battles with federal prosecutors for decades, but he may face his toughest legal test this week at a probation revocation hearing in Muskogee.

The 80-year-old Stipe, who is in failing health, resigned from the Legislature in 2003 after more than a half-century of service. His resignation came after he was implicated in an illegal campaign fundraising scheme for congressional candidate Walt Roberts.

Stipe, a political icon in southeastern Oklahoma, escaped going to prison in that case but was slapped with a five-year probation and a $735,000 fine by a federal judge in Washington, D.C.

Stipe pleaded guilty in 2004 to two conspiracy counts and a perjury count after admitting to illegally funneling $245,000 into Roberts' unsuccessful drive for Congress.

With two years left on his probation, Stipe is accused by federal prosecutors of doing the same thing again _ using the names of fake donors to exceed campaign funding limits for winning Democratic candidates for Congress, governor and auditor and inspector.

He could face up to 10 months in prison if his probation is revoked.

Three years ago, the government nailed the ex-senator after Roberts, Stipe's political protege, agreed to cooperate with the prosecution. So did Stipe's longtime secretary.

This time, Steve Phipps, longtime former business partner of Stipe, is testifying for the government. Phipps, during a civil lawsuit Stipe has filed against him, said earlier this month he has been granted immunity for his testimony in the latest campaign donor case.

U.S. Attorney Sheldon Sperling has said the plea agreement is subject to Phipps' full cooperation at Stipe's revocation hearing.

Prosecutors contend Stipe and Phipps took part in a scheme that involved reimbursing so-called ``straw donors'' listed falsely as having given to the campaigns of U.S. Rep. Dan Boren, Gov. Brad Henry and Auditor and Inspector Jeff McMahan.

Boren, Henry and McMahan said they did not know about the illegal contributions. Henry and Boren have donated those funds to charity. McMahan said he could not do that because his campaign is broke.

Stipe also is accused of breaking the terms of his probation by associating with longtime friend Steve Covington, a convicted felon.

Clark Brewster, Stipe's lawyer, said Covington has been a personal caregiver for Stipe and federal probation officers had no problem with that until October 2005.

Brewster said Stipe's medical condition is ``very precarious'' after brain surgeries. ``He literally has to have 24-hour assistance. This is not in any way feigned.''

He said he will file motions to dismiss the charges and if they are denied, the hearing could last most of the week because of evidence he will present.

``There is no merit to the proposition that Sen. Stipe was involved in any kind of ghost or straw donor campaign in 2004, merely days after being sentenced in Washington,'' he said.

``There's no evidence to support that, outside the statements of Steve Phipps and one other person,'' Brewster said.

In court documents, Assistant U.S. Attorney Gay Guthrie said Stipe showed ``blatant disregard'' for reasonable terms of his probation and deserved punishment ``for its deterrent effect, if for no other reason.''

Stipe, a Democrat, is one of Oklahoma's most famous political figures. He was known as a gifted orator and crack criminal defense attorney when he was in his prime.

During his lengthy Senate career, he never became the No. 1 Senate leader, but was perceived as wielding considerable power through associations he had cultivated over the years. He made millions of dollars through extensive business dealings.

He was indicted three times with various federal offenses before the 2003 campaign case.

He was acquitted in 1968 in a case involving a project to pipe water from southeastern Oklahoma to Oklahoma City. He went to trial on other federal charges in the 1970s and 1980s, but the cases were dismissed by federal judges for lack of evidence and never went to a jury.

In 1978, he ran unsuccessfully for the Democratic nomination for the U.S. Senate. During the campaign, an FBI official in Oklahoma City disclosed during a news conference that the FBI was investigating the state senator.

Stipe has been implicated in an ongoing public corruption probe that centers around his dealings with Phipps, former state Rep. Mike Mass and others.

Phipps has pleaded guilty to mail fraud and acknowledged paying kickbacks to Mass and two other legislators who have not been charged.

Prosecutors allege that Mass and others secured state appropriations for economic development projects that benefited Phipps' private businesses, a pet food company and a gaming company.

Mass also has pleaded guilty to a felony charge and is cooperating with prosecutors in that case.

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3/7/2007 FBI Searches Offices Of Gene Stipe

3/9/2007 Stipe Investigated In Alleged 'Straw Donor' Scheme

3/14/2007 Grand Jury Looking Into Gene Stipe's Finances

3/21/2007 Stipe Business Will Be Run By A Neutral Party

4/1/2003 Former State Senator Gene Stipe Pleads 'Guilty' In Federal Court

4/8/2007 State Charges Possible In Alleged Campaign Scheme

4/18/2007 Jurisdiction Of Stipe Case Transferred To Muskogee

4/23/2007 Newspaper Says Gene Stipe Benefits From Train Sale To State

6/7/2007 Government Seeks Probation Revocation For Stipe

6/13/2007 Former City Manager Expected Before Stipe Grand Jury

6/23/2007 Attorney: Stipe's Business Partner To Plead Guilty To Conspiracy

6/27/2007 Ex-Stipe Business Partner Pleads Guilty

6/28/2007 - Gene Stipe Stays Out Of Prison For Now