Attorney: Stipe's Business Partner To Plead Guilty To Conspiracy

Saturday, June 23rd 2007, 2:05 pm

By: News On 6

MUSKOGEE, Okla. (AP) _ The estranged business partner of former state Sen. Gene Stipe will enter a guilty plea next week to a federal conspiracy charge alleging he paid kickbacks to legislators for their help in getting taxpayer money for two private ventures.

Steven Phipps, 52, is expected to plead guilty Wednesday, the day before Stipe is to appear at a probation revocation hearing. Phipps could face up to five years in prison.

Phipps ``has acknowledged his wrongdoing'' and has entered into a plea agreement with prosecutors, said his attorney, Dan Webber.

``He has been cooperating with the government's investigation for some time. His cooperation began prior to the guilty plea entered by former Representative Mike Mass and will continue,'' Webber said in a statement.

FBI court documents allege Phipps and Stipe used state money for business ventures and to reimburse ``straw donors'' on political campaigns.

Stipe, 80, is on probation for orchestrating a straw donor scheme involving the 1998 congressional campaign of Walt Roberts. The FBI alleges Stipe continued that practice after pleading guilty in Roberts' case and officials now want him sent to prison.

An affidavit used to obtain a search warrant for Stipe's office alleges he and Phipps contributed $34,600 to Dan Boren's 2004 congressional campaign through straw donors. The legal limit is $5,000.

The money was allegedly funneled through Phipps Enterprises, owned equally by Phipps and Stipe. Phipps was to be repaid through ``consulting fees'' for money he provided to straw donors, the affidavit alleges.

The conspiracy charge against Phipps is similar to one filed against former state Rep. Mike Mass, 55, who pleaded guilty April 13 to directing a $250,000 state payment to the Rural Development Foundation. Investigators allege Phipps controls that foundation.

The was part of $971,667 in ``special project'' funds that Mass allocated to the foundation between 2002 and 2004, records show.

Mass directed $419,000 through the state Commerce Department to a quasi-private entity called the McAlester Foundation, which then gave the money to Phipps to build National Pet Products, a McAlester dog food plant, prosecutors said.

In return, Mass received about $250,000 in kickbacks, U.S. Attorney Sheldon Sperling said in April.

Mass was chairman of the House budget and appropriations committee when much of his share went to Rural Development Foundation.

The charge against Phipps doesn't name any of the former legislators, but two FBI affidavits identify the other two as Randall Erwin and Jerry Hefner.

Hefner, now a Wagoner County commissioner, hasn't returned repeated telephone messages for comment. It's alleged in court documents that he directed $330,000 to the Rural Development Foundation.

Erwin, executive director of Little Dixie Community Action Agency in Hugo, has acknowledged getting about $7,800 in consulting fees from Phipps' gambling machine company, Indian Nation Entertainment, but he said the money was for legitimate work.

Webber said although the state money was obtained improperly, Indian Nation Entertainment created several jobs. Phipps invested much of his own money into the company, Webber said.

``Mr. Phipps owns or manages several companies that employ many people and his goal is to help those businesses continue to operate and contribute to the economy of that area,'' he said.