Posted 5/18/2013 07:34 pm
Updated 7 months ago
Arkansas Treasurer Martha Shoffner has been arrested for extortion by the Federal Bureau of Investigation and is being held in Pulaski County Jail, the Associated Press reported Saturday.
FBI spokeswoman Kimberly Brunell told the AP that Shoffner was arrested Saturday at her home in Newport and is scheduled for a federal court hearing Monday. Brunell said Shoffner was arrested on charges of "extortion under color of official right."
Brunell said she would have more details Monday.
The arrest comes four months after Arkansas Business reported that the Democratic state treasurer had been under criminal investigation for more than a year when, on Dec. 14, the Republican-led Legislative Joint Auditing Committee voted to refer an audit of her office to state and federal authorities.
Sources interviewed by the FBI told Arkansas Business in January that investigators had been examining more than Shoffner’s financial dealings with bond brokers doing business with the State Treasurer’s Office. They were also delving into allegations she converted political campaign funds to personal income.
"She has a history of not handling her campaign money right," a veteran bond dealer said in January of Shoffner’s multi-amended campaign reports. "She’s put herself in a position to have her motives questioned."
Shoffner, serving her second term in office, has faced questions over the past year about the way her office has handled state investments. Legislative auditors last year questioned Shoffner's selling of bonds before they matured, a practice that they said cost the state more than $434,000 worth of earnings.
The sale of the bonds early resulted in a net economic loss, with Arkansas losing earnings it would have made had Shoffner's office held on to the bonds, auditors said. The largest net loss, more than $783,000, came from eight transactions with St. Bernard Financial Services, Inc., a Russellville-based company where Shoffner's office has purchased the bulk of its bonds.
The Legislative Joint Auditing Committee in December voted to refer its review of 30 bond transactions by Shoffner's office to state and federal law enforcement. It was unclear Saturday whether Shoffner's arrest was related to that audit.
The findings were the result of an expanded review of Shoffner's investments after auditors in September said that her practice of selling bonds before they matured resulted in a net loss of $58,000 to the state. Lawmakers issued a subpoena for Shoffner to answer questions about the investments after she initially didn't appear before the audit panel.
Shoffner has said she didn't believe investigators would find anything improper with her office, but vowed to make changes to address the problems cited by auditors.
"I know the buck stops with me and I'm going to have to take responsibility and I want to take responsibility," Shoffner told the AP in an interview in September. "I just don't want this to happen again in the future."
(The Associated Press contributed to this story.)