Posted 6/3/2013 12:00 am
Updated 9 months ago
Official corruption, especially the kind that includes blatant bribes, is generally associated with a desire for personal enrichment.
But in the case of Martha Shoffner — who resigned as state treasurer on May 21, the day after she was charged with extortion — the payoffs were small and, according to the FBI, driven primarily by her desire to maintain a residence near her job at the state Capitol while hanging onto her house back home in Newport.
Sources who spoke to Arkansas Business on condition of anonymity suggested that taking office in 2007 as treasurer, one of the lesser constitutional offices with an annual salary of $54,304.80, was not only the pinnacle of Shoffner’s political career but the best-paying job she’d ever had.
But it apparently wasn’t enough to maintain the 4,500-SF house she and her sister, Ida, had bought from the heirs of Dr. T.E. Williams for $90,000 in October 2001 and to also rent a place in Little Rock. Shoffner bought out her sister’s interest in the property for $45,000 in March 2004.
According to sources in the Treasurer’s Office, Shoffner was known to make envious comments about the fact that more than a dozen of her staffers and the bond dealers her office dealt with were being paid more than she was.
After the Arkansas Democrat-Gazette produced an extensive report on the proliferation of state-owned vehicles, Shoffner defended her tax-free use of a 2009 Chevrolet Tahoe, famously contrasting that single perk with the governor’s transportation by a “manservant” — actually a State Police security detail.
(Shoffner sang a different tune about political perks during her unsuccessful 1994 campaign for a seat in the Arkansas House of Representatives. “I will evaluate state spending and work to reduce or eliminate the benefits and fringe benefits of elected officials and other bureaucrats,” she said.)
The financial venting stopped after she moved into a rented condo in the Rainwater Flats project at 515 E. Capitol Ave. in downtown Little Rock during 2011. The 1,300-SF condo, valued at $219,000 in 2005, enjoyed gated security parking and other upscale amenities.
Prior to the condo move, Shoffner enjoyed a utilities-only arrangement at 1021 W. Second St. in downtown Little Rock, courtesy of an accommodating landlord, Texas lawyer Tim Herron, who also owned the Rainwater Flats condo.
But in between these two addresses, Shoffner was set homeless in Little Rock. Her staff even tried to help her find an affordable place for her to live.
For several months, Shoffner made do staying with friends, house-sitting in Little Rock and commuting from Newport until her 2011 move to the Rainwater Flats condo, which she paid about $800 a month to rent.
The upgrade in her job-related living arrangements dovetailed with semiannual cash payments of $6,000 cash from “Confidential Human Source 1,” according to the criminal complaint.
Shoffner’s May 18 arrest and subsequent criminal complaint forced her resignation three days later and exposed her financial relationship with Steve Stephens and his son, Steele, to deeper scrutiny.
Neither is named in the complaint, but details contained in the criminal case clearly point to the massive shift of bond business to St. Bernard Financial Services Inc. of Russellville, where the men worked.
That shift in business coincided with an escalation in financial gifts delivered to Shoffner as outlined in the criminal complaint.
The father-son team bought and sold nearly $1.7 billion in bonds for the Treasurer’s Office during a 45-month period. That July 1, 2008, to March 31, 2012, total was nearly twice that of any other firm doing business with Shoffner.
The timeline of the criminal complaint focuses on late 2009 to May 2013 when Steve and Steele Stephens worked at St. Bernard.
Signs point to Steele Stephens, 51, as “Confidential Human Source 1” in the criminal complaint against Shoffner, although some suggest it may be his father, Steve, 83, who traveled in similar circles with Shoffner, 68, over the years and, like her, grew up in Newport. Stephens first made his mark as a local media celebrity on KTHV-TV, hosting “Steve’s Show,” a dance show that predated “American Bandstand,” and as a weatherman.
Sources familiar with the father-son dealings with the Treasurer’s Office said the elder Stephens had much more personal contact with Shoffner than his son.
One Treasurer’s Office insider quoted Steele Stephens as saying: “Dad deals with Martha. I deal with Autumn” — a reference to Autumn Sanson, the treasurer’s chief investment officer.
According to one insider, Steve Stephens would visit with Shoffner about a bond deal in advance of his son contacting Sanson with the proposed trade. If Sanson questioned the deal, Shoffner would pooh-pooh her concerns and instruct her to do the deal.
Even when Sanson raised questions and advised against some of the trades, Shoffner would overrule her.
Between July 22, 2009, and Oct. 5, 2011, bond trades for the state treasurer through St. Bernard generated fees totaling more than $2.3 million thanks to Steve and Steele Stephens.
Before St. Bernard, the two worked at Little Rock’s Apple Tree Investments Inc. When they left Apple Tree in May 2009, their former employer, CEO Steve Kiefer, made a pitch to Autumn Sanson in an unsuccessful effort to retain the Treasurer’s Office as a client.
“I appreciate your quick response to my phone call and hope that we can do business in the future,” Kiefer wrote in an email dated May 7, 2009. “If not, I wish you and your family well in everything you do. You have been a straightforward, honest person when dealing with us, and I appreciate that. If Martha decides to continue our business relationship, you will deal directly with me from now on. I won’t allow anyone else to handle the account.”
(At the time, Kiefer was under investigation by the Arkansas Securities Department for fraudulent mutual fund sales practices, and in December 2009 he would agree to a $50,000 fine and a 14-day suspension of his broker’s license.)
The careers of Steve and Steele Stephens meandered separately through the investment community until spring 2002. Since then, the two have worked at the same firms.
Steve Stephens is no longer a bond broker as of April 20, according to security records. Steele Stephens resigned from St. Bernard on May 21, the same day Shoffner resigned from office. The Treasurer’s Office announced it would no longer do business with St. Bernard on May 22.
Shoffner’s resignation made a Little Rock home unnecessary. Her arrest, job loss and need to pay for a legal defense have made Shoffner’s Newport home an asset to liquidate.
Jackson County sources report that her 1.6-acre residential spread west of the Newport Country Club is being shopped around for a buyer.