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Steele Stephens: Gave Payments, Received $2.5M in State Commissions

4 min read

LITTLE ROCK — A federal judge on Monday withheld ruling on a motion by defense lawyers to throw out a corruption case against former Arkansas treasurer Martha Shoffner, who is accused of accepting $36,000 in exchange for steering state business to a bond dealer.

After the prosecution rested, defense attorney Grant Ballard asked U.S. District Judge J. Leon Holmes to acquit Shoffner on grounds the government hadn’t proven its case. That’s a standard motion in criminal trials, though cases usually go to the jury without the request being granted.

Holmes cited a federal statute that allows him to wait to rule, which he said he’d do only if the jury votes to convict Shoffner, who is on trial facing 14 extortion and bribery counts.

Related: State Securities Department Goes After Firm That Did Business With Shoffner’s Office

Ballard argued that prosecutors used an interpretation of the extortion and bribery statutes that’s so broad that there isn’t case law to support their claims.

“They’re putting you out on a limb as far as you can go,” Ballard told the judge.

On the seven extortion counts, Ballard argued the government didn’t prove that the alleged payment had affected interstate commerce. On the seven bribery counts, Ballard argued the government had not shown that federal funds were involved.

Prosecutors argued that their case met the tests, in that bonds traded across state lines and the state invested at least some federal grant money in the bonds.

Holmes said the issues were too complicated to argue orally and said he’d want the sides to submit written briefs if the jury finds Shoffner guilty.

Lead defense attorney Chuck Banks said he planned to call three witnesses Tuesday. The jury could get the case in the afternoon.

During testimony Monday, FBI forensic accountant Katherine Black testified about various elements of the case, including how bond trader Steele Stephens had more than twice as much business as any other bond trader approved to do business with the treasurer’s office.

FBI Special Agent Carrie Land described finding more than $10,000 in cash hidden in Shoffner’s home when she and Black searched the Newport property in May. Earlier in the day, Stephens dropped off $6,000 in FBI money for Shoffner while wearing a concealed video camera that recorded an hourlong conversation.

Stephens brought the money in a box with an apple pie, though Land said Shoffner had moved the cash to a cigarette box that was in a kitchen drawer. Another $4,000 was found in another cigarette box, and Land said Shoffner told her where to find it after being asked if any money remained from previous payments by Stephens, who testified under immunity.

When Banks cross-examined Land, he focused on how the then- 68-year-old Shoffner was treated. The raid involved 11 agents and was on a Saturday, meaning Shoffner spent two nights in jail before making a court appearance and winning release pending trial. Banks said Shoffner was disrobed, sprayed for lice, given one blanket and no underwear.

The day began with Stephens still on the witness stand. After the video recording played, Assistant U.S. Attorney Charles Ray White asked Stephens about specific instances from that conversation and a two-hour talk he’d recorded with Shoffner (with FBI help) in January 2013.

Under cross-examination, Banks asked Stephens whether he was forced to give up any commissions and whether the state lost money on his trades.

“It was good work, wasn’t it?” Banks asked.

“Yes,” Stephens agreed.

But Stephens also said that his immunity deal prevented him from having to return his commissions because they were “ill-gotten gains.” Stephens testified he picked up about $2.5 million in commissions from state business with the treasurer’s office over four years.

In a pretrial ruling, Holmes turned away a motion to dismiss filed by Banks on grounds that Shoffner’s actions didn’t affect interstate commerce. During opening statements, Banks told jurors that the federal prosecution was an overreach and that Shoffner shouldn’t have faced anything more serious than a state Ethics Commission investigation for not reporting the $36,000.

Prosecutors asked the judge to block Banks from furthering that argument, saying it was improper to tell jurors the law wasn’t being properly applied. Holmes ruled that Banks could continue to mention the ethics issue since because it relates to the government’s case.

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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