Attorney: Stipe likely to be indicted by grand jury

Muskogee, Oklahoma (AP) 10-07

Former state Sen. Gene Stipe will likely be indicted on September 28th by a federal grand jury investigating him, his attorney said.

Clark Brewster told the Tulsa World that he expected Stipe to be named in an indictment over an alleged kickback and involvement in a title insurance company.

“They have threatened on a number of occasions to cause an indictment and have attempted to get us to come to some kind of plea understanding with them, which has been rejected,” Brewster said.

The basis for Stipe’s indictment will focus on a check given to former state Rep. Mike Mass for $48,000 in October 2002 for a real estate deal with Stipe involving National Pet Products, Brewster said.

Prosecutors will allege it was a kickback, the attorney said. Brewster called it a documented loan.

Mass pleaded guilty in April to a mail-fraud scheme for his role in funneling $250,000 in state funds to the Rural Development Foundation, which provided funds to National Pet Products and Indian Nations Entertainment Corp.

The second issue involves Stipe’s ownership in abstract companies in the northern part of the state that sold title insurance.

Larry Witt, who ran the companies, is alleged to have been one of several “straw donors” in a campaign contributions scheme.

U.S. Attorney Sheldon Sperling said he could not comment on the grand jury proceedings.

As a convicted felon, Stipe is barred from being involved in the insurance industry.

“When it was suggested it could be an issue, his lawyers advised him to transfer his interest to a (family) trust, which he did,” Brewster told the newspaper. “It’s hard to fathom they’d charge him with that when he was under constant supervision with the department of probation.”

Insurance Commissioner Kim Holland issued an order revoking the license of Steven Phipps – Stipe’s former partner – to sell title insurance, stemming from Phipps’ federal conviction of conspiracy to commit mail fraud to deprive another of the intangible right of honest services.

Among those testifying in closed session before the grand jury September 27thwere State Auditor spokeswoman Terri Watkins and another auditor’s employee.

Watkins said she gave testimony to the grand jury about three trips State Auditor Jeff McMahan took with Phipps, who co-owned several abstract companies with Stipe. McMahan’s office regulates the abstract industry.

An independent receiver has been appointed to operate those businesses in a civil case Stipe filed against Phipps that accuses him of embezzlement.

Phipps and Stipe have been connected to an alleged scheme that investigators claim involved reimbursing so-called “straw donors” listed as contributors to the campaigns of McMahan, Gov. Brad Henry and U.S. Rep. Dan Boren, D-Okla.

The allegations led prosecutors to ask the court to revoke Stipe’s five-year probation sentence he is serving stemming from a 2003 conviction for violating federal campaign laws and perjury.

The revocation hearing is set for Oct. 15.

Information from: The Oklahoman,