Steve Phipps accuses others Jury deliberations on kickbacks resume Monday BY TONY THORNTON Published: October 26, 2008 ©Copyright 2008, The Oklahoman

MUSKOGEE — Corrupt businessman Steve Phipps, the linchpin of a three-year FBI investigation, told a federal grand jury he could implicate more than 30 people — including Democratic Senate leader Mike Morgan — in "criminal activities and/or political corruption,” a court document shows.

Steve Phipps. Photo provided
In addition to the people Phipps already has testified against at trial, the list also includes former state Agriculture Secretary Dennis Howard, former state Auditor and Inspector Clifton Scott, a southeast Oklahoma judge and the director of the state Water Resources Board.

Phipps’ willingness to talk and his ability, in many cases, to produce supporting documents explains why prosecutors offered him such an extraordinary deal: Although he admitted on the witness stand to committing 300-400 felonies, Phipps was charged with just one — conspiracy — and faces a term of no more than five years in prison.

Phipps testified at least three times to the grand jury and has met with FBI agents numerous times. He will be sentenced when his cooperation is finished.

His list became public during testimony last week at the federal trial of former state Rep. Randall Erwin.

Kickbacks alleged
Phipps testified that he paid kickbacks to Erwin, who steered $1.1 million in state taxpayer money to Phipps’ businesses. The jury began deliberating Erwin’s fate on Friday and will continue Monday.

The page shown to jurors didn’t say what information Phipps had or how he knew about "criminal activities and/or political corruption” by those on the list. Virtually all of the big names on his list are Democrats.

U.S. Attorney Sheldon Sperling declined comment about the document, as did Phipps’ attorney.

Those on the list whom Phipps previously implicated in open court include former state Auditor and Inspector Jeff McMahan and his wife, Lori; former state Reps. Mike Mass, Randall Erwin and Jerry Hefner; former state Sen. Gene Stipe; and Stipe’s younger brother Francis.

Mass and the McMahans await sentencing for their relationship with Phipps.

Francis Stipe died after pleading guilty in April to four felony counts. Gene Stipe’s trial on the same four counts is on hold pending a mental competency hearing. Hefner hasn’t been charged with any crimes.

How did list of potential targets become public information?
During cross-examination by Randall Erwin’s defense lawyer Tuesday, Steve Phipps was shown a written statement he provided to a federal grand jury on Feb. 16, 2007, the day after Phipps reached a plea agreement with prosecutors.

U.S. District Judge Ronald White allowed one page of the document to be displayed on a big screen for jurors as Phipps read from it. That page included names of 34 people about whom Phipps said he would provide information.

On Wednesday, the judge said he had erred in allowing the document to be entered into evidence. Phipps’ written statement no longer is an exhibit for Erwin’s trial record. However, the 34 names will become part of the trial transcript.

It’s unclear how much the grand jury has heard from Phipps about many of those people. Grand jury proceedings are secret.

Who is not on the list?
Absent from Steve Phipps’ list are some politicians who received illegal campaign contributions from him and former state Sen. Gene Stipe. Among them are Gov. Brad Henry and U.S. Rep. Dan Boren.

The reason: Phipps testified that some beneficiaries of his illegal contributions weren’t aware of the true source of the money. Henry and Boren have said they were unaware.

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