The criminal complaint against Shoffner

The following is a summary of the criminal complaint filed Monday against Arkansas State Treasurer Martha Shoffner.

Shoffner, 68, is accused of accepting cash payments from a bond broker in exchange for transferring a large portion of the State’s investment activity to the broker.

Background of investigation◊In January 2012, an employee with the Arkansas Treasurer’s Offi ce told the FBI that Shoffner was using one broker over others. The employee stated that the State of Arkansas holds about $1.5 billion in bonds of which the broker invested the largest portion. The broker, who later became an FBI source, was also allowed access to details about the entirety of the state’s bond portfolio, which had never been shared with a broker before.

◊In mid-2011, the employee confronted Shoffner about the apparent favoring of one broker.

Shoffner responded, “They’ve [the other brokers] done nothing for me” and I just “trust” the broker. The employee also confronted the broker about the apparent favoritism and the broker responded, “I have been very good to Martha.”

The broker interview◊On Jan. 18, 2013, the broker told federal agents that he/she had given two cash campaign contributions to Shoffner - $2,000 at a campaign event in Little Rock and $4,700 to cover all the expenses related to a campaign watch party. The broker gave the cash to the former Treasurer's Offi ce employee who cooperated with the FBI.

◊The broker said that in the fall of 2009, around the time of the campaign event, Shoffner began to ask the broker for larger gifts.

The broker believed Shoffner was comfortable asking the broker for larger gifts because he/she had been giving Shoffner smaller gifts prior to that time.

◊In 2009, Shoffner asked the broker to purchase property for her in Little Rock. The broker declined because Shoffner wouldbe living on the property and the broker would have his name on the paperwork.

◊After that, Shoffner wanted $1,000 per month to pay her rent in Little Rock. The broker recommended they meet every six months to avoid suspicion. He/ she recalled making approximately six cash payments that started in either late 2009 or mid 2010.

◊Two payments were made to Shoffner at the State Capitol; two payments were made to Shoffner at her residence in Newport and two payments were made at Shoffner’s apartment in Little Rock. The most recent payment was made in December 2012.

The payments were $6,000 each.

Four payments were in $100 bills and two payments contained both $100 bills and $50 bills.

◊In 2012, the broker began placing the payment, which had been rolled up, with a pie inside of a pie box to conceal the payment being delivered to Shoffner. This method of concealing the payment was done the last two times Shoffner was paid. Both of those payments were at Shoffner’s Newport residence.

◊The broker began receiving more of the State’s bond business after he began paying Shoffner.

◊On Jan. 17, 2013, a Treasurer’s Offi ce employee contacted the broker and told him/her to go to the offi ce's back door at 11 a.m.

The employee and Shoffner metthe broker as requested. After the employee left, Shoffner told the broker “you gave me no cash” and “you just sponsored a watch party”. It became clear to the broker that Shoffner kept the cash he/she turned over the night of the watch party event.

Recorded conversation◊On Jan. 19, 2013, the broker met with Shoffner at her residence in Newport. The meeting was consensually recorded.

◊The broker and Shoffner discussed the $6,000 payments.

Shoffner said that she had not told anyone about the payments.

The FBI believes this part of the conversation shows Shoffner’s plan to deny ever having received cash payments from the broker in exchange for bond business and that she lied under oath during a 2012 Legislative Joint Auditing Committee hearing about ever receiving any benefi t from the broker. The conversation implies Shoffner kept no record of any cash received from her campaign events, or from the broker’s cash payments. It also implies she has paid no taxes on the cash payments.

◊The broker questioned whether there was any other broker doing what he did, and Shoffner stated that there was not. The broker questioned how Shoffner was taking care of her cash. Shoffner said that each time it was gonein six months or so. No one ever questioned the $100 bills.

◊The broker told Shoffner that he/she hopes it can get back to normal after the “smoke” settles.

The broker told Shoffner that he is thankful for what he has, and Shoffner responded that we have two more years, and we’ll just see what it brings. The broker asked Shoffner to try to do anything she can to help if it gets to the point where Shoffner feels like she has more leeway, and Shoffner responded that she will.

◊On May 9, 2013, Shoffner called the broker. Shoffner asked the broker to assist her in obtaining a loan to buy property next to her house in Newport. She asked the broker if someone else could bid on the property on her behalf so Shoffner could keep her name secret in the purchase. The broker suggested meeting with Shoffneron May 18, 2013, at 11:00 a.m.

at Shoffner’s house. Shoffner agreed to the meeting.

◊As this was approximately six months from the date of the last $6,000 cash payment, the broker took $6,000 in FBI funds for purposes of making the regular payment.

May 18◊On Saturday, the broker met Shoffner at her house in Newport. Prior to the meeting, the broker was provided equipment to record the meeting. The broker was also provided with $6,000 cash in FBI funds. The cash was rolled up and placed in a pie box.

During the meeting, the broker gave the pie box containing the $6,000 cash to Shoffner. After the broker left Shoffner’s house, FBI agents executed a search warrant there. Shoffner told the agents where she placed the $6,000 in a cigarette pack in the kitchen.

◊Shoffner told agents she received multiple $6,000 cash payments from the broker. Shoffner still had some of the cash from the last payment, and she gave the money to the agents. Shoffner admitted she knew it was wrong to accept the payments.