Informant says $6,700 in cash given to Shoffner campaign

Correction: On any given day, Arkansas has $3.5 billion to $4 billion in outstanding bonds. This article gave incorrect amounts.

In the criminal complaint filed Monday against state Treasurer Martha Shoffner, a confidential informant told federal investigators that one of two cash campaign contributions “he or she” made to Shoffner’s 2010 re-election campaign was $4,700 to be used to cover the cost of a campaign watch party.

“The cash was to cover all the expenses related to the watch party,” the federal affidavit stated, adding that the informant gave the money to another cooperating witness during the event.

A campaign watch party held Nov. 2, 2010, at the Wyndham Riverfront-Little Rock at 2 Riverfront Place in North Little Rock was listed among Shoffner’s campaign expenses in a report covering the period from Oct. 26, 2010, to Dec. 30, 2010. In a section that requires candidates to itemize expenditures of more than $100, the report said the campaign paid $4,077.98 for the event.

The informant also told investigators that he or she met with Shoffner on Jan. 17 at Shoffner’s request in her office. In that meeting, Shoffner told the informant that “you gave me no cash” and “you just sponsored a watch party.”

“It became clear to [the informant] that based on Shoffner’s comments, Shoffner kept the cash he/she provided to [the other witness] the night of the watch party event,” the affidavit stated.

Frank Fletcher, president of FF Hotels Inc. of Little Rock, which owns the Wyndham, said in an interview Monday that Shoffner paid for the event with a personal check for $4,077.98. The FBI subpoenaed the checkand other records associated with the event from the hotel in November, he said.

The informant also told investigators that he or she gave Shoffner a $2,000 “cash payment at a campaign event in Little Rock, Arkansas.”

That gift was within the legal limits of contributions but it violated state law because it was paid in cash. Any contributions exceeding $100 cannot be paid in cash, according to Arkansas Code Annotated 7-6-204.

The $4,700 contribution violated that statute and also exceeded the $2,000 contribution limit.

The Arkansas Ethics Commission is charged with investigating such violations. A finding that a candidate violated those laws can result in public letters of caution, warning or reprimand and a fine of between $50 and $2,000, said Graham Sloan, the commission’s director.

Given that Shoffner is charged with federal violations, Sloan said he wasn’t sure a commission investigation was the “best use of resources.”

This isn’t the first time questions about her 2010 campaign contributions and expenditures have been raised.

Shoffner easily won a second term against a Green Party candidate, Bobby Tullis of Mineral Springs. In that race, she raised almost $108,000 and spent less than $50,000.

The informant wasn’t named in the affidavit. The informant was described as a broker who, by the middle of 2011, “invested the largest portion of the state’s $1.5 billion bond portfolio and was allowed access to the information related to the entirety of the state’s bond portfolio, which had never been shared with a broker before.”

Federal authorities declined Monday to identify the informant, but said the informant’s identity would come out in court.

Last year, legislative auditors found that the state treasurer’s office purchased $1.69 billion in bonds from broker Steele Stephens from May 2008-May 2009 - when he worked at Apple Tree Investments - and from June 2009 to present, while he was working at St. Bernard Financial Services. The amount is almost double what the office has purchased from any other broker.

Shoffner told a legislative committee in December that she didn’t have any previous personal relationship with any of the brokers or develop any such relationship after taking office.

Shoffner has said previously that while Steele Stephens’ father, Steve Stephens, is a good friend, “there was no preferential treatment given because of that,” she said.

A Shoffner campaign finance report filed Oct. 15, 2009, listed a Steve Stephens of St. Bernard Financial Services among her contributors to that point. He gave $2,000, according to the report.

He was among several bankers or banking interests that gave $1,000 or more to Shoffner’s campaign, according to the same report.

The report listed at least two other $2,000 contributors: Delta Trust & Bank of Little Rock and Ross Whipple of Arkadelphia, identified as the chief executive officer of Summit Bank.

Shoffner also received five $2,000 contributions from a New York law firm in 2009 but returned the money after the Arkansas Democrat-Gazette raised questions about the legality of the contributions, which came in one $10,000 check.

Arkansas ethics rules are unclear whether multiple contributors who are not married and not sharing bank accounts are allowed to make their donations in a single check.

The law firm - Kaplan Fox & Kilsheimer LLP - has a securities monitoring contract with the Arkansas Teacher Retirement System. Shoffner is a member of the board of trustees for the system.

Front Section, Pages 5 on 05/21/2013

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