Documents handed over in Shoffner case

Some ‘working papers’ still withheld

The Legislative Audit Division on Thursday handed over most of the documents sought by an attorney for the law firm representing former state Treasurer Martha Shoffner.

The attorney filed an Arkansas Freedom of Information lawsuit in Pulaski County Circuit Court last week, after the division declined to provide documents.

The division is still withholding certain documents, saying some of these “working papers” are exempt from disclosure.

During Thursday’s hearing on the lawsuit, CircuitJudge Mackie Pierce agreed to review the records to see whether some of them should be exempt from public disclosure.

Grant Ballard of the Banks Law Firm, which is representing Shoffner in federal court against charges of extortion and accepting a bribe as a state official, requested documents and working papers related to the audits of the treasurer’s office in 2011 and 2012 and recordings of certain Legislative Joint Auditing Committee meetings last year.

“We can give you some of the documents,” division attorney Frank Arey toldBallard shortly after the start of a hearing on Ballard’s lawsuit against the division. He said the division Thursday also gave Ballard records and transcripts of the Legislative Joint Auditing Committee’s hearings regarding the 2012 audit of Shoffner’s office.

Assistant Attorney General David Curran said the attorney general’s office learned Wednesday that the U.S. attorney’s office no longer objects to the release of these documents.

The Legislative Audit Division had been instructed by the federal government not to disclose these records after they were subpoenaed by the U.S. attorney’s office earlier this year, he said.

Curran said he intended to argue that the division initially declined to provide records requested by Ballard under the Freedom of Information Act because there was an ongoing law-enforcement investigation.

Pierce replied: “You would have lost that argument.”

Ballard used the court hearing to press for certain details about the Shoffner audit.

In response to Ballard’s questions, Legislative Auditor Roger Norman said the division was conducting a routine audit of Shoffner’s office last year that turned into an investigative audit,but he’s not aware that any lawmaker requested the special audit that focused on certain bond transactions in the office and the state Board of Finance.

Ballard asked Norman whether a division employee recommended a special audit of Shoffner’s office, but Pierce cut off that line of questioning, telling Ballard that “this is not a discovery process for you.”

Regarding the division’s working papers requested by Ballard, Tom Bullington, an audit manager for the Legislative Audit Division, testified that they include “audit programs” that instruct auditors how to conduct audits.

“We [auditors] are supposed to have some element of surprise, ” and public disclosure of these instructions could reduce that for state agencies, he said.

Bullington said the working papers requested by Ballard also include account numbers for bank statements of a few brokers who handled bond transactions for the state treasurer’s office. Disclosure of these account numbers would give the public the ability to withdraw money from theseaccounts, he said.

These working papers requested by Ballard also include a few statements regarding fraud, he said.

Arey said he has given Pierce two folders of working papers that Ballard requested.

Afterward, Chuck Banks of the Banks Law Firm said, “Obviously I think we got a substantial portion of what we wanted.

“We want to see the working papers if we can, and we think we are entitled,” he said. “We think that that helps to show us whether the process that was employed by the audit committee was proper.”

Starting in 2008, Shoffner’s office directed $1.98 billion in bond business to St. Bernard Financial Services based in Russellville.Shoffner resigned in May after her arrest on federal extortion charges.

A federal g rand jury handed up an indictment in June charging her with extortion and bribery, accusing her of accepting $36,000 in payments from an unnamed broker to whom her office steered the lion’s share of the state’s bond business.

Shoffner, a Newport Democrat, has pleaded innocent to six counts of extortion, one count of attempted extortion and seven counts of accepting a bribe as an agent of state government. Her trial is scheduled to start on March 3.

Northwest Arkansas, Pages 9 on 09/27/2013

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