Shoffner’s attorney: Toss case

Charges missed mark, filing says

Former state Treasurer Martha Shoffner asked a federal judge to allow her to retain one of her attorneys at the government’s expense. She is shown in this file photo with attorney Chuck Banks.

Former state Treasurer Martha Shoffner asked a federal judge to allow her to retain one of her attorneys at the government’s expense. She is shown in this file photo with attorney Chuck Banks.

Saturday, March 22, 2014

As expected, an attorney for former state Treasurer Martha Shoffner filed a motion Friday expanding his arguments that her March 11 extortion and bribery convictions should be tossed because the charges weren’t properly filed in federal court.

U.S. District Judge Leon Holmes, who presided over Shoffner’s week-long jury trial, had said after prosecutors finished presenting their evidence that he would reserve judgment on defense attorney Grant Ballard’s jurisdictional challenges until after a verdict was rendered. After the verdict, he asked attorneys to file written briefs on the jurisdictional issues, calling them “significant.”

Holmes had denied a similar motion from Ballard before the trial, saying prosecutors had properly alleged that Shoffner’s actions affected interstate commerce. But during the trial, a state official testified that federal funds received by the state didn’t flow directly from the federal government into the treasurer’s office but were filtered through state agencies first. That created ammunition for Ballard to raise the issue again.

Shoffner, 69, of Newport was convicted of 14 charges altogether - six counts of extortion, one count of attempted extortion and seven counts of bribery. All the charges were related to her acceptance on seven occasions between mid-2010 and May 18 of $6,000 in cash from bond broker Steele Stephens, who during that same period saw his bond business with the state increase exponentially over that of other brokers doing business with the state. One charge was considered an attempt because it involved the use of FBI money rather than Stephens’ own money and the FBI promptly recouped the cash.

Stephens, 52, who has been suspended from the bond business as a result of the payments he made to Shoffner, testified in exchange for federal immunity that he made $2.5 million in commissions during a four-year period ending in 2012, as a result of the business he obtained from the treasurer’s office, over the objections of career employees in the office. He made the transactions on behalf of St. Bernard’s Financial Services of Russellville.

In his latest motion and supporting 20-page brief, Ballard, who represented Shoffner with law partner Charles “Chuck” Banks, argued that “the evidence presented at trial did not satisfy the elements and basic legal requirements for a conviction … under either the Hobbs Act … or the Federal Programs Bribery Statute.”

The Hobbs Act is a federal statute enacted in 1946 and named after its sponsor, U.S. Rep. Sam Hobbs, D-Ala., to pursue racketeering charges in disputes between labor and management. It is frequently used in public-corruption cases. It can be found in Chapter 18, Section 1951, of the U.S. Code, while the bribery statute can be found in Chapter 18, Section 666 of the code.

Ballard wrote, “No government witness established that interstate commerce was affected ‘by robbery or extortion,’ as is required by the plain language of the Hobbs Act, and not a single witness testified that there was an agreement that money was exchanged for official acts … as is also required for a conviction of Hobbs Act extortion.”

He said the bribery charges similarly should be thrown out because, “No government witness provided sufficient evidence to establish that the Arkansas State Treasury received ‘benefits,’ as identified under the relevant Federal Programs Bribery statute … leaving this court with insufficient evidence to sustain” those charges.

There was no evidence presented to suggest the federal government “has any federal interest in the alleged criminal conduct of [Shoffner] or the activities of the Arkansas State Treasury,” Ballard argued.

During the trial, federal prosecutors called Richard Weiss, director of the state Department of Finance and Administration, as a witness for the primary purpose of establishing a federal connection to the case. Weiss acknowledged that the state received far more than $10,000 a year in federal funds. But on cross-examination by Ballard, Weiss provided more details,which Ballard said “revealed no clear distribution of federal program funds to the Arkansas State Treasury” to support the bribery charges. He noted that the charges require that “federal program funds” were used.

“Mr. Weiss indicated on cross-examination that the Defendant [Shoffner] did not administer any federal funds, the State Treasury did not have to comply with any specific federal program restriction as to the handling of federal funds, the state treasury does not undergo federal audits, and that he had no knowledge that the Arkansas State Treasury had ever invested any federal money,” Ballard argued in his motion.

He continued: “Put simply, the evidence offered by the government only serves to suggest that some federal funds may make their way to the Arkansas State treasury. The government failed to present evidence that the conduct for which [Shoffner] was indicted posed any threat to the integrity and proper operation of a federal program.”

He said the application of the federal program bribery statute to Shoffner is unconstitutional because the U.S. Supreme Court has indicated that for the statute to be legally applied, “there must be a threat to a federal program’s integrity and proper operation.” He cited a 1997 case, Salinas v. U.S., as well as three later cases related to federal interest.

He noted, “This court is now faced with a set of facts which truly test the limits and outer-boundary of the application of the Federal Program Bribery statute and prosecutions thereunder.”

Federal prosecutors are expected to file a response to Ballard’s motion for acquittal before Holmes decides the issue.

Meanwhile, Shoffner still faces a separate federal trial on mail-fraud charges accusing her of using $9,800 in contributions for her re-election campaign to pay off personal credit-card debts. A sentencing date hasn’t been set in the bribery and extortion case.

Front Section, Pages 1 on 03/22/2014