Former Oklahoma lawmaker charged with mail fraud conspiracy

Journal Record, The (Oklahoma City), Apr 13, 2007 by Marie Price

Former state Rep. Mike Mass of Hartshorne was charged Thursday in federal court with conspiracy to commit mail fraud by channeling state funds to private businesses.

Thursday's filing by Assistant U.S. Attorney Robert Guthrie alleges that from August 2002 through December 2005, Mass conspired with two other legislators to steer state funds to the Rural Development Foundation, which would then forward the funds to National Pet Products and Indian Nation Entertainment Corp.

Neither the other two lawmakers nor the owners of the two pet food or entertainment businesses are identified in the information.

An earlier FBI affidavit names former state Reps. Randall Erwin of Nashoba, and Jerry Hefner of Wagoner, but only Mass has been charged.

National Pet Products and Indian Nation Entertainment Corp. are owned by Steven Phipps, a one-time business partner of former McAlester state Sen. Gene Stipe, who is under investigation by a federal grand jury. In early March, the FBI served search warrants on the offices of Stipe and his accountant, seizing computers and various records.

Thursday's charge against Mass alleges that an unnamed businessman agreed to pay Mass and two other lawmakers a percentage of the gross from gambling machines manufactured by INE as a result of the funds steered to the Rural Development Foundation, then provided to INE.

The March FBI affidavit states that according to a confidential witness, Phipps agreed to create the RDF, and the three representatives agreed to fund RDF in return for a financial benefit to themselves. The same confidential witness alleged that under an agreement with Phipps, the three legislators were to receive 10 percent of the profits earned from INE machines at certain casinos. The affidavit also states that an INE document from November 2005 lists Mass as a $6,000-per-month consultant.

"Defendant and the other two legislators were periodically paid in cash the amount of their agreed upon percentage of the gross profits from the designated gaming machines, and used their influence to help place INE gaming machines in Indian casinos," the information states.

Specifically, the document alleges that on July 29, 2004, Mass caused a check for $250,000 to be sent from the Kiamichi Economic Development District of Oklahoma to the RDF. It alleges that on Aug. 13, 2004, another legislator caused a $350,000 contract to be sent from the Oklahoma Department of Commerce to the foundation.

On May 2, 2005, the information contends, a third, by then former, legislator, caused a $140,000 special project contract to be sent from the Eastern Oklahoma Development District to the RDF. On May 25, federal prosecutors allege, the businessman caused a $100,000 pay request form to be sent from RDF to the EODD.

Attempts to reach Mass for comment were unsuccessful.

U.S. Attorney Sheldon Sperling said conviction for the offense of which Mass is accused carries a maximum penalty of five years in prison, a fine not to exceed $250,000, or both.

Stipe served more than 50 years in the Oklahoma House and Senate. He resigned in 2003 during a federal investigation of campaign fraud involving the 1998 unsuccessful congressional campaign of former Rep. Walt Roberts.

Stipe ultimately pleaded guilty to funneling almost $250,000 to the Roberts campaign, as well as lying to federal investigators. He was sentenced to six months home detention and five years' probation, fined $735,567 and ordered to perform 1,000 hours of community service.

Mass was ordered to pay a $30,000 fine to the Federal Election Commission for acting as a "straw donor" to Roberts' campaign on Stipe's behalf. In the March FBI affidavit, a confidential witness describes a scheme in which Stipe and Phipps allegedly engineered the $30,000 payment.

Mass is scheduled to appear Friday morning at an indictment waiver and plea hearing before U.S. Magistrate Kimberly West in Muskogee in the U.S. District Court for the Eastern District of Oklahoma.