By Tony Thornton
Steve Phipps needed an insurance policy to protect his abstact companies. His insurance, a federal prosecutor told jurors Monday, was the state auditor.
“The best insurance is (bribing) the only person who regulates your industry,” Assistant U.S. Attorney Ryan Roberts told jurors.
Roberts laid the foundation for a series of witnesses who he said will establish a conspiracy between Phipps, state Auditor and Inspector Jeff McMahan and McMahans’ wife, Lori.
Phipps is cooperating as part of a plea deal. The McMahans face a nine-count felony indictment.
Roberts referred specifically to the night of Oct. 22, 2002, when Phipps is alleged to have handed an envelope containing $10,000 to Lori McMahan at a Shawnee restaurant.
The general election — Jeff McMahan’s first — was two weeks away. He desperately needed last-minute funding in a tight race with his Republican challenger, Gary Jones.
The future of Phipps’ companies was at stake. Jones was vowing to do away with the abstract industry. That $10,000 represented Phipps “paying an insurance premium,” Roberts said.
Two years later, McMahan needed money again, this time to send him and his wife to Boston for the Democratic National Convention, Roberts said.
He said he asked Phipps for the money through an intermediary, then sent a poster from Boston, along with a “thank you” note.
“It’s like when an insurance company sends you a cheap refrigerator magnet and says, ‘Thanks for doing business with us,’ ” Roberts told jurors.
One day into the trial, this much seems apparent: Reputations will be tarnished, if not destroyed.
Jeff McMahan’s defense attorney, Rand C. Eddy, told jurors about several elected and appointed public officials who benefited from Phipps’ illegal activities. He promsed to elaborate during the trial.
While Phipps essentially bought those public officials, he chose to “create a story” about McMahan after Phipps got caught in a scheme to obtain $2.7 million in state money for his businesses.