Former Arkansas state treasurer indicted on extortion charges

In this Dec. 14, 2012, file photo former Arkansas State Treasurer Martha Shoffner is shown at the Arkansas state Capitol in Little Rock, Ark.

In this Dec. 14, 2012, file photo former Arkansas State Treasurer Martha Shoffner is shown at the Arkansas state Capitol in Little Rock, Ark.  (AP)

A federal grand jury indicted a former Arkansas state treasurer on extortion and other charges Wednesday after prosecutors allege she accepted more than $36,000 cash from a bond broker to whom she steered state investments.

The indictment comes less than a week after a judge rejected Martha Shoffner's attempt to plead guilty to accepting the money. She is charged with six extortion counts, one attempted extortion count and seven bribe-related charges.

An FBI affidavit filed last month in federal court alleges that the broker -- unidentified in court documents -- would roll up cash in $6,000 increments and have it delivered to Shoffner's office every six months. At least two of the payments were delivered in a pie box with a pie. The broker "recognized his/her bond business with the state grew because of the payments," the affidavit said.

"We certainly anticipate at trial that we will be able to prove that her actions in steering business to (the broker) were directly related to her receipt of $6,000 payments," U.S. Attorney Chris Thyer told reporters.

Chuck Banks, Shoffner's attorney, did not immediately return a call Wednesday afternoon.

Shoffner was arrested at her Newport home May 18 after the FBI said it caught her on tape accepting a $6,000 payment from the broker, who hasn't been identified.

Shoffner, 68, had initially been charged with one count of attempt and conspiracy to commit extortion under color of official right under the Hobbs Act, a federal law often used to prosecute public officials for accepting bribes. Wednesday's indictment expands those to include one count for each of the payments the FBI says Shoffner accepted. Those charges carry maximum penalties of 20 years in prison and up to a $250,000 fine.

The seven bribery charges cover all of the payments Shoffner received, plus the $6,000 payment the FBI said she accepted in May. The bribery charges carry maximum penalties of 10 years in prison and up to a $250,000 fine.

She was set to plead guilty Friday to a similar bribery charge until she told U.S. District Judge Leon Holmes the payments didn't affect her decisions as treasurer and that she didn't intentionally steer business to the broker.

When Holmes asked Shoffner last week if she accepted payments from the broker, she responded: "Yes, but it was offered. I didn't demand it."

Holmes rejected the plea since she wasn't admitting guilt to all of the elements of the charge.

Thyer said he believed Shoffner's admission in court could be used against her in the trial. Thyer said he expected Shoffner to make her first court appearance in the coming days.

"We do not consider Miss Shoffner a flight risk or a risk to the community, so I doubt very seriously we will seek detention for Miss Shoffner at that hearing," he said.

The payments were made after Shoffner asked the broker for $1,000 a month to pay her rent in Little Rock, according to the affidavit. The document said the broker was granted immunity in exchange for his or her cooperation. Thyer said he expected the broker to testify against Shoffner at her trial.

Legislative auditors last year questioned Shoffner's selling of bonds before they matured, a practice that they said cost the state more than $434,000 worth of earnings.

Shoffner was arrested at her home in Newport after the broker agreed to record the meeting and bring $6,000 in a pie box, according to the affidavit. FBI agents executed a search warrant and found the cash inside a cigarette package in Shoffner's kitchen. Shoffner admitted that she accepted the payments from the broker, the FBI said in its affidavit.

Shoffner, a Democrat, was first elected treasurer in 2006 and won a second term in 2010. Facing pressure from fellow Democrats as well as Republicans who threatened impeachment proceedings if she didn't resign, Shoffner stepped down last month.

Gov. Mike Beebe last week appointed former Legislative Auditor Charles Robinson to serve the remainder of Shoffner's term, which ends in January 2015. Robinson is barred from running for the post next year since he was appointed to it.