Published: August 10, 2007 03:03 pm      

Surprises in Stipe v. Phipps

Immunity for straw donors who made illegal campaign contributions in 2004?

That’s one of things Steve Phipps testified to during a hearing at the Pittsburg County Courthouse on Thursday.

Phipps was called as a witness in connection with a motion filed by his wife, Brenda Phipps, to dissolve Phipps Enterprises Inc.

The company was owned by former District 7 state Sen. Gene Stipe and by Steve and Brenda Phipps, until last March, according to testimony from Brenda Phipps.

She said her husband, Steve Phipps, signed his interest over to her in March as part of “estate planning” as he prepared to plead guilty to a charge in federal court.

Federal agents have served search warrants on property owned by Stipe and Steve Phipps as part of an investigation into corruption and related criminal activity in Eastern Oklahoma.

The warrants include allegations that some state tax money granted to Phipps Enterprises had been illegally used.

Brenda Phipps also testified her husband signed his interest to her in National Pet Products, a dog food plant in McAlester, and Indian Nation Entertainment, which handles gaming machines. Brenda Phipps testified that Stipe owned 30 percent of National Pet Products.

Ironically, when Steve Phipps later testified, he said that Brenda Phipps had signed over all of her ownership in National Pet Products to him.

The discrepancy in testimony was not resolved in court Thursday.

Associate District Judge James Bland heard evidence from witnesses and a lot of questions from lawyers during the day-long hearing.

It represented another chapter in the ongoing civil suit between Stipe and Steve Phipps.

After hearing approximately seven hours of testimony, Bland accepted Brenda Phipps’ request to dissolve Phipps Enterprises Inc. — but the judge did not adopt her plan on how to achieve it.

Instead, he suggested near 5 p.m. that the lawyers get together and come up with a plan of their own. They will meet back in court in approximately 30 days.

One of the issues had been how to split up the ownership of six title and abstract companies help by Phipps Enterprises Inc. — which Brenda Phipps described as a “holding company.”

She wanted to divide the companies between herself and Stipe — with her deciding which three companies she would get and then paying Stipe the difference in value.

When her husband signed his interest in the 50 percent of Phipps Enterprises Inc. over to her on March 18, that left her with 50 percent of the company and Stipe owning the other 50 percent, she said.

She also testified about the “estate planning.” Because of a felony conviction, Steve Phipps could have problems holding the licenses to operate title and abstract companies, she said.

Steve Phipps later told Brenda Phipps’ attorney, John Russell, that he had been cooperating with federal investigators long before his plea agreement.

“You were able to get immunity for Phipps Enterprises?” Russell asked.

“And for all the subsidiaries,” Steve Phipps said.

Stipe’s attorney, John Carwile, later questioned Phipps. “You’re testifying that to your knowledge there is no investigation of Phipps Enterprises?”

“No,” Steve Phipps replied.

Carwile then asked if there would be any further investigation of “straw donors.”

“No,” Phipps replied.

Some of the people who allegedly made illegal campaign contributions to the political campaigns of U.S. District 2 Rep. Dan Boren, D-Muskogee and Oklahoma State Auditor and Inspector Jeff McMahan were employees of some of the title and abstract companies owned by Phipps Enterprises, according to court documents and campaign records.

During her testimony, Brenda Phipps said it’s her understanding that the State Auditor’s office has no plans to act against her if she holds title to the companies.

Steve Phipps has already pleaded guilty to a single count of mail fraud in connection with the federal investigation which alleged state taxpayer money had been funneled into Phipps Enterprises, Inc.

Stipe faces an Aug. 28 hearing probation revocation hearing at the federal courtjouse in Muskogee. One of the allegations is that Stipe and Steve Phipps were involved in the scheme to have straw donors make the illegal campaign contributions.

Witnesses also testified Monday that $980,000 from Phipps Enterprises has been set aside in an escrow account for Stipe as the Pittsburg County civil court battle continues.

On Thursday, both the Stipe and Phipps attorneys agreed to have Kraettli Quynton Eppersonhim continue as receiver for a new plan to dissolve Phipps Enterprises.

Earlier, Epperson acknowledged that Phipps Enterprises had paid approximately $200,000 from March through the month of July for his services, his attorneys fees and accountant fees.