Former subordinate says Shoffner ignored warnings

LITTLE ROCK — A former subordinate of former Arkansas treasurer Martha Shoffner testified in federal court Thursday that she warned Shoffner that placing a large portion of the state’s bond business in the hands of one broker would raise red flags with auditors, but that Shoffner shrugged off her concerns.

Testifying on the second day of Shoffner’s trial on federal bribery and extortion charges, Autumn Sanson, chief investment officer for the state treasurer’s office, said it used to be common practice for the state’s business to be divided just about evenly between brokers, with no single broker handling more than $200 million, but then Shoffner began directing a disproportionate amount of the state’s business to broker Steele Stephens.

Sanson said she warned Shoffner about drawing the attention of auditors when Stephens’ inventory reached $300 million.

“She said we could justify it,” she said.

Shoffner also did not heed Sanson’s objections when she allowed Stephens to make a $100 million trade for the state in one day or when she ordered that Stephens be given a list of the inventories of all brokers handling the state’s business, which other brokers were not provided, Sanson said.

She said Shoffner often disagreed with advice from her staff on a variety of issues, sometimes dramatically.

“She would slam her fist on the desk and say — excuse me — ‘I’m the god**** state treasurer. I can do what I want,’” Sanson said.

That phrase led to staff members sometimes referring to Shoffner as “the GDST,” she said.

Shoffner faces six counts of extortion, one count of attempted extortion and seven counts of receipt of bribery. If convicted, she could be sentenced to up to 20 years in prison and fined $250,000 on each extortion count and sentenced to up to 10 years and fined $250,000 on each bribery count.

Federal prosecutors say Shoffner accepted bribes from Stephens and steered business to him in return. The defense says Shoffner accepted cash gifts from Stephens but that the gifts were not bribes and that Stephens did not receive anything in return.

Sanson testified Thursday that brokers, including Stephens, commonly gave gifts to people in the treasurer’s office.

“We were given hams and turkeys at Christmas. I’d been sent flowers on my birthdays, gift cards, they would bring pastries a lot, just things like that,” she said. “A lot of the brokers would offers us tickets to the Travelers games or the Hogs games, the Razorback games, even Razorback baseball in Fayetteville, concerts.”

Sanson admitted that when asked during a Legislative Joint Auditing Committee hearing in September 2012 whether she had received any personal benefit from any broker, she said no. She said that at the time she thought the question was about accepting kickbacks, or collecting from brokers a portion of their profits in return for giving them business.

Sanson testified Thursday that she had never received a kickback from a broker.

She also testified that Shoffner often complained about her salary.

“We heard quite often that she didn’t make a lot of money and that she couldn’t afford certain things, specifically living quarters, vacation, things of that sort,” she said.

The Democratic treasurer resigned May 21, three days after federal authorities arrested her at her Newport home following an investigation lasting more than a year. She also is scheduled to go to trial March 31 on 10 federal counts of mail fraud, related to her alleged use of campaign funds to make payments on a personal credit card.

Her current trial is expected to last until late next week.