State Treasurer Martha Shoffner Arrested By FBI (UPDATED)

This news is breaking fast, but here is what we know. State Treasurer Martha Shoffner has been arrested and is being held for the U.S. Marshals office.  The arresting agency is the Federal Bureau of Investigation (FBI) and she currently is in the Pulaski County Jail.

In December 2012, a state legislative panel recommended that a criminal investigation take place into the practices of Shoffner as State Treasurer.  From the Talk Business report at that time…

State lawmakers said they would ask the Division of Legislative Audit to consider a law enforcement investigation of questionable bond transactions in State Treasurer Martha Shoffner’s office.

Shoffner, a Democrat, has been questioned about the early sale of multiple bond transactions in her office surrounding a Russellville financial firm known as St. Bernard Financial Services. Shoffner has denied any wrongdoing.

At issue are millions of dollars in bond transactions that could have shortchanged the state hundreds of thousands of dollars or more in earnings due to their early sale.

Shoffner said there are changes being implemented in her office for purposes of “rectifying everything.”

Talk Business has talked to multiple sources in the last half hour.  Several sources were unaware of the arrest.  One law enforcement source, who asked not to be identified but was familiar with the matter, said he anticipated a legal complaint being filed on Monday morning.

U.S. Attorney Chris Thyer was also contacted by phone on Saturday evening. He said, “I can’t comment on  anything.”  When asked about a complaint being filed on Monday morning, Thyer reiterated, “I can’t comment on anything.”

The FBI confirms to content partner, KARK Ch. 4, that Shoffner is being held on a charge of “Extortion Under Color of Official Right under the Hobbs Act.”

That provision, which you can read about here, suggests that a public official can be charged with extortion under certain circumstances. The government “need only show that a public official has obtained a payment to which he [or she] was not entitled, knowing that the payment was made in return for official acts,” said a 1992 U.S. Supreme Court ruling.

Shoffner’s most recent Statement of Financial Interest discloses only her state salary and her federal social security as income.  She did not disclose any other sources of income or receiving any gifts which is requested of public officials receiving any amount valued over $100.

A spokesman for Gov. Mike Beebe’s office declined to comment saying he will wait to see the indictment details on Monday.

Shoffner does not have to resign her office based solely on the charges she is expected to face; however, she may resign under political pressure.  If she is convicted of the pending charges eventually, she would be forced to resign from office.  A Shoffner resignation would trigger a process by which Gov. Mike Beebe (D) would name a replacement to serve out the rest of her term of office, which ends in January 2014.  Shoffner is serving her final term as State Treasurer and is term-limited for the office.

Republican State Treasurer candidate Dennis Milligan called on Shoffner to resign.

“I am calling on Martha Shoffner to resign immediately and  allow the governor to appoint someone to serve until 2015,” said Milligan. “This will help her because she will be better able to focus on her legal defense.  It will help the state because the State Treasurer would not be distracted from her official duties because of this felony federal charge.”

“Last fall, the Legislative Joint Auditing Committee provided an in-depth report to law enforcement on the investment practices of State Treasure, Martha Schoffner, after conducting hearings on the matter,” wrote Rep. Kim Hammer who is the House Co-chair of Legislative Audit. “As a result, the FBI conducted an investigation and found sufficient evidence of illegal activity to file charges. Just as the Legislative Auditing Committee performed its responsibilities in this situation, I am equally confident that the judicial system will ensure that truth and justice prevail in the outcome of this case.”