Arkansas treasurer remains in Pulaski County Jail

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Associated Press

Posted on May 20, 2013 at 9:06 AM

Updated Monday, May 20 at 9:06 AM

LITTLE ROCK, Ark. (AP) — Arkansas Treasurer Martha Shoffner remained in jail Sunday awaiting a federal court appearance to face extortion charges, though authorities wouldn't release details behind the allegations.

FBI spokeswoman Kimberly Brunell said Shoffner would have a hearing Monday in U.S. District Court in Little Rock, when more information would be released.

Senate President Pro Tem Michael Lamoureux, R-Russellville, said Sunday that he wasn't worried about the security of state finances and that Shoffner's staff can operate the office.

"It's just a bad situation," Lamoureux said.

Shoffner was being held without bail at the Pulaski County Jail, and the jail's online roster didn't indicate whether she had an attorney. Shoffner's home phone number in Newport has been disconnected, and a spokesman for her office didn't reply to an email seeking comment Sunday.

Shoffner, a Democrat, was re-elected in 2010 and has faced inquiries over the past year about the way her office has handled state investments.

Legislative auditors last year questioned bond sales Shoffner made before the bonds matured. Auditors said the practice cost the state more than $434,000 in earnings, and members of the Legislative Joint Audit Committee referred their findings to law enforcement.

Shoffner said at a legislative hearing in December that she relied on advice from brokers and didn't conduct her own analysis on the bond sales. Robert Keenan, of Russellville-based St. Bernard Financial Services, said at the hearing it was the treasurer's decision whether to sell the bonds.

Auditors reviewed 30 bond transactions.

Keenan and Shoffner said the bond sales were profitable and that officials weren't noting that the figures for alleged losses were based on profits Arkansas could have made had the bonds been allowed to mature.

Auditors said the office purchased $1.69 billion in bonds from St. Bernard and a related firm between July 2008 and last March, almost double the amount purchased from any other broker.

Legislators questioned whether the business with St. Bernard was to create extra sales and fees for the brokerage firm.

Shoffner said at the time that any investigation would reveal no wrongdoing.

Sen. Jason Rapert, R-Conway, who sponsored a bill that passed to overhaul the treasurer's office and provide more oversight of state investments, said Shoffner should resign.

"She should resign for the sake of Arkansas (and) allow employees in her office to perform their duties without duress," Rapert said.

He said several employees in Shoffner's office worked to bring the matters to light.

"It's embarrassing to all elected officials when people overstep their authority and get into situations that are unethical, at least, or illegal, at worst," Rapert said.

Lamoureux said he felt that state auditors conducted a broad review of transactions made by Shoffner's office and that he does not expect new problems with the bonds to surface.

"I felt that was pretty thoroughly handled," Lamoureux said.

He said he'd spoken with House Speaker Davy Carter, R-Cabot, and they agreed to offer any resources the staff at the treasurer's office needs. Carter declined comment. Lamoureux noted that he didn't see any immediate role for the Legislature.

A spokesman for Gov. Mike Beebe said the governor, a Democrat, would withhold comment until Shoffner's charging documents are released.

In December, Beebe didn't call for Shoffner's resignation and said he didn't feel there was a partisan tone to criticism of the bond transactions.

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