LITTLE ROCK — State Treasurer Martha Shoffner was being held in the Pulaski County jail late Saturday following her arrested on federal charges, the FBI said.
Shoffner, who was known for months to be the subject of a state audit and federal investigation related to her handling of bonds sales by her office, was booked under the federal Hobbs Act, said Kim Brunell with the FBI field office in Little Rock. The Hobbs Act prohibits actual or attempted robbery or extortion affecting interstate or foreign commerce.
Shoffner will appear in federal court Monday for a hearing, Brunell told Little Rock television station KATV.
A state auditor confirmed in January that Shoffner, serving her second term as state treasurer, had been under federal investigation for more than a year for her handling of bond sales in her office.
At the time, Debbie Rogers, Shoffner’s chief deputy, said Shoffner would not comment on the probe "until this matter is resolved."
In December, the Legislative Joint Audit Committee requested a criminal investigation into the way Shoffner’s office sold bonds, including her decision to sell bonds before they matured.
A state audit report of Shoffner’s dealings was turned over to the Pulaski County prosecutor.
The audit found that eight of the 30 bond transactions between Jan. 1, 2007, and May 17, 2012, were made to St. Bernard Financial Services. Each of those transactions was made before the bonds matured, resulting in a loss of $686,835.
Several of the transactions were made by one broker, Steele Stephens. Shoffner told the legislative panel in December that she and Stephens’ father, Steve Stephens of Newport, also her hometown, have been friends for years. She previously told the committee that she did not know Steele Stephens was his son until after she and Steele Stephens met at the state Capitol to discuss state investment opportunities.
Shoffner said she never received any personal financial benefits from Russellville-based St. Bernard or any of the other firms. She did say Steve Stephens had donated to her campaign and helped organize a campaign fundraising event on her behalf.
Robert Keenan, CEO of St. Bernard, said in January that his firm and Steele Stephens "haven’t done anything wrong and we’re not the least bit concerned with anything any law enforcement office wants to look at."
Arkansas Business reported in January that federal investigators, including the FBI, are also investigating allegations that Shoffner converted political campaign funds to personal income. A spokeswoman for the U.S. attorney’s office in Little Rock declined comment at the time.
During this year’s legislative session, lawmakers approved a measure intended to tighten procedures and accountability in the treasurer’s office.
Act 1088 of 2013 increases the size of the state Board of Finance and expands the panel’s oversight of state investments by the treasurer’s office. It also authorizes the board to decide who works at several important positions in the treasurer’s office, and details a series of required procedures for various investments handled by the state treasurer.
Shoffner did not oppose the changes.