David Koon reports from the news conference this afternoon by U.S. Attorney Chris Thyer of the Eastern District of Arkansas, who brought the charge against state Treasurer Martha Shoffner, and Western District U.S. Attorney Conner Eldridge, who buttressed the message that the feds are looking for corruption statewide.

• Brian Chilson
• 'PUNISHMENT IS DUE': Chris Thyer.

Thyer said that the decision to extend immunity to the informant referred to as Confidential Human Source 1 (CHS1) in the criminal complaint against Shoffner was not an easy one, but it was made "out of necessity," due to how limited the alleged conspiracy between Shoffner and CHS1, an unnamed bond broker, was. "If both of those two people remain silent," he said, "we wouldn't be here today."

Asked by a reporter if CHS1 was Steele Stephens, Thyer said "no comment." He later cited Justice Department regulations that require him to only release information contained in public filings, but said the identities of those named in the criminal complaint will eventually come out incourt. He said the immunity extended to CHS1 will keep the informant from being prosecuted "by my office," but he added the immunity doesn't cover potential prosecution on state charges.

Thyer said that the timing of Shoffner's arrest on Saturday had to do with the fact that the Saturday meeting between CHS1 and Shoffner was the first time they had met to make a cash handoff since CHS1 was offered immunity. According to the criminal complaint, the meetings between Shoffner and CHS1 happened at intervals of up to six months. Shoffner wasn't indicted, he said, because a grand jury wasn't available Saturday to hear the evidence. Thyer said they decided to move forward without an indictment because a delay would have meant "we would have left $6,000 in government funds in her possession until the grand jury met." He said the case will be presented to a grand jury as soon as possible.

Asked whether Shoffner should resign, Thyer said he has a personal opinion on it, but declined to share it, saying it is "none of my business," and should be left up to Shoffner and the Arkansas legislature. She can be impeached at a special legislative session if she does not resign. A resignation would leave it to Gov. Mike Beebe to make an appointment.

Beebe called today for Shoffner to resign. He said he hadn't talked to her since she made a snarky remark about the governor being driven around by a "manservant" at a time when attention was focusing on use of state vehicles by statewide officeholders such as Shoffner. By law, the State Police provdes the governor with a security detail.

Shoffner's attorney, Chuck Banks, said he'd "probably" recommend that Shoffner should resign, given the interference with her work if she decides to proceed to trial. But he said that was her decision. He'll be meeting further with Shoffner tomorrow.

In addition to commenting about Shoffner, Thyer and officials from the FBI Little Rock field office, Pulaski County Sheriff's Department, Arkansas State Police, Little Rock Police Department and the U.S. Attorney for the Western District used the occasion of the press conference to announce the formation of the new ArkTrust Public Corruption Task Force. The multi-agency task force will accept and investigate confidential tips on public corruption at any level — local, state or federal — by any elected or appointed official in Arkansas. Tips can be submitted to the ArkTrust hotline at (501)221-8200 or visit tips.fbi.gov.

David Ramsey reports on the Mike Beebe news conference at which he said he had no immediate ideas about a replacement if she does leave office:

• FIRST DAY ON THE JOB: Chuck Banks just arrived on Shoffner's legal team.

Chuck Banks, who represented her in federal court today, answered my question on when he begin representing her:

When her family contacted me Saturday night and I visited with her yesterday morning. I didn't enter my appearance or file anything until this morning. I notified Jana Sunday afternoon, then I filed a motion this morning and entered my appearance at the hearing.

By then, the damage had been done, including taped outreach to a government informant for more financial help and alleged admission of wrongdoing to arresting agents.

• NO INVOVLEMENT: Robert Keenan says his firm has no involvement in Shoffner arrest.

A Russellville firm frequently cited as having experienced a big increase in state business says adamantly that they have done no wrong and aren't the source of the information.

Robert Keenan, chief executive of St. Bernard Financial Services in Russellville, reiterates that he doesn't believe the charge relates to Steele Stephens, one of the firm's representatives, or his firm. "He assures me it wasn't him and I believe him and trust him." Keenan said. Stephens was at work today and Keenan said they'd talked Saturday night after news of Shoffner's arrest "shocked" them both.

"We'll find out eventually if he's lying to me, but I don't think so."

Keenan said the identify of the person paying Shoffner ultimately should be revealed because, even if the person is given immunity from federal prosecution, the person should lose his or her securities license. "If it was one of my employees, I'd let him go for not reporting it." He added, "I can't wait to find out who it is. We're getting bombarded up here with people who thinks it's us and it's not."

Keenan said the timeline in the federal charge didn't match Stephens' record with St. Bernard because he didn't go to work there until late 2009 or so. He acknowledged that his firm had increased its share of state business substantially, but he continued to insist as he has all along it's because of lower commissions and better service. He continues, too, to take sharp exception with Joint Audit's evaluation of his firm's record on state business, scoffing particularly at an auditor's comment at one of the hearings that investment firms should be better able to predict future interest rates. Auditors claimed that the state lost money because of early redemption of some bonds, an assessment Keenan has challenged.

• Brian Chilson
• AFTER COURT: Martha Shoffner leaves court with her lawyer Chuck Banks (coat on arm) and family members.

• Photo illustration/rapgenius.com

Here's the document. And here's U.S. Attorney Chris Thyer's news release, which notes conviction could carry a maximum sentence of 20 years and a $250,000 fine. Details:

Shoffner was busted Saturday after receiving the latest in a series of $6,000 payments from a confidential source wired by the FBI (an unidentified securities dealer apparently given immunity from prosecution for cooperation). The source told the FBI he had paid Shoffner a total of $36,000 in six payments every six months, plus almost $5,000 in cash for a campaign event, in return for an increasing share of the state bond business.

Shoffner got several of the payments rolled up and sealed in a pie box. The money delivery brought to the minds of many the bribes paid to a corrupt warden in the movie "Shawshank Redemption." A new $6,000 payment was delivered to Shoffner that way Saturday by the source, who recorded their conversation. FBI moved in and arrested her after the transfer, finding the $6,000, plus some $100 bills left over from an earlier payment. The investigation began in January 2012, based on a tip to the FBI from an office employee, months before trading activities came under scrutiny of the Legislative Joint Auditing Committee.

The FBI complaint says Shoffner admitted wrongdoing during the arrest and helped them find the money she'd received illicitly.

Shoffner, attired in a black pantsuit, gave only one-word responses to Magistrate David Young during her brief court appearance. She was released on her own recognizance, on condition of regular reports to the probation office and surrender of her passport. Her attorney, Chuck Banks, said he would enter a not-guilty plea for Shoffner, but said they would sit down and discuss future plans. Shoffner didn't have an attorney until after her arrest, despite legislative probes and multiple reports about questionable office practices. The federal charge details her alleged illicit outreach for financial help from a source cooperating with the government last week.

Shoffner encountered reporters as she left the federal courthouse and departed in a pickup truck. Asked if she had anything to say to the people of Arkansas, she said she had no comment. Her attorney didn't conmment either. Asked if she planned to resign, she said: "Not at this time." If she were to resign, the governor would appoint a replacement to complete her term, which runs through 2014. The legislature, if in session, also could impeach her and remove her after a Senate trial.

Gov. Mike Beebe, like Shoffner, a Democrat, indicates he'll have a statement at 2 p.m. on his thoughts on whether Shoffner should continue in office. I trust the answer is a ringing no. UPDATE: Yes, Beebe called for her immediate resignation. The Arkansas Republican Party has, naturally (and, yes, correctly), called for Shoffner's resignation.

Attorney General Dustin McDaniel, like the Republican statement, made no presumption of guilt, but said the allegations were disturbing and ".... I believe that she should resign immediately to allow the work of the Treasurer's Office to continue." Will Bond, Democratic Party chair, said, " While treasurer Shoffner has the right to be presumed innocent, Arkansas taxpayers have the right to have confidence that their money is being invested and managed properly. In order to restore public trust and to allow the Treasurer’s office to operate its duties, we ask treasurer Shoffner to resign immediately.” Democratic gubernatorial candidate Mike Ross said Shoffner had "broken the public trust" and should resign immediately. Democratic candidate Bill Halter said, "Restoration of the public trust can only begin with the appointment of a new treasurer." U.S. Sen. Mark Pryor piled on. "Martha Shoffner should resign and be prosecuted to the full extent of the law. Arkansas deserves better."

A comment from Heath Abshure, director of the state Securities Department:

Just read the Criminal Complaint. We will certainly be looking into whether the payments were made with the knowledge of a broker-dealer firm or whether the payments were being made by an agent without the knowledge of the firm.

The Arkansas Times published Oct. 20, 2011, the first account of a a heavy concentration of treasurer's office business with Steele Stephens, a salesman with a small firm, St. Bernard Financial Services, based in Russellville. He and the firm have denied any wrongdoing in all public statements to date (including again today) and the confidential cooperating broker so far has not been identified. Also in reporting in October 2011, Stephens said he'd been just one of three sponsors of the 2010 campaign finance party mentioned in the charge. He never denied contributing to that. What appears to be amiss, according to the federal charge, is that Shoffner converted some of the money contributed to that event for her own use, not party expenses.

UPDATE: I spoke with Robert Keenan, chief executive of St. Bernard. He reiterates that he doesn't believe the charge relates to Steele Stephens or his firm. "He assures me it wasn't him and I believe him and trust him." Keenan said Stephens was at work today and that they'd talked Saturday night after news of Shoffner's arrest "shocked" them both. "We'll find out eventually if he's lying to me, but I don't think so."

Keenan said the identify of the person paying Shoffner ultimately should be revealed because, even if given immunity from federal prosecution, the person should lose his or her securities license. "If it was one of my employees, I'd let him go for not reporting it." He added, "I can't wait to find out who it is. we're getting bombarded up here with people who thinks it's us and not."

Keenan said the timeline in the federal charge didn't even match Stephens' record with St. Bernard becaue he didn't go to work there until late 2009 or so. He acknowledged that his firm had increased its share of state business substantially, but he continued to insist as he has all along it's because of lower commissions and better service. He continues, too, to take sharp exception with Joint Audit's evaluation of his own firm's record on state business, scoffing particularly an auditor's comment that investment firms should be better able to predict future interest rates.

• LAWMEN: U.S. Attorneys Conner Eldridge and Chris Thyer said investigations continue in both the western and eastern districts of Arkansas on public corruption.

Does Martha Shoffner have any friends? Former employees with unhappy tales of their time in her office would be surprised.

The tales are mounting. Hurled phones. Employees sent on personal errands with the office credit card, including to fetch meals for her dog. But the core issue is more likely to be along the lines of what one former employee told me — campaign finance reports lacking disclosure of significant PAC contributions. The contributions were legal. The question would be why any were omitted and whether the money was accounted for. This line of inquiry was suggested to federal investigators by the employee.

BTW: Chuck Banks confirms via e-mail that he is representing Shoffner. He said he was too busy at the moment to talk. Shoffner's at the courthouse, awaiting court scheduling before Magistrate David Young.

• Brian Chilson/file photo
• IN THE SPOTLIGHT: Treasurer Martha Shoffner

When last I spoke with the office of the U.S. attorney, neither a court appearance nor official news conference had been scheduled today on Shoffner's arrest on a charge related to receiving financial benefits for her public service. Nor had I had been able to get a response to the question of why the Saturday arrest. She wouldn't appear to be a flight risk. Surprise arrests are sometimes undertaken to preserve evidence. Two days in the slammer might make a 68-year-old woman prone to deal.

I wrote former U.S. attorney Chuck Banks, now one of the city's most successful criminal defense lawyers, to see if he was representing Shoffner. He didn't respond. But the Democrat-Gazette reports this morning that his name turned up on the county jail visitor log on Sunday. Banks, you might recall, defended Lu Hardin in his federal prosecution. It ended in a plea deal, but no jail time for the former UCA president, a former legislator in a position of public trust convicted of fraud and money laundering.

Employees of Shoffner are whispering that, despite the fact she's been under scrutiny for months, that they didn't believe she'd hired a lawyer until very recently, perhaps this weekend. If so, it was a decision about as wise as her decision not to appear to answer a legislative subpoena over her audit. She's short of financial resources, employees say, but legal representation is something you can't afford to skimp on.

A personal assistant to Shoffner told me the office would be open for business as usual Monday. We still don't know whether the charge will be linked to her investment decisions, or her messy campaign finances or both. Her ability to conduct business without ill appearance will necessarily be damaged by being under federal charge. Pressure on her to resign will be enormous, however firm and perhaps even credible her protests of innocence might be. The difference here, as compared with say the prosecution of Gov. Jim Guy Tucker, was that the case against him was wholly unrelated to his public office.

Employees that I've reached or been quoted by others, to a person, were caught unawares by Saturday's arrest. It occurs to me that the drama might encourage others to be cooperative, if others are in a position to do so.

I thought this was interesting — a Facebook post by former Republican Rep. Ed Garner making the unexceptional but worthy point that innocence attaches to all until proof of guilt and, moreover, that state investments for which Shoffner have been criticized aren't necessarily so readily judged. It is not a crime to sell a bond before maturity, for example. Also, there've been some gross misrepresentations already in this case by people nominally thought to be nonpartisan evaluators. I explored that at some length here when the increasingly political legislative audit division publicized faulty comparisons between treasury and retirement system investments to help Republican legislators build a case against Shoffner.

I'd add that it is not a crime to do business with friends or for a state official's office to do business with a campaign contributor (statutory law and sleaze being two different things). We'd be a nation of political felons if that were so. It's the direct quid pro quo that's the problem. Sometimes hard to prove; sometimes not. Soon we'll have more details to judge. IF the case involves benefits from people with whom Shoffner did state business, it's worth noting that no relevant names have turned up on jail dockets just yet.

UPDATE: Just heard a withering allegation from a former Shoffner employee about her relationship with certain people who did business with the office. If provable ... curtains. Her management of office staff is going to be an ugly tale, too.

Other items this Monday morning:

* GUN HAPPY: NRA blog reports news that Remington Arms is expanding its ammunition plant in Lonoke. It's a $32 million project.

The shoe drops. This mug shot of Democratic state Treasurer Martha Shoffner appeared on the Pulaski County sheriff's office jail intake page late this afternoon. (She looked a little distracted when I saw her looking over the cottage cheese in a case at Kroger's earlier this week.) Sorry: I originally called her auditor incorrectly. I have many calls out for more information.

Shoffner has been under scrutiny for a variety of issues including charges of favoritism in handling of state investments with a securities firm and also in sloppy reporting and spending of state campaign finance money. She's been subject, too, of a tough legislative audit and Republicans have been calling for her to resign.

UPDATE: I"ve heard from Kimberly Brunell, agent in charge of the Little Rock office of the FBI. She's circumspect:

I can tell you that FBI agents today arrested Martha Shoffner on Hobbs Act charges.

Brunell said there'd be more information at a news conference Monday, probably following Shoffner's appearance in a U.S. magistrate's court. She'll remain jailed until then.

I tried to press Brunell, but she said she couldn't provide details. She did say, in response to my question of whether campaign finance or official conduct figured in the charges, that I should look to the portion of the Hobbs Act that refers to "extortion under color of official rights." Said Brunell: "That was the part she was charged under." Then she said no more.

Here's what you need to know about the Hobbs Act. Excerpt:

In order to show a violation of the Hobbs Act under this provision, the Supreme Court recently held that "the Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts."

I guess you could still argue, knowing nothing of the facts underlying this arrest, that this still could pertain to campaign contributions in return for official acts, as well as payments of some sort for investment decisions. Monday should be interesting.

Republicans are popping champagne corks. Justifiably,

UPDATE II: a spokesman for Gov. Beebe says they have no comment. They know nothing beyond press reports.

• PARTISAN JUSTICE: Curtis Coleman praises a judicial candidate.

In that vein, check a YouTube of extremist Republican gubernatorial candidate Curtis Coleman talking of the need to build a "farm team" to elect the right sorts of people in three coming races for Supreme Court. He named one candidate he believed in — Rhonda Wood. "Solid and sound," Coleman said. A Coleman seal of approval is just about as big a disincentive to vote for Wood as I could imagine.

Speaking of Curtis Coleman: I learned this morning that some jokester had submitted a $1,000 pledge to Coleman's Institute for Constitutional Policy in my name. But then I was informed by a followup e-mail that the Institute was not currently accepting contributions. He's claimed it is a registered nonprofit, though it hasn't attained that official tax deductible status yet (giving him the chance to blame it all on the IRS, naturally). Good thing he's not registered yet. 501c3s are not supposed to engage in political advocacy, such as touting a candidate for Supreme Court. Or the Institute leader's own candidacy for governor.