Sheldon J. Sperling, United States Attorney for the Eastern District of Oklahoma, announced that Steven R. Phipps, age 52, of Kiowa, was sentenced to 12 months and 1 day imprisonment, followed by 24 months of supervised release and was ordered to pay restitution in the amount of $279,259.00 and a fine of $50,000 for Conspiracy to Defraud the United States.

In addition, former Oklahoma State Representative and Chair of the State House of Representatives Appro-priations Committee Michael Don Mass, age 57, of Wilburton was sentenced to 24 months in prison, followed by 24 months of supervised release and was ordered to pay restitution in the amount of $279,258.
"The offense for which defendants Mass and Phipps stand convicted and sentenced is mail fraud conspiracy to deprive the citizens of the State of Oklahoma of their right to honest public service,” said Sperling.
Charges arose from an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Invest-igation Division. Mass was charged by Information on June 13, 2007. 
He then pled guilty, was found guilty, and was subject to a presentence investigation by the U.S. Probation Office.  Phipps was charged by Information on June 22, 2007. 
He pled guilty, was found guilty, and was the subject of a presentence investigation prepared by the United States Probation Office.
"From about August 2002 through about December 2005, defendant Michael Don Mass conspired with defendant Phipps and others," Sperling stated. "The conspirators steered funds appropriated by the Oklahoma state legislature to an entity the conspirators created, organized and staffed, known as Rural Development Foundation (RDF).  RDF officials then directed funds to National Pet Products (NPP) and Indian Nations Enter-tainment (INE), businesses largely owned and operated by Phipps. NPP became and is a business which manufactures dog food in McAlester.  INE is a Pittsburg County business which provides gambling machines to tribal casinos.”
"The evidence in this case established that defendant Mass and others directed nearly $2.8 million in state money to certain favored businesses – and that various conspirators received kickbacks.  Defendant Mass received the bulk of the $279,258 in kickbacks paid for financial favoritism.  The court ordered both Mass and Phipps to make restitution in that amount.
"In our pleading concerning Phipps’ impending sentence, we urged that he had provided substantial assistance in the investigation and prosecution of other persons,” Sperling stated. “Evidence in this case revealed longstanding business ties between defendant Phipps and Gene Stipe.  The court had heard witness testimony that Stipe engaged persons to employ economic and physical threats on others in the context of a bankruptcy and other legal proceedings and that Stipe asserted he owned half of Phipps’ various business interests.  Stipe publicly disavowed Phipps’ business practices, in the form of a civil lawsuit brought after public disclosure of the purchase of land for the NPP plant with public money.”
"We also identified other of Stipe’s activities which were in violation of Stipe’s probation for his previous role in illegally financing a campaign for U.S. Representative in 1998," Sperling continued. "Probationer Stipe’s efforts to publicly fund political campaigns, in violation of federal election law, even after Stipe had been sentenced by the U.S. District Court in D.C. for similar campaign funding illegality, were the subject of inquiry and investigation and litigation.  Phipps provided details concerning straw contributions through company bonuses and cash reimbursement transfers from a company to defendant Phipps to the straw donors at the direction of Stipe.  Subsequent search warrants yielded important information of Stipe’s involvement with NPP and Stipe’s probation-violative association with Steve Covington.”
Defendant Phipps also provided substantial assistance in the investigation and prosecution of the late Francis Stipe.  That trial included evidence concerning the purchase of a mortgage on the home of Mass at a critical time related to the investigation about the source of funding for the purchase of Stipe property for the NPP plant.  Then in and concerning the trial of former Oklahoma State Auditor and Inspector Jeff McMahan and his wife, Phipps provided valuable evidence and testimony.
The Honorable Ronald A. White, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the sentencing. 
“Within about 30 days after sentencing, the Bureau of Prisons typically designates the federal corrections facility at which the prison term is to be served," Sperling stated. "Phipps will remain under the supervision of the U.S. Probation Office until he reports to the designated facility as directed on July 24.  Mass will remain under the supervision of the U.S. Probation Office until he reports to the designated facility as directed on June 26.”
"The sentences in this case are historically consistent with federal sentences typically rendered in the past,” Sperling recalled.  "During the county commissioner fraud prosecutions in the 1980s, most defendant commissioners who pled guilty received two-year prison sentences.  Those who rendered significant assistance in ongoing investigations sometimes received further prosecutorial and sentencing consideration.”
Assistant United States Attorney Gay Guthrie and Ryan Roberts represented the United States in these cases.