More details emerge in Northwest Arkansas kickback indictment

Posted: April 20, 2017 at 1:12 a.m.

NWA Democrat-Gazette/ANDY SHUPE Randell Shelton Jr. and his attorney Shelly Koehler of Fayetteville walk into the John Paul Hammerschmidt Federal Building in Fayetteville for his original indictment March 28.
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NWA Democrat-Gazette/ANDY SHUPE Randell Shelton Jr. and his attorney Shelly Koehler of Fayetteville walk into the John Paul Hammerschmidt Federal Building in Fayetteville for his original indictment March 28.

FAYETTEVILLE -- An amended indictment removes one against former state Sen. Jon Woods and adds four charges against him and his alleged co-conspirators in a kickback scheme.

The charges add detail to allegations already made, court documents show.

Arraignment

A new arraignment on the amended charges is set for 10 a.m. Monday in federal court in Fayetteville.

Woods, Oren Paris III of Springdale and Randell G. Shelton Jr. of Alma pleaded not guilty in federal court March 28. Woods is accused of taking kickbacks from Paris, president of Ecclesia College in Springdale, in return for state grants to Paris' college. Shelton is accused of being the middle man who passed the bribes to Woods through his consulting firm in return for a share. The exact amounts aren't given in the indictment because many of the payments to Woods were in cash, the indictment says.

Woods now faces 15 counts of wire fraud instead of the 12 counts in the March 2 indictment. Paris and Shelton are now named in 13 of the wire fraud counts instead of 10. A count of mail fraud also names all three men. In addition, a count of money laundering against Woods remains in the amended indictment.

The updated indictment mentions a detail not included in the earlier version, a comparison of the two showed. Woods, according to the indictment, sent a copy of a draft of a bill to Paris by email Dec. 2, 2014. The proposal would create a special General Improvement Fund account in the state Department of Higher Education. An appropriation of up to $2.5 million would benefit only work-learning colleges "part of the Works College Consortium." The only college in Arkansas a member of the consortium is Ecclesia, according to the consortium's website on Wednesday.

The same day that email was sent, Paris had the college send a $15,000 check to Shelton's company, according to the indictment. Two days later, Shelton withdrew $12,400 in cash, the indictment says. Two of the new counts in the amended indictment cite the e-mail of the draft bill and the $15,000 check.

Woods filed a bill to create the fund for work colleges in February 2015 during the regular legislative session, according to legislative records. The bill, Senate Bill 638 of 2015 with Woods as its sole sponsor, became law. The bill authorized grants to "work colleges" but no state money was budgeted to the account, state records show.

The act authorized up to $3 million in grants to work colleges for any of a variety of purposes, listing "personal services and operating expenses, scholarships, research, development and delivery of education coursework and math and science coursework, costs, associated with athletic programs, land acquisition, equipment acquisition, infrastructure costs, including site development costs, construction, improvements, landscaping, renovation, dorm renovation, major maintenance, building of roads and/or parking lots."

Paris paid Shelton's consulting company $267,000 out of college money from 2013 to 2015 without notifying his college's board until October 2015, according to the indictment. Shelton is described in court documents as a mutual friend of Paris and Woods.

The case still rests on the same set of facts, and the change in the number of charges doesn't add any risk to the defendants because of federal sentencing guidelines, said attorney Shelly Koehler of Fayetteville. Koehler represents Shelton. Attorneys for Woods and Paris did not answer requests for comment Wednesday.

"Randell's looking forward to his day in court and disproving all of them," Koehler said.

"They added several bank transactions and the sending of an e-mail," Koehler said of the amended indictment, with the new counts in the indictment involving each transaction that wasn't mentioned in the original.

In cases of fraud in which there are convictions, the final sentence is determined by the amount of financial loss suffered by the victims, she said. The U.S. Attorney's Office didn't comment Wednesday.

The amended indictment gives more detail about the financial transactions involved. Woods and former Rep. Micah Neal, both R-Springdale, directed state General Improvement Fund money to the college in 2013 and 2014 in return for kickbacks, according to the indictment and a January guilty plea from Neal.

Ecclesia College isn't named in any of the court documents, but Paris is identified as the president of the college involved.

Neal pleaded guilty to four counts of honest services fraud, a public corruption charge, on Jan. 4. Sentencing for him hasn't been set. Neal agreed to cooperate with authorities as part of his plea, in which he admitted wrongdoing before any indictment against him was issued. No plea bargain for sentencing was reached in Neal's case.

He received $18,000 for his part in obtaining a grant for the college and another $20,000 for obtaining a grant to another nonprofit group, according to his guilty plea.

The General Improvement Fund is unallocated state tax money at the end of each fiscal year and interest earned on state deposits. Each legislator is given a share and can direct where he wants it to go as long as it goes to a nonprofit group or government entity.

Woods also sought grants for the college from other legislators from their portion of improvement fund money, according to the indictment. Nine Northwest Arkansas legislators requested $592,500 for the school. Woods directed the most at more than $350,000 total, records show. In all, Ecclesia received $717,500 in improvement fund grants in 2013 through 2014.

Woods, Paris and Shelton are set to be tried together. Each was released on bond with a pretrial hearing set for May 3 and the trial set for May 8. Woods and Paris were released on $10,000 bonds. Shelton's bail was set at $5,000. The trial judge in the case is U.S. District Judge Timothy L. Brooks.

If convicted, the defendants could face up to 20 years in prison for fraud, 10 years, in Woods' case, on the money laundering count, plus fines and forfeiture of any money or property obtained through their actions.

Woods' indictment includes three counts related to another nonprofit group, a workforce training program that returned its $400,000 grant. Both the indictment and Neal's guilty plea say the two lawmakers cooperated in the workforce grant in return for kickbacks. Grant records show the only workforce training program to receive and then return $400,000 was a Bentonville company called AmeriWorks.

NW News on 04/20/2017