SPRINGDALE -- Three state grants involving $600,000 of taxpayer money resulted in 13 federal charges and were the start of plans to obtain more grants in the future, according to federal court documents.
In one case, then-state Rep. Micah Neal and then-state Sen. Jon Woods, both R-Springdale, received kickbacks from one grant later returned, according to the federal grand jury indictment.
Arraignment
Arraignment for former state sen. Jon Woods, Ecclesia President Oren Paris III and consultant Randell Shelton is set for 1:30 p.m. March 28 in U.S. District Court in Fayetteville.
The two redirected the returned money to a college from which more kickbacks were paid, according to the indictment.
The indictment also shed more light on Neal's Jan. 4 guilty plea to a public corruption charge. Neal is awaiting sentencing.
The grand jury indicted Woods, 39, with 11 counts of honest services wire fraud, one count of honest services mail fraud and one count of money laundering. Denying "honest services" by an elected official is a public corruption charge.
Each count of fraud carries a maximum sentence to 20 years in prison and a fine of up to $250,000, according to federal guidelines. The money laundering charge has a maximum sentence of 10 years and a fine of $100,000. Either the prison term, the fine or both can be imposed for each count.
The indictment also names Oren Paris III, 49, of Springdale and Randell G. Shelton, Jr., 37, of Alma in the kickback scheme. Each was indicted on nine counts of honest services wire fraud and one count of honest services mail fraud.
The indictment involves distribution of state General Improvement Fund grants. The fund consists of 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. The money is distributed through the state's eight economic development districts, nonprofit corporations that encourage regional economic development.
The college benefiting from the grants involved in the kickback is never directly named in the indictment, but Paris is identified as the unnamed institution's president. Paris is president of Ecclesia College, a work study college in Springdale. Work study colleges allow students to work off part of their tuition. The indictment identifies the college involved as a work study college in Springdale.
The scheme outlined in the indictment involved others.
A man identified only as "Businessman A" in the indictment paid an undetermined amount of cash in bribes to Woods to obtain $400,000 in improvement fund money for a workforce training project, federal court documents say. Woods paid $20,000 to Neal on the businessman's behalf for his part in securing the grants, according to Neal's guilty plea. "Businessman A" returned the $400,000 in August, 2014 after federal investigators questioned him, the indictment says.
The Northwest Arkansas Economic Development District in Harrison paid the grants involved. The district was audited in 2015 in a special investigation by state Legislative Audit. Grant records from the district and records from the August 2015 audit report show the only entity to receive grants totaling $400,000 for workforce training was a Bentonville firm called AmeriWorks.
AmeriWorks was incorporated by Milton R. "Rusty" Cranford of Rogers on Sept. 27, 2013, Arkansas Secretary of State records show. Woods and Neal directed the grants to AmeriWorks, district records show. Woods was responsible for $275,000 of the grant and Neal for $125,000.
Cranford returned $400,000 on Aug. 13, 2014, district records show. The letter accompanying the refund check, signed by Cranford, said the project fell through.
Cranford was also mentioned by name in an April 16 U.S. attorney's subpoena of the Northwest development district's records of AmeriWorks dating to Jan. 1, 2012.
After the $400,000 workforce training grant was returned, Neal and Woods directed $200,000 of that money to the college, receiving more kickbacks, the indictment says. Neal received $18,000 in cash, according to his guilty plea. Woods received cash amounting to several thousand dollars at least, the indictment says.
Woods' attorney, Patrick Benca of Little Rock, released a statement Friday afternoon proclaiming Woods' innocence.
"I had faith that the investigating agencies would draw the correct conclusion that Senator Woods has committed no crime," the statement said. "Unfortunately, the indictment combines and selects unrelated events and conversations in an attempt to connect dots that are not linked and portrays standard grant request procedures, followed by all legislators, as somehow unique and illicit."
Two home phone numbers listed for Oren Paris III, Ecclesia's president, have been disconnected, and a cell phone message wasn't returned. His office referred questions to Thursday's Facebook statement attributed to the board's president. The statement said the board believes Paris has acted with integrity and in the school's best interest.
Attempts to reach Shelton and Cranford were also unsuccessful.
"I have been engaged in public service for most of my life, and the allegations of the federal indictment are very troubling," Gov. Asa Hutchinson said Friday.
"Charges of corruption and bribery undermine the rule of law that is the underpinning of our system of government. The charges are unproven at this point, but the indictment is a reminder to all in office of the public trust we hold. The charges also reaffirm my concern about legislative GIF money and why we need to end it. I will work with the Legislature on better ways to handle any surplus, including the idea of directing surplus to a reserve fund."
The Consultant
The college would write checks, approved by Paris, to a consulting firm owned by Shelton "as a pass-through," the indictment says. Shelton would deposit the checks from the college and make payments to Woods. Shelton was a mutual friend of Paris and Woods, the indictment says.
Paris didn't tell his college's board he paid $267,000 to a consulting business owned by his friend until October 2015, after federal investigators questioned him about it, his indictment says.
In one transaction, Paris authorized $50,000 to Shelton's firm Sept. 27, 2013 -- the same day Paris signed an agreement for the college to accept a $200,000 state General Improvement Fund grant, the indictment says. Shelton used the $50,000 that day to open an account for his business, which had been incorporated the day before, the document reads.
Less than a week later, on or about Oct. 1, 2013, Shelton transferred $40,000 by wire from that business account into the personal bank account of Woods who had directed the grant to the college.
The college's board awarded Paris a $25,000 bonus Oct. 3, 2013 -- the day the college deposited the check, the indictment says.
Secretary of State records dated Sept. 26, 2013 show Shelton as the incorporator of Paradigm Strategic Consulting. The incorporation has since been revoked, according to the office.
Paris' report to his board in October 2015 "informed the board generally" about the payments to the consulting business over the previous two years, the indictment says, and said the business' activities "resulted in strategic positioning with new large donors, which was anticipated to result in multiple millions of dollars over the next few years."
Shelton kept a portion of the bribe money paid to Woods and Neal through Shelton's consulting company, according to the indictment.
The indictment says another benefit to Woods was Paris agreed to hire a friend of Woods as an administrative assistant. That person isn't named in the indictment. The woman received a $7,000 hiring bonus and a $43,000 annual salary.
Attempts to reach seven members of Ecclesia's governance board by phone or online Friday afternoon weren't successful.
Washington County Judge Joseph Wood, listed as a board member on the college's website, didn't return messages on his cell phone or at his office Friday.
A message for Christian singer Twila Paris left at the management company she employs also wasn't returned. She's identified on Ecclesia's website as a spokeswoman. She's the wife of Jack Wright, a board member, and Paris' sister.
Several other local legislators have directed grants to Ecclesia in the past four years, including State Sens. Bart Hester of Cave Springs and Cecile Bledsoe of Rogers, both Republicans. The two each directed $60,000 grants to Ecclesia; only Woods and Neal directed more.
Both Hester and Bledsoe said Friday they supported Ecclesia's mission as a work-learning, Christian-based institution. Both also said they were disappointed in the news of the indictments, though Hester added he didn't want one person's actions to "put a cloud over an entire institution."
"Ecclesia is the only work-learn college in Arkansas, and so the word was kind of around that that was a good thing," Bledsoe said, pointing to the growing problem of student debt that the work-learn model helps prevent. "Anything that is good can be perverted, so I'm sorry that that happened. The idea is wonderful. I'm feeling disappointed. I'm feeling very disappointed."
Broader plans
Woods, Paris and Shelton planned to obtain more state money, the indictment says. Woods and Paris lobbied other lawmakers, including Neal, to steer General Improvement Fund money to the college. Woods told Neal he would receive a kickback for directing money to the college, the indictment says.
General Improvement Fund grants to the college and other private entities isn't unusual, state and development district records show. Eight current or former legislators directed state grants to Ecclesia College from 2013 through March 2015 totaling $217,500 in addition to the $400,000 from Woods and Neal.
The figure doesn't include $100,000 the college received from another development district with headquarters in Hot Springs, the West Central Economic Development District, with Woods supporting that request.
All but one of the grants to Ecclesia came at the request of lawmakers within the eight counties covered by the Northwest district. The exception was a $25,000 grant directed by Rep. Stephen Meeks, R-Greenbrier, for matching money for a federal student aid grant. Meeks said earlier he supported the grant because he supported the school's mission.
Woods also sponsored Act 417 of 2015, the Work College Act. The act authorized grants to work colleges allowing students to pay part of their tuition through labor.
"At the time of the filing of this bill and the passage of this act, Entity A was the only college in the state of Arkansas that would have been eligible to receive grants under the Work College Act," the indictment says.
NW News on 03/04/2017