FAYETTEVILLE — Ecclesia College was failing to raise enough money to cover its expenses in January 2015, after almost two years of paying Randell Shelton to line up donors, the college’s former professional fundraiser testified Friday in a public corruption trial.
Ecclesia, a private Christian college, is at the center of an indictment against former state Sen. Jon Woods of Springdale; Oren Paris III, former president of Ecclesia; and Randell Shelton, formerly of Alma. The three were indicted in March 2017, accused of participating in a kickback scheme.
The trial of Woods and Shelton began Monday in federal court in Fayetteville.
Paris pleaded guilty April 4 to one count of conspiracy and will testify for the government. He resigned as Ecclesia’s president and from the college’s governing board the previous day.
Paris disguised the kickbacks as consulting fees paid to Shelton’s company, Paradigm Strategic Consulting, according to the indictment. Shelton then passed money along, the government contends. The grants involved came from the state’s General Improvement Fund.
Defense attorneys have said the money transfers to and from Woods were loans and money to pay back loans.
Ecclesia hired Seth Duell in February 2015 to raise money, he testified Friday morning. Paris never told Duell that Paradigm Consulting had been hired to raise money, he said.
In cross examination defense attorneys produced emails from Paris to Duell dated as early as February 2015 referring specifically to Shelton and Paradigm in reference to fundraising suggestions. Duell testified he did not remember the emails and said they only made suggestions. He never coordinated fundraising with Shelton, he said.
Paris had paid Shelton’s consulting company $267,000 out of college funds from 2013 to 2015 without notifying his college’s board until October 2015 when federal investigators questioned Paris, according to the indictment and testimony.
Paris reported to his board in October 2015 about the payments to the consulting business over the previous two years, the indictment says, and said Shelton’s efforts “resulted in strategic positioning with new large donors, which was anticipated to result in multiple millions of dollars over the next few years.”
The campus was run down, Duell testified. “Dorms were in a terrible state,” he said.
Ecclesia had no record of any donations greater than $15,000 when he came on board, Duell testified. The college lacked enough enrollment to cover its expenses with tuition, he testified.
“I was kept in the dark about who Paradigm was,” he said.
Duell raised the possibility of seeking General Improvement Fund grants, but was told by Paris that Paris handled those, Duell testified.
“Many people in Springdale had never heard of a Ecclesia, and there was skepticism from those who didn’t know” Duell testified about his fundraising efforts.
Duell worked for the college for about a year he testified.
“When FBI investigators interviewed Mr. Paris in his office, I knew it was time to find another job,” he said.
Woods supported a $200,000 grant to Ecclesia in September 2013, grant records show. Neal supported a $50,000 grant to the college and Woods another $150,000 in December, 2014, also according to grant records. The amount of money Woods is accused of receiving as a kickback isn’t specified in the indictment. It claims much of that money was paid in cash, except for one transaction made to Woods by wire transfer for $40,000.
Arkansas legislators gave nearly $700,000 of taxpayers’ money to help Ecclesia College buy almost 50 acres in Benton County.
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.
The trial is expected to take at least three weeks. Prosecutors called witnesses Wednesday and Thursday to detail Woods’ and Shelton’s finances. Woods maintained at least four bank accounts in the time period he is accused of taking kickbacks, with none sustaining a positive balance, according to testimony.
Woods also received $87,250 in loans from Arvest Bank between 2012 and 2014, all guaranteed by others, according to financial records presented Thursday at his trial.
Prosecutors began the week with testimony from former state Rep. Micah Neal of Springdale, who pleaded guilty Jan. 4, 2017, to one count of conspiracy. He admitted receiving two kickbacks, one in 2013 and one in 2014, totaling $38,000 in exchange for directing state grants to two nonprofit groups. His sentence is pending.
Woods is accused of taking kickbacks from Paris in return for directing $550,000 in General Improvement Fund grants to Ecclesia, all in 2013 or 2014.
Neal testified Wednesday he became involved in the kickbacks because he was having financial trouble and asked Woods how he made money. Woods said he had a deal worked out and came back to him a few days later with the kickback plan in which the two would receive 20 percent of any grant money steered to Ecclesia and another nonprofit, AmeriWorks, Neal said.
Neal’s guilty plea included his taking kickbacks along with Woods for $400,000 in state grants to AmeriWorks. Neal said he received $20,000 delivered by Woods for steering $125,000 to AmeriWorks. Grant records show Woods directed $275,000 to the company.
AmeriWorks was incorporated by lobbyist Russell “Rusty” Cranford a day before it received the grants. The $400,000 from the 2013 grant was returned Aug. 14, 2014, after federal investigators questioned the company’s founder about the grants, according to Woods’ indictment.
Woods and Neal, both Republicans, then cooperated to use part of the refunded $400,000 to steer another $200,000 to Ecclesia in return for another kickback, the indictment says.
Cranford, 56, is set for trial June 11 in federal court in Springfield, Mo., on one count of conspiracy and eight counts of accepting bribes in an unrelated indictment.
Woods faces 15 counts of fraud, all relating to either wire or mail transfers of money. Paris and Shelton were named in 14 of the fraud charges. All three were charged with one count of conspiracy to commit fraud. Woods is also charged with one count of money laundering in connection with the purchase of a cashier’s check.
