FAYETTEVILLE — One of the groups at the center of former state Sen. Jon Woods’ corruption trial wouldn’t have qualified for the $400,000 grant it received, but administrators allowed AmeriWorks to borrow the tax-exempt status of another nonprofit company, Mike Norton testified this morning.
Norton, of Harrison, was director of the Northwest Arkansas Economic Development District in 2012-2014. During that time, federal prosecutors say Woods and three co-conspirators directed the district to award grants from the state General Improvement Fund in exchange for kickbacks. The development district administered the grants, which have since been ruled unconstitutional.
Woods and former state Rep. Micah Neal, both R-Springdale, directed $400,000 in grant money to AmeriWorks, court and state records show. Neal pleaded guilty Jan. 4, 2017, for his role in the scheme and was the government’s first witness in the case. 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.
Neal’s sentence is pending.
AmeriWorks was incorporated by lobbyist Russell “Rusty” Cranford and described in a grant application as a work-training program. 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.
Records show AmeriWorks accepted the grant Sept. 26, incorporated Sept. 27 and deposited the $400,000 check Sept. 30. Since it wasn’t incorporated when it applied for the grant, Norton said he met with Cranford and Woods at Neal’s Cafe in Springdale to discuss the issue. Micah Neal was in his family’s restaurant at the time, Norton said.
They agreed to use the tax-exempt status of Decision Point, Norton said.
AmeriWorks had no business address of its own and was having its grant correspondence sent to offices of Decision Point, a Bentonville-based nonprofit corporation that provides behavioral and substance abuse treatment. Cranford represented Decision Point as a lobbyist.
Decision Point staff helped file the grant, and the organization received the money on AmeriWorks’ behalf. Cranford signed the application for the grants in question, according to state records and court documents. The grant checks from the Northwest district for the program were made out to “Decision Point d/b/a AmeriWorks.”
That should never have been the case, Decision Point’s parent company, Preferred Family Healthcare of Kirksville, Mo., said last year when asked by the Northwest Arkansas Democrat-Gazette about its involvement.
“I have no idea why there is ever a reference to ‘Decision Point dba AmeriWorks,’” said parent company spokesman Reginald McElhannon.
Despite the grants, AmeriWorks failed to gain additional financial support and never got off the ground, according to an August 2014 letter from Cranford to the Northwest district returning the $400,000, according to Economic Development District records. Cranford returned the money the day after federal investigators spoke to him, prosecutors said.
Woods was indicted in March 2017, accused of a kickback scheme involving such grants issued in 2013 and 2014. Two alleged co-conspirators — Randell Shelton, formerly of Alma, and Oren Paris III, former president of Ecclesia College in Springdale, were indicted with Woods.
Norton confirmed on the stand Monday he resigned on Sept. 27, 2014, at the request of the district’s board because of the state of the district’s finances. In particular, the board found money earmarked for transportation projects had been used to meet the staff’s payroll, he testified. The board also found late payments to grocers who supplied senior citizen centers run by the district, he said.
The kickback allegations also involve $550,000 of the more than $717,500 in state General Improvement Fund grants that Ecclesia, a private Christian college, received from 2013 through 2014, the U.S. Department of Justice contends.
The trial of Woods and Shelton began April 9 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 board the previous day. His sentence is also pending.
Paris disguised the kickbacks as consulting fees paid to Shelton’s company, Paradigm Strategic Consulting, according to the indictment. Shelton then passed the money along, the government contends.
Defense attorneys have said the money transfers to and from Woods were loans and money to pay back loans.
Woods directed 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.
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, according to prosecutors.
The trial is expected to last at least three weeks.
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.
