Woods trial: Missouri company sought millions

Tuesday testimony focused on Woods

Former state Sen. Jon Woods (left) walks April 4 alongside his attorneys outside the John Paul Hammerschmidt Federal Building in Fayetteville.
Former state Sen. Jon Woods (left) walks April 4 alongside his attorneys outside the John Paul Hammerschmidt Federal Building in Fayetteville.

FAYETTEVILLE -- A $400,000 grant awarded with kickbacks was only the start of a Missouri company's plan to get another $4.7 million from the state, according to the U.S. Justice Department.

Former state Sen. Jon Woods sought $4.7 million in state grants, forgivable loans and other financing to move a Springfield, Mo., thermostat manufacturer to Northwest Arkansas, subpoenaed email presented Tuesday at Woods' trial shows.

The for-profit thermostat company had two board members who were also executives in a nonprofit behavioral health provider. That nonprofit hired Woods' fiancee, Christina Mitchell, for $70,000 a year four months after receiving the $400,000 grant. Mitchell's replacement received $35,000 a year, according to records presented Tuesday.

Woods is accused of accepting a kickback on the $400,000 grant. He and co-defendant Randell Shelton Jr., formerly of Alma, are being tried together over alleged kickbacks on a different set of grants to a Christian college in Springdale.

Woods' defense countered the thermostat company's move from Missouri would have brought at least 150 jobs to the region with the potential for more, and a number of state and local lawmakers and economic developers were working on the prospect. The defense accused the government of being selective in the records it subpoenaed.

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Tuesday's testimony referred to Woods' dealings with AmeriWorks Inc. and related companies and people. AmeriWorks, a Bentonville firm, allegedly paid kickbacks in return for the $400,000 grant in 2013. Shelton played no role in those dealings, the government acknowledged. Shelton argued unsuccessfully for a separate trial shortly after his indictment in March last year.

AmeriWorks wasn't eligible for the grant since it lacked certification as a nonprofit company in September 2013, grant records show. So the grant was received by Dayspring, a nonprofit behavioral health provider, doing business as AmeriWorks, grant records show. The grant applicant was Milton R. "Rusty" Cranford, both a lobbyist for and executive with Dayspring's parent company.

Cranford accepted the AmeriWorks grant Sept. 26, incorporated the nonprofit organization Sept. 27 and deposited the $400,000 check Sept. 30, grant and state incorporation records show. Cranford is under federal indictment in Missouri for nine unrelated bribery charges.

Cranford had staff at Decision Point, a sister company, help prepare the grant application, according to Woods' indictment. Dayspring and Decision Point share a headquarters in Bentonville.

Woods' fiancee got a job with Dayspring. She left later in 2014, according to court testimony and personnel documents presented in court Tuesday.

Dayspring and Decision Point's parent company, Preferred Family Healthcare, is based in Springfield, Mo. Email subpoenaed by the government shows Tom Goss, chief financial officer, told Cranford on Oct. 15, 2013, he wanted to hire Mitchell at a salary of $90,000 a year, but in discussions they noted no position outside of the parent company paid so much.

"Senator is taken care of," Goss said during the email exchange. "He is a new bubba for our team."

Headquarters' email also shows the original draft of the AmeriWorks grant application wasn't filled out by Cranford and Decision Point staff, as grant records show, but by Bontiea Goss. Bontiea Goss was the chief operating officer for the parent company.

Tom and Bontiea Goss also were board members of Pro 1, a private, for-profit thermostat manufacturer and importer also based in Springfield. That company was seeking $4.7 million in grants and forgivable loans in 2013 from the Arkansas Economic Development Commission. Cranford and company representatives met with Grant Tennille, then-director of the AEDC, and local chamber officials in Northwest Arkansas on Sept. 27, 2013, records presented at trial show.

Among the benefits sought was a $1 million grant and a $3 million no-interest, five-year loan that would be reduced by $20,000 for each job created -- using workers trained by AmeriWorks, court documents showed. If projections of 150 employees were met, the loan would have been entirely forgiven.

Woods would spearhead efforts to get support, with him approaching members of the Senate. Then-state Rep. Micah Neal, also of Springdale, would lobby in the House. Both would appeal to then-Gov. Mike Beebe, Woods said in an email to Goss, Cranford and Neal dated Oct. 19, 2013. The governor would have final say on the AEDC grants. If he refused, Woods and Neal would take up the issue in the February 2014 fiscal session of the Legislature, Woods' email says.

Patrick Benca, Woods' defense attorney, noted in cross-examination Pro 1 could have brought as many as 200 jobs to Northwest Arkansas, employed veterans and people with a history of substance abuse trained by AmeriWorks and the project to move the company to Arkansas had many supporters besides Woods and Neal.

Mitchell married Woods on June 14, 2014. Shelton was Woods' best man, according to earlier statements by defense attorneys in the trial.

Mitchell was hired as an on-the-job trainer for Dayspring, and her first day at work was Feb. 24, 2014, testified Tammy Pierce of Fayetteville, Dayspring's personnel director at the time. Mitchell left on June 20 of the same year. In his 2013 financial statement, filed Feb. 2, 2014, Woods listed Christina Woods as an academic adviser with the University of Arkansas with an income of more than $12,500.

In addition to the salary, Mitchell and her successor were paid a $300 a month mileage allowance and cellphone reimbursement.

"Who had the final decision on who was hired for this position?" Assistant U.S. Attorney Kenneth Elser asked about Mitchell's hiring.

"Rusty Cranford," Pierce replied.

Tom and Bontiea Goss were removed from their positions by Preferred Family's board Nov. 9, along with company chief executive officer Marilyn Nolan. The three were later fired. A Philadelphia-based lobbyist for the company pleaded guilty late last year to accepting almost $1 million skimmed from the company for illegal campaign contributions and other lobbying prohibited to nonprofits that receive federal funds.

Former Arkansas Rep. Eddie Cooper of Melbourne also pleaded guilty Feb. 12 to a conspiracy charge involving embezzlement from Preferred Family in federal court in Missouri. Another former board member who oversaw mergers killed himself on his farm near Springfield in November after pleading guilty in June to embezzling almost $2 million from the company.

The government will rest its public corruption case against Woods and Shelton today, Elser told the presiding judge at the close of court Tuesday.

Elser would neither confirm nor deny if Oren Paris III of Springdale, the former president of Ecclesia College, will testify today against his two former co-defendants. Paris pleaded guilty to one count of conspiracy on April 4 in the last hearing before trial. He was indicted for paying kickbacks to Woods and to Neal in return for state General Improvement Fund grants in 2013 and 2014 totaling $550,000.

Paris disguised the kickback payments as fees to Shelton's consulting firm, according to the government. Neal pleaded guilty to one count of conspiracy on Jan. 4 of last year and was the first witness in the trial, which began April 9.

U.S. District Judge Timothy L. Brooks told the defense team Tuesday to be ready to start calling witnesses as soon as the government concludes, although he did say a long mid-day hearing after the government rests is to be expected. The defense will have motions for the court to consider then, attorneys for Woods and Shelton told the judge.

Tuesday's proceedings concentrated on the case against Woods. Brooks read jury instructions after each witness reminding jurors none of the evidence they saw or heard Tuesday factored in to the case against Shelton.

In another development, a juror in the case fell ill Tuesday morning and was replaced by one of the jury's two alternates. Brooks told the jurors the replaced juror wasn't sure he could sit through proceedings the whole day. Taking a day off at this point would jeopardize plans to finish the trial next week, Brooks said.

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.

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.

Neal said in his guilty plea 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 and Paris' sentences are pending.

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 Arkansas Economic Development District returning the $400,000. The district had issued the grant at Woods' and Neal's direction.

Cranford returned the money the day after federal investigators spoke to him, prosecutors said in court documents filed earlier in the case.

The kickback allegations also involve $550,000 of the more than $717,500 in state General Improvement Fund grants to Ecclesia, the U.S. Department of Justice contends.

Doug Thompson can be reached by email at [email protected] or on Twitter @NWADoug.

NW News on 04/25/2018

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