FAYETTEVILLE -- U.S. District Judge Timothy Brooks denied defense motions to dismiss the corruption case involving former state Sen. Jon Woods, revealing in his court order that the chief FBI investigator in the case may face criminal charges.
Friday's ruling also disclosed that Woods cooperated with federal investigators from November 2015 through early 2016.
"Beginning in November 2015, Mr. Woods also cooperated for some time with the government's investigation, while he was represented by an attorney named W.H. Taylor. However, in March 2016, Mr. Woods fired Mr. Taylor, hired his current counsel, Patrick Benca, and stopped cooperating with the government."
FBI special agent Robert Cessario had the hard drive of a laptop computer used in the investigation of the Woods case wiped after being ordered to turn it over for inspection in a evidence-related dispute.
"Agent's Cessario's actions are currently being investigated by the FBI's Office of the Inspector General," Brooks noted in Friday's ruling. "And depending on the results of that investigation, he may face criminal charges.
"But those are not the crimes that have been charged in this case. The grand jury has issued an indictment against these defendants. The public has an interest in seeing that indictment prosecuted, just as the defendants have an interest in holding the government to its burden of proof at trial."
Woods; Oren Paris III, president of Ecclesia College in Springdale; and consultant Randell G. Shelton Jr., formerly of Alma, are accused in a federal indictment of participating in a kickback scheme involving state grants. The Justice Department alleges Paris paid Woods and then-state Rep. Micah Neal of Springdale kickbacks in return for $550,000 in grants from them to his college from 2013 through 2014.
Neal pleaded guilty to a conspiracy count on Jan. 4, 2017, for his role.
"There may be readers of this opinion who feel that this court, by declining to dismiss the indictment, is somehow allowing Agent Cessario -- and by extension, the government -- to 'get away with' bad conduct," Brooks wrote in his order. "The court would emphasize here that it does not condone Agent Cessario's actions; it finds them reprehensible. But the public does not forfeit its interest in seeing crime prosecuted simply because one government agent happened to engage in bad conduct along the way."
Brooks also refused a defense motion he step aside from the case on Friday.
The motion requesting Brooks to recuse was sealed and was the subject of a Jan. 10 closed court hearing. Brooks was formerly a member of Taylor's law firm in Fayetteville. Taylor has represented both Woods and Cessario in the past. His business relationship with Taylor ended years ago when he was appointed as a federal judge, Brooks ruled.
Neal made secret audio recordings from March to October of 2016, hoping to find more evidence and mitigate the sentence he expects to receive, according to his testimony in an earlier hearing. Neal did this without the government's encouragement or participation, according to prosecutors, but he did inform investigators he was doing it.
Defense attorneys asked Brooks to dismiss the case last year, arguing they never received a complete copy of Neal's recordings. They received 39 files originally and discovered gaps in the dates between recordings. They also found text messages between Neal, his attorney and Cessario referring to recordings not among the ones the defense team received.
The discovery of the gap resulted in the U.S. attorney's office ordering Cessario to turn in the laptop for inspection. That inspection found Cessario had the hard drive erased. Cessario's role as lead investigator taints the whole case, defense attorneys argued in a hearing Jan. 25.
Further investigation found 79 more recordings on a computer at the office of Neal's attorney, Shane Wilkerson of Bentonville, that were given to the defense. Still further investigation after the wiping incident came to light found another audio file.
Woods faces 15 counts of fraud, all relating to either wire or mail transfers of money. Paris and Shelton are named in 14 of the fraud charges. Each is 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. Their trial is set to begin April 9.
The case involves grants from the state General Improvement Fund, which is controlled by legislators. The state Supreme Court declared the method of distribution unconstitutional in a ruling Oct. 5.
The U.S. Justice Department alleges Paris paid Woods and Neal kickbacks in return for $550,000 in grants from those two legislators to his college from 2013 through 2014. Shelton is accused of using a consulting firm he owned as a way to pass along the kickbacks to Neal and Woods through consulting fees approved by Paris.
Neal, a Republican, pleaded guilty to one count of conspiracy to commit fraud, admitting he took two kickbacks totaling $38,000 in exchange for directing grants to two nonprofit groups. He has not been sentenced.
The indictment doesn't give a total figure of what Woods, a Springdale Republican, is accused of receiving in kickbacks because portions of it were reportedly paid in cash.
All three defendants have entered not guilty pleas. They face up to 20 years in prison on the fraud and conspiracy charges, if convicted. Woods faces an additional 10 years on the money-laundering charge, if convicted.
"The government's investigation into these and related matters is still ongoing, and it extends beyond the individuals and acts that have been charged in this particular case," Friday's ruling said.
"Among other things, the investigation involved the tracing of legislative acts, the making and approval of GIF grants on a regional level, and the ensuing paper trail of disbursements, receipts and proof that all of the proceeds were used as authorized. This dragnet involved the collection of an enormous number of documents -- a number that has been represented to the court as extending into the millions."
NW News on 03/03/2018