Former Arkansas senator convicted in kickbacks case projected affluent ruse

Court case lays bare Woods’ misdeeds to keep up facade

Posted: September 9, 2018 at 5 a.m.

Former state Sen. Jon Woods (right) heads to federal court Wednesday in Fayetteville for sentencing on corruption charges.

FAYETTEVILLE -- As a state senator, Jon Woods had the best lodgings at the Capitol Hill Apartments in Little Rock, his rooms bestrewn with costly sports memorabilia, according to court testimony in April.

He had the best-stocked liquor cabinet in the home-away-from-home for state legislators that sits across the street from the state Capitol.

The now-former senator from Springdale didn't drink, according to trial testimony. The liquor was for entertaining associates and other lawmakers.

Agreements were reached. Some of them, it's now known, eventually led to illegal kickbacks to Woods.

Woods' monthlong trial this spring ended with him convicted May 3 of 15 charges involving kickbacks related to state General Improvement Fund grants he had approved. He was convicted of one count of conspiracy to commit fraud, one count of money laundering in the purchase of a cashier's check, and 13 counts of mail or wire fraud.

On Wednesday, U.S. District Judge Timothy L. Brooks in Fayetteville sentenced Woods to 18 years and four months in federal prison. In addition, Woods will spend three years on probation after his prison sentence, pay $1.6 million in restitution and forfeit $1 million in assets to the federal government. Woods is free on bond. He's to report Sept. 26 to whatever federal prison the U.S. Justice Department selects.

Woods declined to testify or make a statement during the proceedings. He sat without stirring, facing forward throughout the judge's remarks on the factors in his sentencing. The judge's explanation lasted more than a half-hour.

Afterward, Woods and his legal team left the courtroom without comment. Woods is a first-time offender, but his crimes show a high level of sophistication and eagerness to profit off the public's trust, Brooks said in rejecting Woods' request for leniency.

"I think your mentality has evolved to the point that I think you have some serious criminal mentality issues" and would return to fraudulent behavior if given a light sentence, the judge said.

In at least one case, Woods corrupted a fellow lawmaker -- now-former state Rep. Micah Neal -- pulling him into the schemes, U.S. Attorney Duane "Dak" Kees said at Wednesday's hearing.

"How many other legislators were deceived?" Kees asked.

Woods grew up in Springdale and graduated from the University of Arkansas, Fayetteville with a degree in marketing in 2002. He was working as a loan officer at a bank when he was first elected to the state House in 2006. He served three terms in the House. In 2012, he won a seat in the Senate.

Woods didn't run for re-election in 2016, but that year he collected $33,698 in state per diem, mileage and other expense payments -- the largest amount among senators.

Testimony and evidence during his trial drew a picture much different from the lavish lifestyle Woods presented to his fellow lawmakers.

Financial records showed that Woods took out loans, and then loans to pay the loans while juggling at least four checking accounts that often registered negative balances. He spent $39,000 on fine jewelry with money he didn't have, records showed.

"Mr. Woods used his office as senator as a legislative ATM," Sean Mulryne, attorney for the public integrity section of the U.S. Department of Justice, said during the trial.

Woods borrowed $35,000 from a payday lender in the two years before the kickback scheme began. In 2011 and again in 2013, Woods introduced legislation to benefit payday lenders, Mulryne testified.

Woods' financial records showed that he made cash deposits in various accounts totaling $82,488 from 2012-15. That included $24,877 in 2013 and $37,782 in 2014, bank records show. That compares with $3,700 in 2012 and $16,138 in 2015, according to testimony from Christy Cops, fraud research specialist for Arvest Bank, where Woods had accounts.

Woods took out $87,250 in loans from Arvest Bank between 2012 and 2014, all guaranteed by local businessmen. Testimony by government witnesses showed that Woods consolidated those loans, a $52,000 balance on a car loan and other debts into a $165,000 loan from Signature Bank in June 2015.

Bank records showed as many as 16 overdraft penalties a month in one of his bank accounts in 2013, Cops testified.

But Woods projected a much different public image.

Fellow lawmaker and Springdale High School alumnus Neal testified that he looked at Woods' lifestyle and asked him how he made money. Soon after, Woods revealed a plan in which he and Neal would steer state grant money to the small Ecclesia College in Springdale and the nonprofit Bentonville company AmeriWorks in exchange for a 20 percent kickback, Neal said.

Woods received kickbacks on $350,000 in state General Improvement Fund grants he directed to Ecclesia and $275,000 in grants he sent to AmeriWorks, prosecutors said.

Randell Shelton Jr. of Kemp, Texas -- the best man at Woods' June 14, 2014, wedding -- was also charged in the kickbacks case. He was sentenced Thursday in Fayetteville.

At Shelton's daylong sentencing hearing, Brooks said Shelton will probably never defraud taxpayers again, but he couldn't grant the leniency that Shelton and his family wanted.

Brooks said he had to impose a sentence that couldn't "in any way, shape or form be construed as a slap on the wrist."

Shelton was sentenced to six years in prison to be followed by three years of probation on 12 charges of conspiracy and fraud related to state grants to Ecclesia College. He was ordered to pay $660,698 in restitution and to forfeit another $664,000 in assets.

Shelton implored the judge to sentence him to house arrest, so he could be with his infant daughter.

But, Brooks said, "you are asking to be locked in your home with your newborn baby. Many parents would consider that a joy."

Brooks said Shelton was clearly distressed at the cost of his actions on his family, but there was a "mountain of evidence that was also microscopic in its detail" against him during his April trial.

It took four weeks to get through all of the evidence, the judge reminded Shelton.

Brooks noted that Shelton's first retainer of $50,000 was about $10,000 more than the entire yearly salary of the college's full-time, professional and experienced fundraiser. The consulting contract with Ecclesia was "a thin veil," Brooks told Shelton.

Shelton and Woods were indicted in March 2017. Oren Paris III, former president of Ecclesia College, pleaded guilty April 4 to one count of conspiracy related to the kickbacks. He resigned as Ecclesia's president. His sentencing is set for this week.

Paris disguised the kickbacks as fundraising consulting fees paid to Shelton's business, Paradigm Strategic Consulting, according to the indictment. Shelton then passed the money along to Woods and Neal.

Neal also is scheduled to be sentenced this week, one year and nine months after he pleaded guilty to one count of conspiracy involving the kickbacks.

For Woods' sentencing, at least a dozen people wrote letters of support for leniency, the judge said Wednesday. Woods did a great deal of good and was effective as a legislator, said past officers of associations for firefighters and police at the hearing.

But the judge said Woods' kickback schemes were sophisticated and took skill to execute.

"You were playing chess at a very high level, thinking three or four or five moves ahead. This wasn't a case of someone offering you a chance to make easy money and you taking it," Brooks told Woods on Wednesday.

Woods' corruption involved more than kickbacks, according to testimony and court documents. He sponsored and got passed legislation to benefit Ecclesia College. He drafted and sometimes introduced other legislation to benefit his benefactors, including a plan he pitched to Gov. Asa Hutchinson in 2015 to legalize medical marijuana to support Ecclesia. He drafted a bill to direct state grants to a shingle recycling business owned in part by himself, Shelton and Paris, according to court documents.

Woods' then-fiancee was hired at a behavioral health provider that received a $1 million state grant that Woods sponsored, and his invalid father received medical equipment bought with another state grant by a company in Benton, according to court records.

The most brazen act of all, Brooks said at Wednesday's hearing, came after lobbyist, behavioral health services executive and now-convicted bribe-payer Milton R. "Rusty" Cranford returned a $400,000 state grant Woods had helped sponsor in September 2014 after federal investigators questioned it.

"Your immediate, almost reflexive response was to re-steal the same money," by putting it in another grant to get another kickback, Brooks told Woods. "I find that amazing. I find that a great insight into the depravity of your heart."

The charges against Woods were for kickback schemes involving Ecclesia and the $400,000 grant to AmeriWorks, a company Cranford ran.

But it was a $1 million state grant in 2013 to the behavioral health provider, Alternative Opportunities -- now known as Preferred Family Healthcare -- that weighed heavily in his sentencing, according to court proceedings.

Thus, Woods' attorney Patrick Benca of Little Rock argued, in effect, years were added to Woods' sentence for a crime he was never convicted of and has been implicated in only by Cranford, a convicted felon.

"My concern is that you have a guy facing more time in prison for an accusation from someone who was not present at trial," Benca said. "There was no way to confront Mr. Cranford at trial, no test of his credibility in front of a jury. It's unfair."

He said at Wednesday's hearing that he plans to file an appeal in the case. Also attorneys say the fact that Shelton and Woods were tried together rather than separately, may be used as grounds for appeal.

Metro on 09/09/2018