Little Rock attorney Jane Duke is advising the Arkansas Legislature's staff on how to respond to demands for records made by federal investigators. She also represents a top official in a company connected to an ongoing federal investigation into kickbacks received by state lawmakers.
Kenneth Elser, acting U.S. attorney for the western district of Arkansas, confirmed the ongoing investigation in a court hearing May 23. Less than a month later, the Arkansas Bureau of Legislative Research retained Duke and her firm of Mitchell, Williams, Selig, Gates and Woodyard to advise them on how to comply with requests by federal investigators for legislative documents.
Former state Sen. Jon Woods, Ecclesia College President Oren Paris III and Randell Shelton Jr. are set to stand trial beginning Monday for what the government alleges was a kickback scheme involving state grants. Paris paid fees to Shelton’s consulting firm, according to their indictment. Shelton in turn passed money to Woods and then-state Rep. Micah Neal, R-Springdale, according to the indictment. Neal pleaded guilty to one count of conspiracy Jan. 4.
Woods faces 15 counts of fraud, all related to either wire or mail transfers of money. Paris and Shelton are named in 14 of the fraud charges.
All three defendants are 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.
Jonathan Earl Woods, 40, won election to the state Legislature before he turned 30 and left before he turned 40. Along the way, he helped amend the state’s constitution three times and unseated an incumbent state senator.
Woods grew up in Springdale and graduated from the University of Arkansas with a degree in marketing in 2002. He was working as a loan officer at a bank when first elected to the state House in 2006. At the time, he was also a member of the rock band A Good Fight.
Woods, a Republican, served three terms in the state House before defeating incumbent Sen. Bill Pritchard, R-Elkins, in 2012.
He co-sponsored a state constitutional amendment guaranteeing a right to hunt and fish, a constitutional amendment to extend term limits for legislators and set ethical standards, and a constitutional amendment to allow cities to issue economic development bonds. All constitutional amendments require voter approval in a general election. Each of those three efforts succeeded.
He did not run for re-election in 2016, but collected the largest amount of per diem, mileage and other expense payments among senators in 2015 at $33,692.
Woods also was a partner in a consulting business, Woods Enterprises, beginning in 2007, according to his statement of financial interest filed with the Arkansas Secretary of State. Woods listed income of more than $12,500 from both A Good Fight and the consulting business each year until 2014, when his expense payments from the state and wife’s salary were the only sources of income of more than $12,500, according to his filings.
Woods wife, Christina, is listed as an academic adviser with the University of Arkansas, Fayetteville.
Woods incorporated another business, Titan Consulting, in 2016 and listed income from the business of more than $12,500 that year.
Oren Paris III, 50, is president of Ecclesia College, whose forerunner was founded by his father.
Oren Paris II started Ecclesia Inc. Basic Ministries Program in Elm Springs in 1975, according to Arkansas Department of Higher Education documents and the college’s website.
Ecclesia is a work-learning college, which allows students to earn money toward tuition, according to the school website. It offers three associate of arts degrees, 12 bachelor degrees and one graduate degree and is accredited by the Association of Biblical Higher Education.
Paris is also a brother of gospel singer and songwriter Twila Paris. She is the winner of 10 Gospel Music Association Dove Awards and three American Songwriter Awards.
Oren Paris succeeded his father as president of Ecclesia in 1997. The elder Paris was named chancellor, a largely honorary position he held until his death in June 2012.
As president, the younger Paris expanded the campus to more than 200 acres. Arkansas legislators gave nearly $700,000 of taxpayers’ money to help Paris buy almost 50 more acres beginning in 2013, according to state and county records.
Several of Paris’ requests for state grants for the properties say they are “critically needed space” for incoming resident students. Paris didn’t respond to a request in February for enrollment numbers or how many students live on campus, but Angie Snyder, Ecclesia’s director of communications, said in a March 2016 Northwest Arkansas Democrat-Gazette report half of the college’s 183 students are enrolled through distance learning.
Paris has incorporated two businesses in Arkansas, according to the Secretary of State’s website: Cedar Oak Properties LLC in 2016 and Roof Recovery and Recycle LLC in 2014. Both have been dissolved.
Paris is also a business partner of Randell Shelton Jr., who was also indicted in the case. Shelton listed Paris as the manager of a company he incorporated in 2015 named Shingle Resource Recycling.
Randell G. Shelton Jr., 38, is a consultant whose clients included Ecclesia College.
Shelton is identified in court documents as a friend of Ecclesia President Oren Paris III. Shelton was also a partner with Paris in Shingle Resource Recycling, a limited liability corporation, according to business records. Corporate filings with the Arkansas Secretary of State’s office list Paris as a manager and Shelton as the “incorporator” and manager.
At business meetings with at least one state agency, Shelton identified himself as the managing partner of the firm. The firm was a recycling company for discarded roofing shingles.
Shelton received $267,000 in fees approved by Paris as a consultant for Ecclesia, according to the indictment against the two men and former state Sen. Jon Woods, R-Springdale.
Both the shingle company and Shelton listed their address in 2015 and 2016 at 8532 Carrie Smith Road in Springdale, a 1.15 acre property bought by Ecclesia in 2013 for $230,000.
Graham Sloan, director of the Ethics Commission, named Shelton in a 2015 discussion as a potential contributor to the Conservative Arkansas Political Action Committee. The committee agreed to pay a $200 fine for filing as a PAC and not as an independent expenditure committee. The group sent mailers and bought ads in favor of candidates. Their efforts included about $4,251 paid to Target Direct on or about May 18, 2012, for a mailer in support of Woods’ successful state Senate campaign, Sloan said.
Duke, a former U.S. attorney for the eastern district of Arkansas, said in February and confirmed this week she also represents Tom Goss of Springfield, Mo., chief financial officer for Preferred Family Healthcare. Goss' wife, Bontiea, is the company's chief operating officer. The two were also founders of Alternative Opportunities Inc. in Arkansas, which Preferred Family took over in 2015.
Subsidiaries of Alternative Opportunities received more state General Improvement Fund grant money from Arkansas legislators since 2013 than any other entity in the state, according to research by the Arkansas Democrat-Gazette published in October. Two of those grants totaling $400,000 are the basis of the kickback scheme in which one former state lawmaker has pleaded guilty. A second former legislator, Jon Woods, goes on trial Monday on charges he also took kickbacks.
"There is no conflict of interest between our representation of Tom Goss and our representation of the Bureau of Legislative Research," Duke said Tuesday. "Neither had dealings with the other," she said. She said Goss knows nothing about kickbacks which, according to court documents, were paid by the then-director of Alternative Opportunities in 2013.
Goss agreed to the law firm's representation of the bureau, and the bureau knew she represented Goss, Duke said. Neither the bureau nor federal investigators will comment on whether the investigation of Woods and the ongoing investigation at the Capitol are connected, or what legislative records investigators are seeking.
Invoices for services rendered by the Mitchell Williams firm to the state, obtained by the Arkansas Democrat-Gazette, include charges for filing a motion to quash a subpoena from the FBI in its investigation for being overly broad. The firm has charged the state $59,301 since June 13, state records show.
The firm also helped legislative staff in connection with the Woods trial where four legislative staff members have been subpoenaed to testify, according to Marty Garrity, bureau director. Garrity confirmed Duke's account that the bureau was told about Goss.
The Legislative Council, a body of lawmakers overseeing government operations when the Legislature is out of session, approved hiring Duke's law firm. Sen. Bill Sample, R-Hot Springs and council chairman, said he spoke with Garrity on Tuesday and was satisfied with the representation Duke and her firm provided. He said he didn't see a conflict of interest.
"As long as they're happy, I'm happy," he said of the bureau.
Under current Arkansas Supreme Court rules of professional conduct, Rule 1.7, even if there were competing interests between two clients with the same lawyer, there's no issue so long as each client gives "informed consent" of the situation and there's no direct conflict prohibited by law, such as when "representation of one client will be directly adverse to another."
Neither the Arkansas Bar Association nor the Arkansas Office of the Committee on Professional Conduct would comment on the particulars in this case.
The kickback case
Charges against Woods, R-Springdale, include accepting a kickback in 2013 from a Bentonville-based nonprofit corporation named AmeriWorks in return for directing $275,000 in state General Improvement Fund grants to it. Former state Rep. Micah Neal, R-Springdale, pleaded guilty Jan. 4 to accepting a kickback after directing $125,000 in grant money to the company, which described itself as a jobs training program.
Milton R. "Rusty" Cranford, who identified himself in grant records as statewide director of Alternative Opportunities Inc., signed the application. Alternative Opportunities was incorporated in Arkansas in March 2006, Secretary of State records show. Names registered under the nonprofit's umbrella group were: Dayspring Behavioral Health Services, Decision Point, Health Resources, Health Resources of Arkansas and the Wilbur D. Mills Treatment Center.
The three principal incorporators were listed as Bontiea Goss, Tom Goss and Marilyn Nolan. The principal address was 1111 S. Glenstone, Springfield, Mo. That address is now an administrative office of Preferred Family, according to its website. Preferred Family and Alternative Opportunities merged in 2015 and became Preferred Family, the company said in February.
Cranford used the name and tax-exempt status of Decision Point to qualify for the AmeriWorks grant and used Decision Point staff to prepare the grant application, according to court records. Decision Point provides counseling for substance abuse and other behavioral problems.
The business address used by AmeriWorks throughout the grant application process was the address of Decision Point's facility in Springdale, according to records from the Northwest Arkansas Economic Development District, which administered the grant program.
The grant checks were deposited in Decision Point's account, the indictment says. AmeriWorks wasn't formally incorporated until after the grant was approved, grant and Secretary of State records show.
Preferred Family said there was never a formal connection between Decision Point and AmeriWorks. AmeriWorks was "a separate taxable nonprofit," spokesman Reginald McElhannon of Preferred Family said in a February statement. Any kickbacks took place before Preferred Health became directly involved in Arkansas in 2015.
The amount of state money in programs such as Medicaid, far beyond the General Improvement Fund, that Alternative Opportunities and Preferred Family receive in any given year is safely in the millions, said state Sen. Bryan King, R-Green Forest. King is a long-time critic of state Medicaid spending and what he describes as a lack of transparency in the business relationships between lawmakers and health care providers.
He's the sponsor of Senate Bill 175 of 2017, the latest in a number of such measures he proposed over the years to require reporting of business dealings between Medicaid providers, lawmakers and their spouses. The measure passed 23 to 6 in the Senate but died in the House State Agencies and Governmental Affairs Committee.
"Just what we know is enough where we should be concerned," King said. "I've had concerns for years about the influence of these providers." King also said he would contact Duke personally to discuss her representation of Goss and the state.
While Preferred Family didn't operate in Arkansas until 2015, Arkansas Secretary of State records show the Gosses and Nolan were involved beginning in 2006 when they founded Alternative Opportunities.
Cranford was an employee of Dayspring when Alternative Opportunities formed. He "later provided executive leadership for our various Arkansas services," the February statement said. "Our organization also has contracted with Cranford Coalition for government relations services for many years." Preferred Family placed its contract with Cranford's lobbying firm on inactive status in January, McElhannon said.
Duke represented AmeriWorks briefly in July and August 2016, she said Tuesday, while it was being subpoenaed for records then under Tom Goss' control. Goss referred all questions to Duke when contacted earlier this year about the Woods case.
The $400,000 in grants to AmeriWorks in the Woods case was refunded after federal investigators interviewed Cranford about the grants, according to Woods' indictment. The Aug. 13, 2014, refund check bore Tom Goss' signature stamp, records show. A letter from Cranford on Alternative Opportunities stationary accompanied the check. The check was drawn from the account of Dayspring Behavioral Health.
The Woods case involves grants from the state General Improvement Fund, a portion of which was until recently controlled by legislators. The fund consists of state tax money left unallocated at the end of each fiscal year and interest earned on state deposits. Each legislator was given a share of the fund to be directed to a nonprofit group or government entity. The state Supreme Court declared this method of distribution unconstitutional in a ruling Oct. 5.
From 2013 forward, Decision Point and other Goss-affiliated entities received $746,500 of General Improvement Fund grants on the approval of 15 state House and Senate members. The figure includes the $400,000 from Woods and Neal.
Cranford hasn't returned calls for comment left at his Little Rock office since Neal's guilty plea in January. A message left Tuesday was also not returned. Nathan F. Garrett of Kansas City, Mo., is one of the attorneys representing Cranford, according to an office worker taking a request for comment at the law firm of Graves/Garrett LLC. Garrett didn't return a message to him Tuesday.
Matters in Missouri
Tom and Bontiea Goss and Nolan were recently placed on unpaid administrative leave, Preferred Family confirmed Monday. The company wouldn't comment on the reason or the timing of the board's decision.
Nolan is a member of Preferred Family's senior management team, a spokesman for the company said. She was formerly the chief executive officer for Alternative Opportunities, according to news accounts.
A former member of Alternative Opportunities board of directors pleaded guilty June 12 to embezzling almost $2 million from the nonprofit company from his Missouri office, according to a statement from the U.S. Attorney's Office for the Western District of Missouri.
David Carl Hayes pleaded guilty to charges including theft from an organization receiving federal money. Neither the U.S. attorney for the western district of Arkansas nor for the western district of Missouri would comment on whether this is linked to the investigation of either Woods or the one at the Capitol. Hayes was the coordinator of merger and acquisition activity from 2006 to 2013, according to court documents.
"Doing business as Dayspring Behavioral Health Services, Alternative Opportunities operated dozens of clinics throughout the state of Arkansas. Hayes embezzled from Dayspring from Jan. 3, 2011, to March 31, 2014, by causing Dayspring to issue checks payable to himself or a person not identified in court documents, which Hayes deposited into his personal checking account."
Preferred Family notified Arkansas officials of the embezzlement, the guilty plea and of the Gosses' administrative leave, said Amy Webb, spokeswoman for the Arkansas Department of Human Services.
"Under PFH's certification as a provider, they were obligated to alert the Division of Behavioral Health Services and they did so," Webb said. Also, it appears the money embezzled was taken from Hayes' employer and no Arkansas state fund, such as Medicaid money, was involved, she said.
NW News on 11/30/2017
Print Headline: Attorney advising legislative staff linked to company in kickback case