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story.lead_photo.caption File Photo/NWA Democrat-Gazette/ANDY SHUPE Former state Sen. Jon Woods (right), surrounded by members of his legal team, walks Nov. 30 into the John Paul Hammerschmidt Federal Building in Fayetteville.

FAYETTEVILLE -- Attorney W.H. Taylor was brought into a closed federal court hearing for an hour and a half as a witness Wednesday in the public corruption case against former state Sen. Jon Woods of Springdale.

Wednesday's hearing concerned whether certain sealed documents in the case should be subject to attorney-client privilege, barring their use by the prosecution, according to court documents available to the public.

The sealed documents in dispute came from a time period in which Taylor was Woods' defense attorney and simultaneously represented an FBI investigator in Woods' case, Bob Cessario, in a civil matter, according to court documents. Woods is now represented by attorney Patrick Benca of Little Rock.

Woods, Oren Paris III, president of Ecclesia College in Springdale, and consultant Randell G. Shelton Jr. are accused in a federal indictment of participating in a kickback scheme. Trial is set for April 9. More pre-trial hearings are set for Jan. 25 and April 4.

Officials cleared U.S. District Judge Timothy L. Brooks' courtroom of audience members just before the hearing began at 9 a.m. Taylor of Fayetteville was brought in to testify about 9:45 a.m. and didn't leave until about 11:15 a.m. Taylor said afterward he couldn't comment on the case.

Other witnesses were interim U.S. Attorney Kenneth Elser and Cessario.

Elser was the next witness to testify in the case, according to a brief summary of proceedings posted on the court's website Wednesday evening. His testimony lasted from the time Taylor's ended until the court broke for lunch at 1 p.m. The hearing resumed at 2 p.m. with Cessario's testimony, followed by arguments from attorneys in the case, ending about 3:45 p.m.

Brooks took the issues in the hearing under advisement and will issue a written ruling in due course, according to the summary.

Neither Elser, Benca nor Woods would comment after the hearing.

[Court rulings to remain secret in Woods case.]

According to previously released court records, Taylor encouraged his then-client Woods to make a statement that the government intends to use as evidence. Defense attorneys for Paris and Shelton have yet to see the statement because the issue of whether it's privileged is still in dispute, according to a Tuesday court order.

Woods is accused of accepting kickbacks in return for directing state General Improvement Fund grants to the college. The grants were approved by Woods with kickbacks passed through Shelton's consulting firm, according to the indictment.

Woods of Springdale 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. All three 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.

The indictment alleges Paris paid Woods and former state Rep. Micah Neal of Springdale kickbacks in return for $550,000 in grants to his college from 2013 through 2014.

Neal pleaded guilty Jan. 4 to one count of conspiracy to commit fraud. The two also received kickbacks from a Bentonville company called AmeriWorks, the indictment says.

The indictment doesn't give a total of what Woods, a Springdale Republican, is accused of receiving in kickbacks because it says portions were paid in cash.

Woods, Shelton and Paris 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. All three may also be ordered to forfeit any money or property obtained through their actions, if found guilty.

Freedom of Information Act requests by the Northwest Arkansas Democrat-Gazette a year ago this month found at least three of the state's eight economic development districts, which administered the General Improvement Fund grants, had been subpoenaed by federal investigators. Another development district didn't respond.

Since that time, staff for the state Legislature obtained permission to hire outside legal counsel to represent them in dealing with federal investigators who have requested more records relating to the grants. The records include state legislators' working papers.

The secrecy surrounding this case has become an issue before the court.

The U.S. attorney's office in March requested a protection order sealing documents in the case. Its motion cited both the need to protect the defendants' private financial information and "confidential and sensitive information related to other law enforcement investigations. If this information were to be publicly disclosed, such disclosure might impair an ongoing investigation or infringe on the privacy rights of third parties whose conduct is or was at one time under investigation."

Defense attorneys didn't object at the time nor at their clients' arraignment in May, but the defendants asked the judge to unseal the documents in a motion filed Oct. 3, claiming the secrecy had become a hindrance to preparing a defense.

Laurent Sacharoff, associate professor at the University of Arkansas School of Law in Fayetteville, reviewed the record of the filings in the Woods case Nov. 14 at the request of the Northwest Arkansas Democrat-Gazette.

"This case involves clear public interest, including allegations that public officials took bribes. In such a case, it strikes me that documents should be filed under seal only after carefully weighing the need for particular information to remain secret as against this strong public interest in transparency. Sometimes, a court can redact sensitive information rather than filing an entire document under seal."

Sacharoff noted the U.S. Court of Appeals for the 8th Circuit ruling in the case of IDT Corp. vs. eBay, a patent infringement case. Although the Woods trial involves criminal allegations, the appeals court ruling directly addresses the issue of sealing an entire record to protect confidential information compared to redacting such information while leaving the rest of the record open, he said.

The court ruled judicial records should remain open unless the trial court can give a clear and compelling reason for closing the entire record. The 8th Circuit's multistate district includes Arkansas, so the court's standard applies here, Sacharoff said.

Other issues in the Woods' case are expected to be taken up in a hearing Jan. 25. One issue is a motion to dismiss based on the alleged government failure to disclose relevant audio recordings. The laptop computer used in the investigation was missing 79 covertly recorded audio files because Cessario took it home for unauthorized personal use and then wiped the machine's memory before returning it, according to a letter from government attorneys filed last month with the court. Woods' case was originally set for trial Dec. 14, but was delayed after the incident came to light.

That letter was under seal by court order, Brooks ruled in a December court order. Therefore, his court also will hold a hearing Jan. 25 to determine if the attorney who attached the government's letter to a motion posted on the court's website, Gregory F. Payne, should be subject to disciplinary action. Payne is an attorney for Paris.

The General Improvement Fund, which was controlled by legislators, consisted 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 money to be directed to a nonprofit group or government entity. The state Supreme Court declared this method of distributing general improvement money unconstitutional in a ruling Oct. 5.

NW News on 01/11/2018

Print Headline: Attorney testifies in kickback case

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