FAYETTEVILLE -- Defense attorneys argued from the beginning that the government was withholding evidence in the kickback case involving former state Sen. Jon Woods, according to court documents recently unsealed.
Those documents also show that some of the evidence was destroyed, largely thanks to a computer wipe by an FBI agent.
Woods is to be sentenced today, and sentencing for co-defendant Randell G. Shelton Jr. is set for Thursday. Accomplices Oren Paris III of Springdale and former state Rep. Micah Neal, also of Springdale, go before U.S. District Judge Timothy Brooks for sentencing next week.
The expected appeals in the corruption convictions of Woods and his co-defendants can begin once Brooks imposes the sentences.
The appeals will allege widespread government misconduct from the U.S. attorney's office, the FBI and even Woods' original attorney, defense attorneys say.
Woods and Neal were convicted of accepting kickbacks from state grants they steered to Ecclesia College in Springdale in 2013 and 2014. Paris was president of Ecclesia at the time. He hired Shelton as a consultant to pass money to Woods and Neal. Woods and Neal are also convicted of accepting kickbacks from another nonprofit, AmeriWorks Inc. of Bentonville.
Neal pleaded guilty to his role in the scheme on Jan. 4, 2017. Paris pleaded guilty the week before his trial with Woods and Shelton was to begin in April. Woods and Shelton were convicted by a jury in Brooks' court May 3.
Paris' plea agreement allows him to retain his appeal rights. If Woods' and Shelton's convictions are overturned, Paris' guilty plea would be retracted.
The full extent of defense claims of withheld evidence came to light Friday. Much of the case records were kept under seal because the federal investigation into corruption in state spending is still underway. So far, that investigation has resulted in convictions of five former state lawmakers and the indictment of a sixth in a related case.
Brooks released 532 pages of records Friday, including all or portions of 48 different court documents, plus attached exhibits. Of those, 35 were released in their entirety and 13 had some portions redacted.
The centerpiece of their appeals, defense attorneys say, will be the decision of FBI investigator Robert Cessario to wipe the hard drive of an FBI laptop computer that was used to gather evidence. Cessario's explanation that he was trying to protect his private medical records was rejected by the court, and the matter was referred to the Inspector General of the FBI for further investigation. No result of that investigation has been made public to date.
The events leading up to the laptop wipe began with members of the defense team insisting that they were not getting all the records they were entitled to and the government assuring them they were, the unsealed documents show. Secret recordings made by Neal became the key to the dispute.
A text from Neal's attorney, Shane Wilkinson of Bentonville, mentioned recordings by Neal of conversations that were not turned over to the defense until defense attorneys discovered them during Woods' trial.
In all, Neal made at least 119 audio files that he downloaded onto a computer at Wilkinson's office. Further investigation after defense attorneys made an issue of possible missing files found 80 of them had not been shared with the defense. The gap was discovered days before the trial was originally set to begin in December, resulting in a delay until April.
Cessario was ordered Dec. 4 in an email from Assistant U.S. Attorney Aaron Jennen to turn over the laptop. Cessario had the hard drive professionally erased at a computer shop in Bentonville that same day, then erased it again himself before turning it in on Dec. 7, he testified in a pretrial hearing Jan. 25.
Brooks barred the prosecution from calling Cessario as a witness at the trial and also barred the prosecution from using any of Neal's recordings, but allowed the trial to proceed. Brooks declared Cessario's actions "reprehensible," in a March 2 court order, but ruled that the government had made a good-faith effort to find all the recordings and provide them to the defense once the U.S. attorney's office was made aware of the problem.
The government should not have found out that an FBI agent had failed to turn over evidence only at the repeated insistence of the defense, unsealed defense motions argued.
"By the time Cessario was instructed to turn over his computer, the prosecutors were sufficiently aware of his conduct so as to be complicit in it," one motion for dismissal argued.
The recently unsealed documents also mention that photographs of a person taken while Woods was cooperating with authorities can't be found. The documents did not say if the photos were ever found. The conversation in question was between Woods and Michael Lamoureux, the governor's chief of staff at the time, on Nov. 15, 2016.
Neal volunteered to wear a wire after agreeing to cooperate with the investigation in early 2016, records show. The government turned him down, but he told U.S. attorneys and investigators in the case that he still planned to record conversations he thought were relevant. Government officials said he was free to do that, but they were not requesting him to.
Neal said in testimony during a Jan. 26 pretrial hearing that his goal was to help investigators and hopefully lighten his sentence.
If the government was so disinterested in Neal's freelancing, then why did Cessario communicate frequently with Wilkinson by text, the defense asked in its filings. Those texts show Wilkerson telling Cessario about conversations Neal had recorded that investigators might be interested in. The redacted transcript of the texts, from Feb. 11, 2016, to July 29, 2017, make up 41 pages of the unsealed documents.
In one of the conversations recorded by Neal, Woods' describes the defense strategy for all the defendants. The defense attorneys contended that the action was a deliberate breach of attorney-client confidentiality by the government.
In that conversation, Woods said he would describe a $40,000 wire transfer to him from Shelton as a loan and deny any wrongdoing. He added that anyone else, including Neal, asked about the grants by investigators should call Woods' attorney. Deputy U.S. attorneys and investigators met with Neal shortly after that recorded conversation, according to court documents.
The government responded by saying it didn't ask Neal to make the recordings or to share information with them, even though both occurred, court document show.
"In the end, the government cannot be said to act improperly where Woods voluntarily shared information, nonprivileged or otherwise, with a third party who is not an agent of the government and who, when interacting with Woods, acted on his own accord," the response from the U.S. attorney's office reads.
Court documents also show that defense attorneys objected to the relationship between the U.S. attorney's office and W.H. Taylor of Fayetteville, Woods' first attorney. Taylor declined to comment on the case when contacted by telephone Tuesday, saying it would be inappropriate at this time. Court records show that he encouraged Woods to cooperate with investigators in late 2015 and expected to make a deal that would get Woods less than a year of time in prison.
The defense contends that Taylor had a conflict of interest because he represented Cessario in his 2014 divorce case and never told Woods that Cessario had been a client of his. Taylor began representing Woods 14 months after Cessario's divorce decree was entered. Cessario was a key investigator on the Woods case and talked to Taylor often, records show.
"At the very least, Mr. Woods should have been advised of the potential conflict and been given the opportunity to waive said conflict in writing or seek conflict-free counsel," defense attorneys said.
Taylor represented Woods long enough for Woods to make a statement that not only incriminated himself, but, the defense contends, served as the whole basis for investigating Paris.
Woods told Neal that Taylor was hoping to get Woods' sentence reduced to as little as six months, but that the likely prison sentence was at least 18 months even if he cooperated, according to a transcript of a conversation Neal secretly recorded that was contained in the documents.
If Woods did not cooperate, though, he would go to prison for 10 years, Taylor told Woods according to the transcript. Taylor forcefully told Woods, with profanity, to "quit [expletive deleted] lying," according to a transcript of the conversation.
Defense attorneys argued that Taylor was acting less like an advocate for his client and more as an agent for the government.
Woods retained Taylor in October of 2015 and changed attorneys the following March. Woods cooperated with federal investigators from November of 2015 until he changed attorneys.
Brooks was a law partner of Taylor's until Brooks' appointment to the federal bench in March of 2014.
That previous relationship was also raised in defense motions.
JUDGING THE JUDGE
Shelly Koehler of Fayetteville, defense attorney for Shelton, said a big issue of appeal for her client will be Brooks' denial of a motion to grant Shelton a separate trial. One of the kickbacks Woods and Neal received was from a business called AmeriWorks. Neither Shelton nor Paris had anything to do with that transaction, so including it in their trial put them in a worse light, Koehler said.
She also objected to Brooks' remarks to the jury regarding the state's General Improvement Fund, the source of the money for the grants. The judge went too far by informing the jury that the grant process used was declared in violation of the state constitution in October of 2017 -- long after these grants were made, she said.
Until last October, every lawmaker got a share of that fund after every regular legislative session. The improvement fund consists mainly of unspent taxpayer money at the end of the state's two-year budget cycle. The fund also includes interest earned on state accounts. In effect, it is the money left over in the state's budget.
Half of the money went to lawmakers to spend as they saw fit as long as it benefited government entities or nonprofit causes. Much of their money was sent to the eight nonprofit economic development districts in the state for distribution as grants. Each legislator could make it known to the district boards where he wanted that grant money to go. This is the system overturned by the state Supreme Court in October. It violated the state constitution's prohibition of spending state money for local projects, the court ruled.
An appeal to the 8th U.S. Circuit Court of Appeals will likely take six months to a year, Koehler said.
Metro on 09/05/2018
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