Ecclesia lawsuit could go forwad with focus on ill-gotten gain

FAYETTEVILLE -- A lawsuit seeking to recoup some state grant money awarded to Ecclesia College -- in return for kickbacks in some cases -- may go forward, but with a new plaintiff.

Jim Parsons of Bella Vista, the original plaintiff, said he wants to drop the suit he filed three years ago.

Former college President Oren Paris III is serving a federal sentence for conspiracy involving the kickbacks. He was recently released from prison to home detention because of the covid-19 pandemic.

Paris has suffered enough, Parsons said, but a motion to dismiss was never filed on Parsons' behalf.

Travis Story, a Fayetteville attorney for both Paris and the college, filed a motion Aug. 28 seeking to dismiss the case after Parsons' wishes became known. Two of Parsons' attorneys filed a motion to withdraw from the case Sept. 8.

Attorney Matt Bishop filed a motion Sept. 8 seeking to have his client, former state Sen. Bryan King of Green Forest, assume the case as class representative for taxpayers.

Story filed a motion Sept. 11 objecting to the substitution of King, because Parsons wanted the case dismissed. Story argues King isn't a suitable replacement because he was a legislator. Bishop responded to Story's objection Mondaysaying King has been a party since the illegal exaction claim was filed and can serve as a class representative.

Ecclesia got no grant money while King was a legislator, Bishop said.

A hearing on the various motions is set for Sept. 28.

"The illegal exaction claim has been part of this case since not long after the director of the Department of Finance and Administration asked the attorney general to pursue the funds Ecclesia illegally obtained. When faced with public-private corruption, it's easy to throw your hands up and say that's just how it is in politics," Bishop said.

The Arkansas Constitution gives residents the right to act to protect tax dollars from being illegally obtained or spent, Bishop said. King thinks that's a battle worth fighting, he said. The college received up to $550,000 in grants tainted by kickbacks, according to court records.

Parsons' original suit claimed the awarding of grants from the state's General Improvement Fund to Ecclesia was illegal exaction because of the kickbacks and asked the money be returned to the state.

Ecclesia is a small, private Christian college in Springdale. The U.S. Department of Education has listed Ecclesia as being on probation related to financial aid since 2018. The listing notes the school is under investigation by the Office of the U.S. Inspector General.

Parsons originally filed the suit as a state Freedom of Information Act request for documents such as financial records from the college. He amended it to seek reimbursement to the state of the grant money. Bishop's motion would drop the FOI part of the lawsuit.

Paris pleaded guilty March 3, 2017, the week before he was to go to trial along with former state Sen. Jon Woods of Springdale and consultant Randall Shelton Jr. In the scheme, Paris hired Shelton as a consultant and paid him. Woods and then-state Rep. Micah Neal obtained grants for the college. Shelton then passed along some of the grant money to Woods and Neal, according to trial testimony and financial records.

Neal pleaded guilty, cooperated with federal investigators and testified against his co-conspirators at trial. Woods and Shelton were found guilty by the jury.

Bishop is also asking the case be delayed until Paris' federal appeals are resolved, so he has to answer questions and cannot invoke his Fifth Amendment right not to incriminate himself.

Paris admitted conspiracy in federal court when he pleaded guilty to his role in the kickback scheme. He agreed to plead guilty on the condition he be allowed to appeal his conviction on the grounds that an investigator in the case had destroyed evidence that might have proven his innocence.

Paris' federal criminal conviction was upheld by the 8th U.S. Circuit Court of Appeals on March 29.

"A deposition of Mr. Paris, or trial testimony, will at this time yield little fruit," according to Bishop's motion.

The case is set for trial Oct. 14 before Washington County Circuit Judge John Threet. Notice was posted in late July that Ecclesia had been provided a list of questions to answer and documents to provide.

Weaving a twisted web

Originally filed Feb. 9, 2017, Parsons' lawsuit asks the college be ordered to pay back all the state General Improvement Fund grant money it received from the Legislature through the Northwest Arkansas Economic Development District because the money wasn't used for the stated purposes.

In all, Ecclesia received $717,500 in state grants from 2013 through early 2015, but no more than $550,000 was involved in any kickbacks, according to court records.

"The funds were not used for the acquisition of land for student housing, nor were they used to build student housing," according to the complaint. "Instead, the funds were used to pay kickbacks to legislators, to purchase tracts of land which defendant promptly encumbered to acquire additional funds for the personal benefit of its officers, agents and employees."

Ecclesia spent $692,500 in state grants from 2013 through 2014 to buy land, according to the U.S. Attorney's Office for the Western District of Arkansas. The school either bought or paid off the loans on 48.5 acres from 2013 through 2014 with the taxpayer money. Its grant applications said the land was needed to accommodate the college's growth.

The state Department of Finance and Administration asked Attorney General Leslie Rutledge's office in 2018 to sue the college to reclaim at least $600,000 of the grant money.

"It appears that a significant portion, if not all, of these funds were procured in coordination with criminal activity that has been and is being prosecuted by the United States attorney's office," Larry Walther, director of the state's Finance and Department, wrote to Deputy Attorney General Monty Baugh in a letter dated Sept. 7, 2018.

The Attorney General's office declined, arguing Paris and his co-defendants were ordered by a federal judge to repay the money. Federal restitution information can only be released by the defendant, his attorney or the U.S. Attorney's Office. Acting U.S. Attorney Clay Fowlkes declined to comment on whether Paris has paid restitution.

Woods and Neal not only steered $550,000 in grants to Ecclesia directly, but the two also encouraged other lawmakers to send General Improvement money to the school. Woods received a direct kickback for a $100,000 grant he helped obtain from another lawmaker for the college, according to court documents.

The improvement fund contained tax money left unspent at the end of the state's two-year budget cycle. The fund also included interest earned on state accounts. After the state Supreme Court in 2006 declared the Legislature could not direct appropriations to local-level projects, lawmakers adopted the process of dispersing such funds through regional improvement districts.

On Oct. 5, 2017, the Supreme Court also declared the district distribution process unconstitutional.