FAYETTEVILLE -- Attorneys for three men indicted on charges they arranged kickbacks in return for state grants entered innocent pleas for their clients Monday to a revised set of allegations in the case.
The attorneys also said they will ask to delay the trial from its scheduled May 8 date, they told U.S. Magistrate Judge Erin Wiedemann, who presided over the arraignment. The trial judge in the case is U.S. District Judge Timothy Brooks.
About the GIF
The state General Improvement Fund consists of unspent state budget balances and interest earned on state accounts. Half the money is divided among legislators for local projects.
Source: Staff Report
Attorneys for former state Sen. Jon Woods, R-Springdale, Ecclesia College President Oren Paris III of Springdale and Randell Shelton Jr., a consultant from Alma, appeared at the arraignment at the courthouse in Fayetteville.
Paris is accused of paying kickbacks to Woods while Woods was a legislator. Woods, in turn, paid then-Rep. Micah Neal in some cases, according to the indictment. Neal, R-Springdale, pleaded guilty to one* public corruption c̶h̶a̶r̶g̶e̶s̶ charge on Jan. 4, with sentencing still pending in his case.
Paris passed the kickback payments through Shelton, a business partner Paris hired on behalf of the college, according to the indictment. The college is not named in the indictment, but it says Paris is the president of a nonprofit operating a college in Springdale.
Ecclesia received a $200,000 grant from the state's General Improvement Fund on Sept. 23, 2013, at Woods' request from the Northwest Arkansas Economic Development district in Harrison, according to records kept by the district.
Four days later, Paris' college issued a $50,000 check to Shelton's consulting company, which had been incorporated the day before, according to the indictment. The college check was the first bank deposit made by the company, the indictment says. On or about Oct. 1, 2013, $40,000 was transferred by wire from the consulting company's account to Woods' personal bank account, the indictment says.
Woods and Neal later cooperated in another grant of $400,000 to a nonprofit job-training entity in return for kickbacks, the indictment says. That $400,000 was returned Aug. 14, 2014, after federal investigators questioned the company's founder about the grants, the indictment says.
Woods and Neal then cooperated to use part of the refunded $400,000 to steer another $200,000 to the college in return for another kickback, the indictment says. The check for that $200,000 grant was delivered by Woods and an assistant director of the development district on Dec. 19, 2014, according to the indictment. Development district records show Ecclesia received a grant in that amount at that time.
Development district records also show the only nonprofit job-training entity to receive a $400,000 grant through the development district with Woods' and Neal's participation was AmeriWorks, a Bentonville company. AmeriWorks returned the grant on Aug. 14, 2014, district records show.
Woods, Paris and Shelton were indicted on 10 charges on March 2. Woods was charged individually with an additional three counts. The U.S. attorney's office filed a revised indictment April 19, which prompted Monday's arraignments.
Woods now faces 14 counts of wire fraud, as well as a count of money laundering that remains in the revised indictment. Paris and Shelton are now named in 13 wire fraud counts. A count of mail fraud also names all three men.
The indictment does not mention another $100,000 grant to Ecclesia obtained through the West Central Arkansas Planning and Development District in Hot Springs, nor does it mention any other lawmakers who directed grants to the college in the same 2013-14 period. Woods and Paris worked together to persuade other lawmakers to provide grants, according to the indictment.
Ecclesia received more than $700,000 in General Improvement Fund grants in that time period, most of which was used to buy land. Either Woods, Neal or both were responsible for $500,000 of that, state records show.
Also, Woods sponsored legislation in 2015 that created a special General Improvement Fund account in the state Department of Higher Education. Woods' Act 603 of 2015 authorizes grants of up to $3 million to "work colleges" for expenses including scholarships, athletic programs and land acquisition, but no state money was approved for the account, state records show.
The law setting up the work-college account is still on the books, the department confirmed Monday. Grants from the account could only benefit colleges that are "part of the Work College Consortium," the act states. The only college in Arkansas that is a member of that consortium is Ecclesia, according to the consortium's website.
Woods emailed a draft of his proposed work-college legislation to Paris on Dec. 2, 2014 -- the same day Paris had the college send a $15,000 check to Shelton's company, according to the indictment. Two days later, Shelton withdrew $12,400 in cash, the indictment says.
Woods also agreed to encourage other state lawmakers to give money to the college. In all, Ecclesia College obtained more than $700,000 in state General Improvement Fund grants in 2013 and 2014, records show.
In other developments at Monday's arraignment, Paris received permission to travel out of state to meet with private donors to the college as long as he gives federal authorities 14 days' notice. Paris was also granted leave to attend family gatherings where potential witnesses in the case are present so long as he does not discuss the case with them.
Metro on 04/25/2017
*CORRECTION: Former state Rep. Micah Neal pleaded guilty Jan. 4 to one count of conspiracy to commit honest services fraud, admitting he took two kickbacks totaling $38,000 in exchange for directing grants from the state General Improvement Fund to two nonprofit entities. A previous version of this story gave an incorrect numbers of counts.