Former Arkansas senator's corruption trial continues; another ex-lawmaker details kickback received behind restaurant

Jon Woods, Oren Paris III, and Micah Neal.
Jon Woods, Oren Paris III, and Micah Neal.

FAYETTEVILLE -- Then-state Sen. Jon Woods kept at least four different bank accounts and not one kept a positive balance, according to financial records presented by the government Wednesday at his trial.

When Woods received a $40,000 kickback wire-transferred to his bank account on Oct. 1, 2013, he took out a cashier's check to pay a $33,000 debt two and a half hours later, according to statements made by an assistant U.S. attorney at Woods' corruption trial.

Defense attorneys called the $40,000 a loan and the $33,000 repayment of a previous loan.

The trial in federal court in Fayetteville started Monday and continues today.

Former state Rep. Micah Neal drew more than $100,000 a year from his family's restaurant and thousands more a month from legislative per diem, but still was struggling financially, he acknowledged in his testimony Wednesday morning. At one point, he accepted a $18,000 kickback in two envelopes filled with $100 bills behind Neal's Cafe in downtown Springdale, he testified.

A third co-conspirator in the corruption case, Randell Shelton Jr. of Kemp, Texas, lost his property manager's job in Little Rock in July 2013 and helped Woods launch the kickback scheme the following September, according to the government.

Woods of Springdale; Oren Paris III, former president of Ecclesia College in Springdale; and Shelton, formerly of Alma, were indicted in March 2017. Paris pleaded guilty April 4 to one count of conspiracy and will testify for the government. Paris reportedly disguised the kickbacks as consulting fees paid to Shelton's company, Paradigm Strategic Consulting. Shelton then passed money along, the government contends.

Neal of Springdale pleaded guilty Jan. 4, 2017, to one count of conspiracy. He admitted receiving two kickbacks, one in 2013 and one in 2014, totaling $38,000 in exchange for directing state grants to two nonprofit groups.

His sentence is pending. Some prison time for him is a near-certainty, he said in his testimony Wednesday. Neal was the government's first witness Wednesday morning, after opening statements Tuesday afternoon.

Woods is accused of taking kickbacks from Paris in return for directing $550,000 in General Improvement Fund grants to Ecclesia, all in 2013 or 2014.

Neal testified Shelton delivered $18,000 in $100 bills stuffed in two Arvest bank envelopes in December 2014 behind his family's Springdale restaurant, Neal's Cafe. The money was a kickback for directing $50,000 in Improvement Fund grants to Ecclesia, Neal said.

The $40,000 Shelton transferred to Woods four days after a $50,000 payment from Ecclesia was a loan to a friend, according to Shelton's defense counsel. Bank records for Paradigm and for Woods were detailed in court by Christy Cops, fraud research specialist for Arvest Bank. Both Woods and Paradigm kept their accounts there.

Woods' bank records Cops testified to showed as many as 16 overdraft penalties a month in one of his accounts in 2013. The $40,000 alleged kickback was wire-transferred from Paradigm's account to one of Woods' on Oct. 1, 2013, bank records show. Woods took out a $33,000 cashier's check payable to Bob Srygley from the same receiving account two hours and 20 minutes later.

A Robert Srygley of Fayetteville is a past president of the Arkansas Check Casher's Association. He could not be reached for comment after the close of court proceedings Wednesday. Testimony will show Woods owed debts to a series of friends, borrowing heavily each time from one friend to pay the last, according to Shelton's defense counsel.

Neither Srygley nor any other creditor show up on Wood's 2012 or 2013 statements of financial interests, Arkansas Secretary of State records show. All legislators are required to file such statements and list creditors.

Also testifying Wednesday was property investor Christopher Robertson, Shelton's former employer. Robertson confirmed in his testimony he hired Shelton in 2005 and dismissed him July 26, 2013 in a cost-cutting measure.

Also Wednesday, U.S. District Judge Timothy Brooks ruled statements made by Woods during a time when he was cooperating with federal investigators cannot be used to impeach Neal's testimony, for now.

Woods cooperated with federal investigators from November 2015 through early 2016, according to a March 2 ruling from Brooks. In a discussion held away from jurors, Shelton's attorneys asked to use some of his statements in their cross-examination of Neal Wednesday. Woods' attorneys objected.

"It's like a slush fund. It's what it is," Neal testified when asked to explain to the jury what the General Improvement Fund is. Handing out these grants helped win votes and garner media publicity for lawmakers, he said.

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.

A broad investigation into Improvement Fund grants is ongoing, Brooks noted in his March ruling.

Shelly Koehler of Fayetteville, one of Shelton's attorneys, said Tuesday that Shelton has a long history of successful enterprises including fundraising that began before he entered college. He was helping Ecclesia pursue an $18 million expansion plan, she said.

Neal said he became involved in the kickbacks because he was having financial trouble and asked Woods how he made money. Neal said he asked Woods because he observed Woods had a nicely furnished Little Rock apartment with sports memorabilia such as a baseball bat signed by Pete Rose and a signed photograph of Michael Jordan.

Woods said he had a deal worked out and came back to him a few days later with the kickback plan in which the two would receive 20 percent of any grant money steered to Ecclesia and another nonprofit, AmeriWorks, Neal said.

Defense attorneys noted Wednesday that Neal had other means of financial support, including $6,000 in legislative per diem and other reimbursements he collected the same month he said he accepted the money from Shelton.

Neal's guilty plea included his taking kickbacks along with Woods for $400,000 in state grants to AmeriWorks. Neal said he received $20,000 delivered by Woods for steering $125,000 to AmeriWorks. Grant records show Woods directed $275,000 to the company.

AmeriWorks was incorporated by lobbyist Russell "Rusty" Cranford a day before it received the grants. The $400,000 from the 2013 grant was returned Aug. 14, 2014, after federal investigators questioned the company's founder about the grants, according to Woods' indictment.

Woods and Neal, both Republicans, then cooperated to use part of the refunded $400,000 to steer another $200,000 to Ecclesia in return for another kickback, the indictment says.

Cranford, 56, is set for trial June 11 in federal court in Springfield, Mo., on one count of conspiracy and eight counts of accepting bribes in an unrelated indictment.

Neal also testified he put in his personal account a $1,000 campaign donation from Cranford for his 2012 state House race. Neal said Woods told him to make sure his campaign showed a deficit at the end of the year so Cranford could legally write a check to the campaign fund.

Woods faces 15 counts of fraud, all relating to either wire or mail transfers of money. Paris and Shelton were named in 14 of the fraud charges. All three were 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.

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.

He served three terms in the state House before defeating incumbent Sen. Bill Pritchard, R-Elkins, in 2012. He did not run for re-election in 2016, but collected the largest amount of per diem, mileage and other expense payments among senators that year 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.

He incorporated another business, Titan Consulting, in 2016 and listed income from the business of more than $12,500 that year.

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Metro on 04/12/2018

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