At trial, former Arkansas legislator's finances detailed

Co-signed loans part of testimony

Former state Sen. Jon Woods (right), surrounded by members of his legal team, waves Nov. 30 as he walks into the John Paul Hammerschmidt Federal Building in Fayetteville.
Former state Sen. Jon Woods (right), surrounded by members of his legal team, waves Nov. 30 as he walks into the John Paul Hammerschmidt Federal Building in Fayetteville.

FAYETTEVILLE -- Former state Sen. Jon Woods had $87,250 in loans from Arvest Bank between 2012 and 2014 all guaranteed by others, according to financial records presented Thursday at his trial.

The U.S. Justice Department continued to detail Woods' financial dealings during the time he is accused of participating in a kickback scheme involving state grants. Defense attorneys also brought out details to show Woods was current in repayment of those loans. The defense claimed that the government is selectively putting bank records into evidence to portray the defendants' finances as more precarious than the full record shows.

The trial began Monday and is expected to take at least three weeks. Proceedings begin again at 8:30 a.m. today. A motion for a mistrial was denied Thursday.

Woods of Springdale; Oren Paris III, former president of Ecclesia College in Springdale; and Randell 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. He resigned as Ecclesia's president and from the college's governing board the previous day.

Paris disguised the kickbacks as consulting fees paid to Shelton's company, Paradigm Strategic Consulting, according to the indictment. Shelton then passed money along, the government contends. The grants involved came from the state's General Improvement Fund.

Defense attorneys have said the money transfers to and from Woods were loans and money to pay back loans.

Christy Cops, fraud research specialist for Arvest Bank, testified Thursday morning that the bank lent Woods $30,000 in 2012 guaranteed by Richard Roblee and made two loans of $25,000 each in 2014 guaranteed by James Phillips.

Former state Rep. Jonathan Barnett of Siloam Springs co-signed a $7,250 car loan for Woods in 2012, bank documents showed during Cops' testimony. Cops continued her testimony from Wednesday, in which bank records she testified to showed that Woods had at least four different checking accounts and failed to consistently maintain a positive balance in any of them.

Documents produced during Cops' testimony Thursday also showed that Woods had a 20 percent stake in a roofing shingle recycling business founded by Paris and Shelton. The government also showed deposits to Shelton's consulting company's account by Ecclesia and expenses of the shingle company paid out of the same account.

Cops' testimony took much of the morning. A detailed explanation of how General Improvement Fund grants are made took up most of the afternoon. Kevin Anderson, assistant director of the Bureau of Legislative Research, testified about the law authorizing grant allocations by Woods' and former state Rep. Micah Neal of Springdale. Anderson oversees the fiscal division of the bureau, which drafts budget bills. The bureau is the staff for the Legislature.

Shelly Koehler of Fayetteville, one of Shelton's attorneys, objected and moved for a mistrial when U.S. District Judge Timothy L. Brooks instructed the jury, before Anderson began his testimony, that Anderson would give an overview of the grant process.

That overview would include events that happened up to the present, not just during the time spanning the charges. Jurors were not to consider subsequent events as relevant in this trial, Brooks told them. Only events during the 2013 and 2014 time period that resulted in charges were relevant, he said.

Brooks' comments went beyond instruction into what amounted to testimony, Koehler said in a hearing while the jury was out of the courtroom. The defense for Woods joined in Koehler's objection, which the judge denied.

Koehler has argued that Shelton has a long history of successful enterprises, including fundraising, and the money paid to him by Paris was for consulting fees.

Neal 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.

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.

Woods' and Neal's grants to Ecclesia were far below the $3 million in General Improvement Fund grants going to some of the state's larger universities during the same time period, Woods' attorney brought out. Patrick Benca of Little Rock questioned Anderson about those appropriations, noting that two-year colleges got similar amounts as Ecclesia, a four-year school.

Those other schools were all state-run institutions, however, Anderson noted under questioning from Assistant U.S. Attorney Aaron Jennen. The state cannot legally appropriate money directly to a non-state entity as was done in those bills, Anderson said.

Ecclesia's grants had to come indirectly through a process involving distribution of grants by one of the state's eight nonprofit economic development districts -- a process declared unconstitutional by the state Supreme Court on Oct. 5, long after Ecclesia's grants in this case.

The General Improvement 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, although those grants required approval from development district boards. A replacement for this unconstitutional system has not yet been devised.

Gov. Asa Hutchinson put no legislative general improvement money in the budget in the past legislative session, which took place after Neal pleaded guilty.

Neal testified Wednesday that he became involved in the kickbacks because he was having financial trouble and asked Woods how he made money. 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.

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.

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.

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Metro on 04/13/2018

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