Arkansas ex-senator indicted by U.S.; 2 others accused in kickbacks case

From left, former state Sen. Jon Woods and Oren Paris III, president of Ecclesia College
From left, former state Sen. Jon Woods and Oren Paris III, president of Ecclesia College

A federal grand jury indicted former state Sen. Jon Woods, R-Springdale, on 12 counts of fraud and one of money laundering, alleging he took one bribe of $40,000 in exchange for steering a state General Improvement Fund grant to a Northwest Arkansas college, plus an undetermined amount of cash in exchange for other such grants.

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Former state Rep. Micah Neal, R-Springdale

Indicted along with Woods were Oren Paris III, president of Ecclesia College in Springdale, and Randell G. Shelton Jr., an acquaintance of both Woods and Paris who owns a consulting business, according to the indictment.

Former state Rep. Micah Neal, R-Springdale, pleaded guilty Jan. 4 to taking kickbacks from money he directed in cooperation with a then-unnamed state senator.

The 43-page indictment, filed in the Fayetteville Division of the U.S. District Court for the Western District of Arkansas, also says Woods and Neal took bribes from a businessman and lobbyist whose name was not disclosed. Referred to in the indictment as "Businessman A," the businessman's project got $400,000 in state General Improvement Fund money.

[DOCUMENT: Read the indictment]

Businessman A returned the money "shortly after being contacted and interviewed by federal law enforcement officials regarding his dealing with Woods and other matters," the indictment says.

The indictment doesn't say how much in kickbacks Woods allegedly received from Businessman A for the grant but said the payment was in cash and amounted to at least several thousand dollars. Further payments to Woods through Shelton were also in unknown cash amounts of at least several thousand dollars, the indictment said.

Woods is named in all 13 counts of the indictment issued Wednesday. Paris and Shelton are named in 10.

The General Improvement Fund is unallocated state tax money at the end of each fiscal year and interest earned on state deposits. Each legislator is given a share and can direct where he wants it to go as long as it goes to a nonprofit group or government entity.

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The money is administered through one of the state's eight economic development districts. Grants directed by Neal and Woods came through the Northwest Arkansas Economic Development District, based in Harrison.

The college benefiting from the kickback scheme, called "Entity A," is not named in the indictment, but Paris is identified as the president of it.

Messages for Woods and Paris on their respective cellphones were not returned Thursday night. Paris also did not respond to an email seeking comment, and Woods did not respond to a text, both sent Thursday evening.

The only phone number found for Shelton rang twice and went dead, so no messages were left.

All three are set for arraignment in U.S. District Court in Fayetteville at 1:30 p.m. March 28.

Woods directed $200,000 in grants to the college on Sept. 27, 2013, according to the indictment. Financial records from the development district also showed that Woods directed $200,000 to Ecclesia College on that date.

Woods also sought grants for the private Christian college from other legislators from their portion of improvement funds, according to the indictment. Nine Northwest Arkansas legislators requested $592,500 for the school. Woods directed the most at more than $350,000 total, records show.

According to the indictment, on or about April 21, 2013, Paris texted Woods: "Good selling point to conservative legislators is that (Entity A) produces graduates that are conservative voters. All state and secular colleges produce [a] vast majority [of] liberal voters."

Woods texted back: "Agreed."

Another $100,000 from the fund to Ecclesia came through the West Central Arkansas Planning and Development District in Hot Springs. The only documents from legislators provided by that district in support of the grants came from Woods.

board backs leader

Ecclesia College is a work-learning college, which allows students to earn money toward tuition and graduate with much less debt than the average university student, according to the school website. It offers three associate of arts degrees, 12 bachelor's degrees and one graduate degree. The school was founded in 1975.

Late Thursday, Phil Brassfield, chairman of the board at Ecclesia College, posted a letter on the college's Facebook page addressed to "Dear Brothers and Sisters."

"It is with heavy hearts that we learn of the charges made by agents of the federal government against our friend and brother, Dr. Oren Paris," wrote Brassfield. "While the allegations made against Oren are to be taken seriously, we are confident once all the facts and the truth are made known, all will come to understand as we on the Board of Governance believe, that Oren has acted at all times with absolute integrity and always in the best interest of Ecclesia College."

The board agreed unanimously that Paris should continue to serve as the college president "through these challenging times," according to the letter, which was signed by Brassfield and six other board members.

Beginning at least as early as January 2013, and until about October 2015, the three men "schemed ... to defraud and deprive the citizens of the State of Arkansas of the honest services of a public official through bribery," the indictment reads.

Paris enriched himself, his family and "Entity A by paying bribes to Woods and Neal, through Shelton, in exchange for the use of their authority as legislators to obtain and direct [General Improvement Fund] monies to Entity A," the indictment says.

Shelton kept part of the bribe money paid to Woods and Neal through Shelton's consulting company, according to the document.

"Woods solicited, and Woods and Neal accepted, payments from Paris and Entity A," the indictment said. Also, "Woods solicited Paris to provide employment to Person A, a friend of Woods."

Shelton kept a bank account in the name of his consulting firm. The college would write a check to the consulting firm "as a pass-through," the indictment said. Shelton would deposit the checks from the college and make payments to Woods.

"From approximately June 1, 2012 to approximately May 31, 2016, Paris received more than $300,000 in compensation from Entity A," the indictment said. "During the same period of time, Paris, his immediate family members and their spouses received in excess of $1 million from Entity A."

Woods emailed Paris the application needed for grants, according to the indictment.

After the grant was awarded and the college received $200,000 in grants, Paris' college signed a contract with Shelton's newly formed consulting company and paid it $50,000 on Sept. 27, 2013. On Oct. 1, Shelton transferred $40,000 from the company's account "to Woods' personal Arvest Bank account," the indictment said.

"By a resolution dated Oct. 3, 2013, the same day Entity A deposited $200,000 in [General Improvement Fund] monies, Entity A's Board of Governance approved a $25,000 bonus payment to Paris," the indictment read.

Property purchased

An unrelated Benton County Circuit Court lawsuit concerning unpaid medical bills filed Oct. 31 lists an 8532 Carrie Smith Road address as Shelton's home. Ecclesia College bought the house at 8532 Carrie Smith Road in 2013, according to Benton County records.

Secretary of state records dated Sept. 26, 2013, show Shelton as the incorporator of Paradigm Strategic Consulting. The incorporation has since been revoked, according to the office.

Shelton incorporated Shingle Resource on Jan. 8, 2015. The incorporation records list Paris as a company manager and the Carrie Smith Road address for the company.

Ecclesia bought almost 50 acres with the state money although it already owned more than 200 acres, according to state and county records. The school purchased two properties in 2013, both for well over the county-appraised value, Benton County records show.

Ecclesia said in its grant applications it needed the land for student housing to accommodate rapid growth in its fall 2013 and fall 2014 enrollments, but the Springdale building department shows no new buildings or structural renovation have occurred on the properties.

Woods also is accused of accepting payments along with Neal for getting $400,000 in General Improvement Fund grants to the project of Businessman A. Development district records show the only entity to get a grant that large was AmeriWorks, a Bentonville-based company set up to train disadvantaged workers.

Those records also show $400,000 was returned on behalf of the project by Milton R. "Rusty" Cranford, a lobbyist and incorporator of AmeriWorks.

Calls to both the Cranford Coalition, his lobbying firm, and his cellphone number as listed in the grant documents were not returned.

Neal pleaded guilty to accepting $20,000 in kickbacks in exchange for directing $125,000 to AmeriWorks. Woods directed the remainder of the $400,000.

Neal and Woods began supporting the grant for AmeriWorks two months before it incorporated in 2013, according to government records. AmeriWorks signed an agreement accepting the grant Sept. 26, 2013, the day before the company's incorporation was filed, according to the records of the secretary of state's office.

Despite the grants, AmeriWorks failed to gain more financial support and never got off the ground, according to the August 2014 letter from Cranford to the Northwest district when he returned the money.

Gov. Asa Hutchinson, among others, said after Neal's guilty plea that distribution of General Improvement Fund money at lawmakers' discretion should end.

The legislative Joint Budget Committee is scheduled to consider a bill Monday by Sen. Trent Garner, R-El Dorado, to do away with the current system of awarding improvement money. Senate Bill 325 would put the money into an emergency fund requiring approval of the full Legislature -- or of the Legislative Council if the request is made between sessions -- to authorize the governor to spend the money.

Woods served three terms in the state House before defeating incumbent Sen. Bill Pritchard, R-Elkins, in 2012. He announced in November 2015 he wouldn't seek re-election.

Records from Arkansas Legislative Audit, the Bureau of Legislative Research and the state Senate show Woods claimed the largest amount of expenses last year among senators -- $33,692, according to a report in the Arkansas Democrat-Gazette.

Woods' expenses included $1,905 to attend the Southern Legislative Conference's annual meeting in Lexington, Ky., in July and $3,094 to attend the Council of State Governments' conference in Williamsburg, Va., in December, according to legislative records.

Information for this report was provided by Bill Bowden of the Arkansas Democrat-Gazette.

Metro on 03/03/2017