A federal judge on Tuesday permanently dismissed an indictment against two Little Rock men whose September trial on accusations that they intentionally hoodwinked the government to obtain million-dollar construction contracts resulted in a deadlocked jury.
U.S. District Judge Leon Holmes' brief order dismissing 28 charges apiece against Ross Alan Hope and Mikel Kullander, and unfreezing their company's bank account, came at the request of the U.S. attorney's office, which declined to say why it decided against retrying the men.
Charles "Chuck" Banks, one of Hope's attorneys, said Hope "is extremely pleased and gratified that the right decision was made," and "wanted to express his appreciation to U.S. Attorney Cody Hiland and the trial team for making the correct decision, which was done for the right reasons."
Banks, a former U.S. attorney himself, said it was "pretty clear in my mind" after seeing the evidence tested at trial and the resulting mistrial, that "this is a civil dispute and has been from the beginning, and doesn't warrant criminal charges."
Banks indicated it was the U.S. Department of Veterans Affairs that felt the case should be handled as a criminal prosecution.
When the men were indicted in 2016, the U.S. attorney's office was under the leadership of Chris Thyer, an appointee of President Barack Obama who left in March. Thyer was replaced last month by Hiland as part of a routine changing of the guard under a new presidential administration.
"I really applaud Cody for making a stand-up call," Banks said Tuesday.
He said there are "still bright days ahead," and "I see us continuing to do business with the VA," explaining that local VA officials are familiar with the quality of work done by Hope's business, Powers of Arkansas.
Hope has for 12 years owned Powers of Arkansas, the largest heating and air-conditioning business in Arkansas, which is based in North Little Rock. His best friend, Kullander, owns Kullander Construction Co. in Little Rock, a family business that formed in 1978. Both are 57.
Their 2016 indictment centered on a new company, DAV Construction, which they formed in 2007 with James Wells, a veteran who had recently been forced to resign his job at Powers of Arkansas, where he had worked for 19 years, after the VA declared him 100 percent disabled. Wells had become partially disabled years earlier as a result of seizures stemming from his military service.
Hope testified that he was aware the VA had recently started giving priority consideration of its construction contracts to businesses run by service-disabled veterans as part of the Veterans Benefits, Health Care and Information Technology Act of 2006. The law gave such businesses the highest priority for VA contracts awarded to small businesses.
Also, with Powers having been a subcontractor for the VA for several years, Hope said he knew local authorities with the federal agency weren't satisfied with the work of two companies it was required to use under the new law. So, he said, he asked Wells if the VA would allow him to own a company, even if the agency wouldn't allow him to work.
He said Wells, a computer-assisted design and drafting specialist, checked and discovered that he could own and operate a company under VA rules, so they asked Kullander, who had general contracting experience, to join them in forming a new service-disabled veteran-run business.
Hope testified that the three made a good team, with him bringing administrative and accounting skills, and Wells having practical skills for working on thermostat controls made by Siemens, a multinational company for which Powers had been the sole Arkansas distributor and contractor since 1990.
He said the men soon learned that under federal regulations, Wells would have to own at least 51 percent of the business for it to be classified as a service-disabled veteran-run business, so they set up the company accordingly.
Hope testified that the men thought they were complying with federal requirements that the veteran "control the day to day management," by giving Wells 51 percent ownership, but, "We never expected Jim to do the work."
He said that when Wells learned in 2008 or 2009 that he was making too much money through DAV to continue receiving disability checks, the men made corporate changes that included making Kullander president instead of Wells. Hope testified that the men readily acknowledged making the changes, and explained why, when a government agent made a site visit in 2011.
But because Wells no longer held the highest position in the company, the VA refused to renew DAV's status as a service-disabled veteran-run business, Hope said.
He told jurors that he, Kullander and Wells made further efforts to try to comply with federal laws and regulations, and were eventually allowed to resume bidding on the set-aside contracts, but then the government shut them down again and pursued criminal charges against Hope and Kullander. Wells was never charged.
For seven or eight years, DAV had received contracts totaling more than $15 million from the VA and the U.S. Food and Drug Administration, and even after DAV was disqualified, the VA continued to use the services of Powers of Arkansas, according to trial testimony.
Prosecutors argued at trial that Hope and Kullander knew from the beginning that Wells wasn't going to "control" DAV, and purposely overstated the veteran's involvement to fraudulently gain access to the set-aside contracts.
Defense attorneys said the men never intended to commit a crime, kept agency representatives informed of their activities and even consulted with them on how to comply with regulations, always acting in good faith.
After a day and a half of deliberating, jurors said they couldn't agree on the charges, which included a single charge of major-fraud conspiracy, three counts of major fraud and 24 individual mail-fraud counts against each man.
Banks said Tuesday that DAV still exists as a corporate entity but is no longer receiving government contracts.
Metro on 11/08/2017
Print Headline: Case is tossed after deadlock in fraud trial; U.S. declines to retry 2 men accused of scamming VA