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Fraud sentencing set for former Arkansas legislator

by Dave Hughes | April 4, 2018 at 4:30 a.m.

FORT SMITH -- Former state Sen. Jake Files, who pleaded guilty in January to wire fraud, bank fraud and money laundering, is scheduled to be sentenced in federal court June 18, according to court records.

The sentencing hearing for Files, R-Fort Smith, is scheduled for 10 a.m. before U.S. District Judge P.K. Holmes III. Files, 45, has been free on bond since his Jan. 29 pleas.

Files' crimes carry different penalties, but the most severe penalty is for bank fraud, which could land him in federal prison for up to 30 years. He also could be fined up to $1 million.

Files pleaded guilty to wire fraud and money laundering for misdirecting nearly $27,000 in state General Improvement Fund money from a baseball-softball complex project he was involved in building for Fort Smith and using the money for personal purposes.

The bank-fraud charge accused him of pledging a forklift he did not own as collateral for a bank loan.

After entering his guilty plea, Files resigned Feb. 9 from his Senate seat representing District 8, which covers part of Sebastian County. Files had announced last year, before he was charged in court, that he would not seek re-election to the seat he'd held since 2011.

He was chairman of the Senate Revenue and Taxation Committee and served on the Senate Transportation, Technology and Legislative Affairs Committee, the Senate Efficiency Committee, the Arkansas Legislative Council and the Joint Budget Committee.

Files was working with Lee Webb of Fort Smith to build a tournament-quality softball and baseball complex, called the River Valley Sports Complex, on land the city owned at Chaffee Crossing, which is surplus Fort Chaffee land the federal government ceded back to civilian use.

In August 2016, according to his plea agreement with the government, Files assisted Fort Smith in preparing a grant application for $46,500 in General Improvement Fund money to be used to extend utilities to the complex site. Because the amount of the grant exceeded $20,000, he was required to submit three bids for the project.

The plea agreement said Files fabricated the bids and submitted them by email Dec. 29. He created the bids so the low bid would be from an employee of his FFH Construction LLC. The employee, DiAnna Gonzalez, was awarded the contract.

Gonzalez has not been charged with any crime.

Files told Gonzalez to create a bank account to receive the grant money, the plea agreement said. Once the grant money was deposited in the account, Files instructed Gonzalez to withdraw $25,931.91 -- $14,000 in cash and $11,931.91 in a cashier's check payable to FFH Construction -- and deliver it to him at his construction office.

According to the plea agreement, Files distributed most of the cash to Gonzalez and his employees who, Gonzalez told the Arkansas Democrat-Gazette, had not been paid since Thanksgiving, and pocketed the rest.

Files took the cashier's check and deposited it in an account at First National Bank of Fort Smith in his name, the plea agreement said.

The bank-fraud charge grew out of a $56,746.55 loan Files received from First Western Bank in November 2016, for which he pledged a Sky-Trak forklift as collateral. The plea agreement said Files had sold that forklift in March 2016 to the owner of a masonry company to whom he owed $55,000.

Files and his construction company have been in financial trouble for several years. He has judgments against him in a handful of lawsuits in Sebastian County Circuit Court for defaulting on millions in loans and unpaid debts.

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State Desk on 04/04/2018

Print Headline: Fraud sentencing set for ex-legislator

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