FAYETTEVILLE — The agency responsible for administering General Improvement Fund grants in Northwest Arkansas did a lousy job of tracking the money, its deputy director testified Monday.
Jeremy Ragland of the Northwest Arkansas Economic Development District spoke in the federal case against former state Sen. Jon Woods. Woods was indicted in March 2017 — along with Randell Shelton, a consultant; and Oren Paris III, former president of Ecclesia College in Springdale — in a kickback scheme involving such grants issued in 2013 and 2014.
Ragland testified that he took over its improvement grant program in November 2014 and said the district never investigated to verify the grants were spent as intended.
“Poor would be a good description” of the state of grant records when he arrived, he said.
Record keeping was so bad, for example, that Woods and then-state Rep. Micah Neal were not aware one $400,000 grant that was part of another alleged kickback scheme had been returned four months later, according to Raglad.
The General Improvement Fund consisted 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 replacement for the system, which a judge ruled unconstitutional, hasn’t yet been devised. Gov. Asa Hutchinson put no general improvement money in the budget in the last legislative session, which took place after Neal pleaded guilty.
Eight improvement districts cover the state. Their boards approved improvement grants, but in practice, the Northwest Arkansas board followed the recommendations of legislators whose appropriation bills provided the grant money, Ragland testified.
He said he never submitted a grant application to the board without the legislator who provided the money having the opportunity to approve or reject it.
Assistant U.S. Attorney Kenneth Elser asked: “How often did a legislator say, ‘Whatever the board wants?'"
Ragland replied, “Very rarely.”
Former state Rep. Karen Hopper, R-Mountain Home, requested a state audit of the Northwest Arkansas Economic Development District in 2015. That investigation showed the district managed money “as a single entity, without regard to legal or contractual restrictions,” according to the audit report.
The kickback allegations involve $550,000 of the more than $717,500 in state General Improvement Fund grants Ecclesia College received from 2013 through 2014, the U.S. Department of Justice argues.
The trial of Woods and Shelton began April 9 in federal court in Fayetteville.
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 board the previous day. Former state Rep. Micah Neal pleaded guilty Jan. 4, 2017, for his role in the scheme and was the government’s first witness in the case.
Sentences for Neal and Paris are pending.
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.
Read Tuesday's Arkansas Democrat-Gazette for full details.