FAYETTEVILLE -- Ecclesia College, a private Christian school, stood to gain money from taxes on legalized medical marijuana in an early draft of a proposed constitutional amendment by then-Sen. Jon Woods of Springdale, according to legislative working papers made public in federal court late Thursday.
Barring such a windfall, the college's operations were on shaky financial ground, according to earlier testimony.
Naccaman Williams, director of special projects for the Walton Family Foundation, doubted the financial viability of Ecclesia after a campus tour in October 2013, he testified Thursday. Williams finished his testimony more than four hours before evidence of the marijuana plan was detailed.
Williams' tour came after the college had received the first of more than $700,000 in state grants in 2013 through 2014 to help buy land for expansion and other purposes. Of those, $550,000 in grants are now alleged to be part of a kickback scheme with Woods and another lawmaker.
Woods was indicted in March 2017, accused of a kickback scheme involving grants issued in 2013 and 2014 from the state General Improvement Fund. Two alleged co-conspirators -- Randell Shelton, formerly of Alma, and Oren Paris III, former president of Ecclesia -- were indicted with Woods. Former state Rep. Micah Neal pleaded guilty for his part in the scheme on Jan. 4, 2017. Neal was the government's first witness in the trial, which began April 9. The trial is expected to last at least through the rest of next week.
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. His sentence and Neal's are pending. Paris disguised the kickbacks as consulting fees paid to Shelton's company, Paradigm Strategic Consulting, according to the indictment. Shelton then passed the money back to Woods and Neal, the government contends.
In a related development, Shelton's attorneys requested in a motion Thursday that the court find FBI Special Agent Robert Cessario in contempt for failing to answer a defense subpoena to testify at the trial. Cessario was lead FBI investigator in the case who was barred from testifying for the prosecution after investigators discovered he had improperly wiped the hard drive of a computer used to gather evidence in the case.
Ecclesia sought grants from the Walton Family Foundation and other private sources, according to the testimony of Williams and earlier witnesses. Williams toured the college at the request of former state Rep. Tim Summers of Bentonville. Williams agreed to the tour primarily as a courtesy to Summers, he testified.
Williams said upon arrival at the school he found Ecclesia's enrollment "was even smaller than I thought" at about 100 students.
"It needed a lot of work," Williams testified about the campus. "I wondered if it was economically viable." Nothing on the tour changed his impression, he testified. Williams holds a doctorate degree in education finance from the University of Arkansas, he testified.
Bringing the college up to the level where donors like the Walton Family Foundation would reconsider was part of its rationale for hiring Shelton, according to the defense attorneys.
Woods worked on several bills that would have improved the college's finances, legislative staff testified throughout the afternoon Thursday. Legislative working papers are exempt from the state Freedom of Information Act, but the U.S. Justice Department subpoenaed records of Woods for this trial and also brought four current and former members of the Legislature's staff at the Bureau of Legislative Research to testify.
Staff members testified Woods directed them to work with Paris on higher education bills and with Shelton on bills on recycling roofing shingles. Shelton, Paris and Woods held a financial interest in a shingle recycling business, court records show.
Woods was sole sponsor of Senate Bill 638 of 2015, which became Act 603 of that year, public records show. The act created an account at the state Department of Higher Education for grants to "work study colleges." Such institutions are defined in the act as members of the national "Work Colleges Consortium." The only college in the state belonging to that consortium is Ecclesia, according to court testimony. There are seven such colleges in the United States, according to court testimony. No state money was budgeted to the account, state records show.
The government's last witness Thursday was Matthew Miller, assistant director of the Bureau of Legislative Research and head of its legal services division. Miller drafts all proposed state constitutional amendments, known in their legislative form as concurrent joint resolutions. If both chambers of the Legislature approve such a resolution, it is referred to the next general election ballot. Only general election voters can approve an amendment to the Arkansas Constitution.
Miller testified Thursday that he prepared, at Woods' request, a draft resolution to legalize medical marijuana. The first draft was ready on July 1, 2015. This was not the version of the legalization that voters approved in the 2016 general election. That amendment was placed on the ballot by popular petition, without the Legislature.
The draft amendment limited where tax money gathered from legalized marijuana could be spent. One of those purposes was to give money to the "work college fund" already created by Woods in his earlier legislation.
Woods directed the most grant money Ecclesia received from the General Improvement Fund at more than $350,000, court records show.
Woods directed a $200,000 grant to Ecclesia in September 2013, grant records show. Neal, of Springdale, supported a $50,000 grant to the college and Woods another $150,000 in December 2014, also according to grant records. The amount of money Woods is accused of receiving as a kickback isn't specified in the indictment. It claims much of that money was paid in cash, except for one transaction made to Woods by wire transfer for $40,000.
In one transaction, Paris authorized $50,000 to Shelton's firm Sept. 27, 2013 -- the same day Paris signed an agreement for the college to accept a $200,000 state General Improvement Fund grant, the indictment says. Shelton used the $50,000 that day to open an account for his business, which had been incorporated the day before, the document reads.
Less than a week later, on or about Oct. 1, 2013, Shelton transferred $40,000 by wire from that business account into the personal bank account of Woods, according to prosecutors. Defense attorneys have said the money transfers to and from Woods were loans and money to pay back loans.
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.
Woods and Neal also directed $400,000 in grant money to AmeriWorks, court and state records show. 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 and described in a grant application as a work-training program. 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.
Metro on 04/20/2018
Print Headline: College stood to gain from taxes on pot Rx; Kickbacks trial focuses on Ecclesia financial woes, ex-senator’s proposal