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story.lead_photo.caption Former state Sen. Jon Woods (left) walks April 4 alongside his attorneys outside the John Paul Hammerschmidt Federal Building in Fayetteville. - Photo by Andy Shupe

FAYETTEVILLE -- A $400,000 grant awarded with kickbacks was only the start of a Missouri company's plan to get another $4.7 million from the state, according to the U.S. Department of Justice.

Former state Sen. Jon Woods sought $4.7 million in state grants, forgivable loans and other financing to move a Springfield, Mo., thermostat manufacturer to Northwest Arkansas, subpoenaed emails presented Tuesday at Woods' trial show.

The for-profit thermostat company had two board members who were also executives in a nonprofit behavioral health provider. That nonprofit hired Woods' fiancee for $70,000 a year four months after receiving the $400,000 grant. The fiancee's replacement received $35,000 a year, according to records presented Tuesday.

Woods is on trial on accusations of accepting a kickback on the $400,000 grant. He and co-defendant Randell Shelton Jr., formerly of Alma, are being tried together over alleged kickbacks on a different set of grants to a Christian college in Springdale.

Woods' defense countered that the thermostat company's move from Missouri would have provided at least 150 jobs to the region with the potential for more, and that a number of state and local lawmakers and economic developers were working on the prospect. The defense accused the government of being selective in the records it subpoenaed.

Tuesday's testimony referred to Woods' dealings with AmeriWorks Inc. and related companies and people. AmeriWorks, a Bentonville firm, allegedly paid kickbacks in return for the $400,000 grant in 2013. Shelton played no role in those dealings, the government acknowledged. Shelton argued unsuccessfully for a separate trial shortly after his indictment in March of last year.

AmeriWorks was not eligible for the grant since it lacked certification as a nonprofit organization in September 2013, grant records show. So the grant was received by Dayspring, a nonprofit behavioral health provider, doing business as AmeriWorks, grant records show. The grant applicant was Milton R. "Rusty" Cranford, both a lobbyist for and executive with Dayspring's parent company.

Cranford accepted the AmeriWorks grant Sept. 26, incorporated the nonprofit Sept. 27 and deposited the $400,000 check Sept. 30, grant and state incorporation records show. Cranford is under federal indictment in Missouri for nine unrelated bribery charges.

Cranford had staff members at Decision Point, a sister company, help prepare the grant application, according to Woods' indictment. Dayspring and Decision Point share a headquarters in Bentonville.

Dayspring and Decision Point's parent company, Preferred Family Healthcare, is based in Springfield, Mo. Emails subpoenaed by the government show Tom Goss, chief financial officer, told Cranford on Oct. 15, 2013 he wanted to hire Woods' fiancee, Christina Mitchell, at a salary of $90,000 a year, but in discussions they noted no position outside of the parent company paid so much.

"Senator is taken care of," Goss said during the email exchange. "He is a new bubba for our team."

Headquarters' emails also show the original draft of the AmeriWorks grant application was not filled out by Cranford and Decision Point employees, as grant records show, but by Bontiea Goss. Bontiea Goss was the chief operating officer for the parent company.

Tom and Bontiea Goss were also board members of Pro 1, a private for-profit thermostat manufacturer and importer also based in Springfield. That company was seeking $4.7 million in grants and forgivable loans in 2013 from the Arkansas Economic Development Commission. Cranford and company representatives met with Grant Tennille, then-director of the development commission, and local chamber officials in Northwest Arkansas on Sept. 27, 2013, records presented at trial show.

Among the benefits sought was a grant of $1 million and a no-interest, five-year loan of $3 million that would be reduced by $20,000 for each new job created -- using workers trained by AmeriWorks, court documents showed. If projections of 150 employees were met, the loan would have been entirely forgiven.

Woods would spearhead efforts to get support, with him approaching members of the Senate. Then state Rep. Micah Neal, also of Springdale, would lobby in the House. Both would appeal to then-Gov. Mike Beebe, Woods said in an email to Goss, Cranford and Neal dated Oct. 19, 2013. The governor would have final say on the development commission grants. If he refused, Woods and Neal would take up the issue in the February 2014 fiscal session of the Legislature, Woods' email says.

Patrick Benca, Woods defense attorney, noted in cross-examination that Pro 1 could have created as many as 200 jobs in Northwest Arkansas and employed veterans and people with a history of substance abuse trained by AmeriWorks, and that the project to move the company to Arkansas had many supporters besides Woods and Neal.

Tom and Bontiea Goss were removed from their positions by Preferred Family's board of directors Nov. 9, 2017, along with company CEO Marilyn Nolan. The three were later fired. A Philadelphia-based lobbyist for the company pleaded guilty late last year to accepting almost $1 million skimmed from the company for illegal campaign contributions and other lobbying prohibited to nonprofits that receive federal funds.

Former Arkansas Rep. Eddie Cooper, D-Melbourne, also pleaded guilty Feb. 12 this year to a conspiracy charge involving embezzlement from Preferred Family in federal court in Missouri. Another former board member who oversaw mergers killed himself on his farm near Springfield in November after pleading guilty in June to embezzling almost $2 million from the company.

The government will rest its public-corruption case against Woods and Shelton today, Assistant U.S. Attorney Kenneth Elser told the presiding judge at the close of court Tuesday.

Elser wouldn't say whether Oren Paris III of Springdale, the former president of Ecclesia College, will testify today against his two former co-defendants. Paris pleaded guilty to one count of conspiracy on April 4 in the last hearing before trial. He was indicted over kickbacks purportedly paid to Woods and to Neal in return for state General Improvement Fund grants in 2013 and 2014 totaling $550,000.

Paris disguised the kickback payments as fees to Shelton's consulting firm, according to the government. Neal pleaded guilty to one count of conspiracy on Jan. 4 of last year and was the first witness in the trial, which began April 9.

U.S. District Judge Timothy Brooks told the defense team Tuesday to be ready to start calling witnesses as soon as the government concludes, although he did say a long midday hearing after the government rests is to be expected. The defense will have motions for the court to consider then, attorneys for Woods and Shelton told the judge.

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.

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.

Neal said in his guilty plea that he received $20,000 delivered by Woods for steering $125,000 to AmeriWorks. Grant records show Woods directed $275,000 to the company. Neal's and Paris' sentences are pending

Despite the grants, AmeriWorks failed to gain additional financial support and never got off the ground, according to an August 2014 letter from Cranford to the Northwest Arkansas Economic Development District returning the $400,000. The district had issued the grant at the direction of Woods and Neal.

Cranford returned the money the day after federal investigators spoke to him, prosecutors said in court documents filed earlier in the case.

The kickback allegations also involve $550,000 of the more than $717,500 in state General Improvement Fund grants to Ecclesia, the U.S. Department of Justice contends.

Photo by NWA Democrat-Gazette
Randell Shelton Jr.

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  • RBear
    April 25, 2018 at 6:08 a.m.

    It just keeps getting better (or worse, depending on your POV) in this case. I have no clue what type of defense Woods' attorneys can have for him. But I think a few others should take the heat, namely Ballinger who has some activity with Woods on these financial dealings. Let's hope voters are paying attention when it come election time, but I doubt they will. Their good pastors (aka campaign workers) will tell them Ballinger is a good man doing the Lord's work in Little Rock.

  • JMort69
    April 25, 2018 at 7:04 a.m.

    Not all of Ballinger's coveted Senate District 5 lies in the area where he lives. Some of us live in Crawford and Sebastian Counties where these cults don't exist. And, not all of us are the leming-like creatures who sit gaped mouthed in their churches and believe anything their supposed "pastors" say. Some of us actually think for ourselves and we see this very clearly. Ballinger, among others, helped promote this scam by contributing their GIF funds to this ridiculous "college". They are just as culpable as the people on trial to us voters. Oren Paris, III was a "pastor", as were most of the people on the board of Ecclesia. None of them said anything about what was going on and it should have been apparent. Paris and his family were skimming over 1.3 million from the school in a 4 year period, per the federal indictment. No one noticed? Having been raised in a fundamental, evangelical religion, I was exposed to many of this type preacher. On the whole, I found their intelligence to be limited and many were nothing but con men. You see the type on television frequently. It is up to those of us who are not under the influence of these charlatans in righteous clothing to see to it that Ballinger and his ilk are not elected. Voting in the Republican Primary, no matter whether you are one or not, is the only way to prevent Ballinger from being elected. I urge good people of conscience to do that. Its time to rid our legislature of anyone associated with this alleged criminal activity and start anew.

  • RBear
    April 25, 2018 at 7:44 a.m.

    JMort great comments and thank you for sharing them.

  • TimberTopper
    April 25, 2018 at 8:25 a.m.

    Why not just vote out all preachers as well? Are we really so dumb as to think one can preach and also be a politician, without the preacher trying to use his position to give us his Bible laws put on the books, and at the same time think that the politician part of him will have clean hands, when it comes to money. The two occupations just are not compatible, on one human being.

  • hurricane46
    April 25, 2018 at 11 a.m.

    I agree with Timber, when a preacher is elected to the legislature he isn't representing his district, he's representing his church.