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story.lead_photo.caption Former state Sen. Jon Woods (right), surrounded by members of his legal team, waves Nov. 30 as he walks into the John Paul Hammerschmidt Federal Building in Fayetteville. - Photo by Andy Shupe

FAYETTEVILLE -- Payday lender Robert A. Srygley lent then-legislator Jon Woods $35,000 in two installments in late 2011 and early 2012, he testified Thursday.

Srygley, past president of the Arkansas Check Cashers Association, didn't know Woods had introduced legislation in 2011 to benefit payday lending and would introduce another bill to benefit lenders in 2013, he testified. Woods was a House member in 2011 who began service in the Senate in 2013.

"I don't think anything came of it because I would have known if it passed," Srygley of Fayetteville said during cross-examination when shown a copy of House Bill 1572 by Woods on payday lending. The bill would have allowed lenders of less than $5,000 to charge fees to borrowers, including 5 percent for late payments, $25 for a bounced check and an unspecified amount for officially recording documents related to the loan. The fees wouldn't be considered interest, the bill said.

Srygley also said he never heard of Senate Bill 900 of 2013 by Woods. The bill, which died when the General Assembly adjourned, would have allowed the Legislature to set the maximum interest rate on loans. Then-Arkansas Attorney General Dustin McDaniel described it at the time as an attempt to restore payday lending in Arkansas.

Arkansas voters approved a 17 percent cap on annual interest rates in 2010.

Srygley also made a campaign contribution to Woods of $2,000 on April 9, 2012, he confirmed.

Srygley was the first witness called by Woods' defense. He lent Woods $30,000 on Sept. 15, 2011, according to his testimony and check copies introduced as evidence. Srygley testified he expected repayment in three months, but did not get it until Oct. 1, 2013.

The $30,000 loan was for Woods' expected campaign expenses, Srygley testified. Woods successfully challenged incumbent Sen. Bill Pritchard of Elkins in the Republican primary the following year. Srygley made his $2,000 contribution to Woods' campaign, then provided a $5,000 loan on May 17, 2012, all while owed repayment on the first loan.

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"I would let him know I was still around," Srygley said when asked what he did to secure repayment.

Srygley does not do business in Arkansas any more, he testified, because of a 2009 state Supreme Court ruling that check-cashing fees must be considered interest on loans. Payday lenders who had charged fees in excess of the state constitution's usury provisions were ordered to stop.

Woods' first repayment on his debt was in mid-2013 with $2,000 in cash, Srygley testified.

"I was disappointed," he said. "I told him the envelope didn't feel like it had $35,000 in it, and it didn't."

The remaining $33,000 came in an Oct. 1, 2013 cashier's check to Srygley from Woods for that amount. That $33,000 cashier's check was cut four days after Randell Shelton Jr. forwarded $40,000 to Woods by wire transfer, evidence presented earlier in the trial showed.

Shelton's wire transfer was a loan to a friend, according to his defense counsel. Testimony will show Woods owed debts to a series of friends, borrowing heavily each time from one friend to pay the last, according to Shelton's defense counsel.

Bank records for Shelton's company, Paradigm Consulting, and for Woods were detailed in court April 11 by Christy Cops, fraud research specialist for Arvest Bank. Both Woods and Paradigm kept their accounts there.

Woods' bank records showed as many as 16 overdraft penalties a month in one of his accounts in 2013, Cops testified.

Neither Srygley nor any other creditor show up on Wood's 2012 or 2013 statements of financial interests, Arkansas secretary of state records show. All legislators are required to file such statements and list creditors.

Woods was indicted in March 2017, accused of a kickback scheme involving such grants issued in 2013 and 2014. Two alleged co-conspirators -- Shelton, formerly of Alma, and Oren Paris III, former president of Ecclesia College in Springdale -- were indicted with Woods.

Paris pleaded guilty April 4 to one count of conspiracy and agreed to testify for the government. He was not called before the government rested its case Wednesday. The U.S. Department of Justice still has the option to call Paris as a rebuttal witness after the defense rests, which it is scheduled to do by the middle of next week.

Paris resigned as Ecclesia's president and from the private, Christian college's board the previous day. His sentence is pending. Paris disguised the kickbacks as consulting fees paid to Paradigm, according to the indictment. Shelton then passed the money along, the government contends.

Elizabeth Newlun, administrative assistant to the president at Ecclesia, testified late Thursday that the federal government has placed the college under increased scrutiny since Paris' guilty plea. This delays federal student-aid payments considerably, she testified. The government contends Newlun was hired as a favor to Woods as part of the kickback scheme, which she denied in her testimony.

Newlun's son, who served in the Air Force, was killed in action in 2011. He was a close childhood friend of Woods. She said from the stand that Woods was one of the three people she called after she received news of her son's death and that she thinks of him like a son.

The kickback allegations involve $550,000 of the more than $717,500 in state General Improvement Fund grants Ecclesia received from 2013 through 2014, the U.S. Department of Justice contends.

Woods directed the most grant money Ecclesia received, at more than $350,000, court records show.

Former state Rep. Micah Neal of Springdale pleaded guilty Jan. 4, 2017, for his role in the scheme and was the government's first witness in the case. His sentence is also pending.

The defense will offer expert testimony and accuse Neal of lying, said Woods' defense attorney, Patrick Benca of Little Rock. A certified public accountant and a law professor who is a nationally recognized expert on the pressure the government puts on suspects to make statements and implicate others are among the remaining witnesses for the defense, he said.

Benca also protested Thursday the judge's self-imposed deadline of four weeks for the trial. The judge's concern for the jurors should not override his client's constitutional rights to a full defense, Benca argued in a hearing after the jury left for the day. U.S. District Judge Timothy Brooks replied the trial was scheduled far enough in advance that his client's ability to put on a defense was not at issue.

The trial of Woods and Shelton began April 9 in federal court in Fayetteville and is expected to end next week.

Woods directed a $200,000 grant to Ecclesia in September 2013, grant records show. Neal 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 the $40,000 wire transfer from Shelton.

That Oct. 1, 2013 wire transfer was a loan, Shelton's defense contends. It happened four days after Shelton opened the account for Paradigm Consulting with a $50,000 check from Ecclesia on Sept. 27, 2013. Ecclesia issued the check the same day, after Paris signed an agreement accepting a $200,000 General Improvement Fund grant directed to Ecclesia by Woods and Neal.

Woods borrowed $45,000 from his parents to pay Shelton back, testified Jeannie Woods, the former senator's mother. In cross-examination, Assistant U.S. Attorney Kyra Jenner presented bank records showing the money for that loan was obtained April 13, 2016 -- months after Woods knew he was under investigation. Woods had met with investigators in November, 2015 and stopped cooperating in March, court records show. Woods repaid Shelton on April 16, 2016, according to bank records.

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 04/27/2018

Print Headline: Payday lender takes stand in kickback trial

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