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Erred in investigation into former Arkansas senator, FBI agent testifies

Wiping computer wrong, he says as defendants try to get graft case tossed by Doug Thompson | January 26, 2018 at 4:30 a.m.
Former state Sen. Jon Woods (right), surrounded by members of his legal team, walks Nov. 30 into the John Paul Hammerschmidt Federal Building in Fayetteville.

FAYETTEVILLE -- In the corruption case of former state Sen. Jon Woods, the lead FBI investigator testified Thursday that he acted improperly when he had a computer used to collect evidence in the case wiped clean.

The evidence -- secretly recorded conversations between Woods and former state Rep. Micah Neal -- was the focus of a hearing Thursday in U.S. District Court. The hearing continues today.

All the audio files downloaded using the laptop were transferred to discs and provided to attorneys in the case, the investigator, FBI Special Agent Robert Cessario, testified.

However, defense attorneys in the case discovered gaps in the record provided. Further investigation found 79 more audio files in the possession of Neal's attorney, Shane Wilkinson, on a computer at his Bentonville law firm. The law firm had made the files available to the government at a Dropbox file-sharing site.

Cessario was ordered to turn the laptop over to computer experts at the FBI's state headquarters in Little Rock after the discrepancy was brought to light at a Nov. 30 pretrial hearing, court records show. Before doing that, he had the laptop professionally erased because it contained personal medical records, he testified Thursday. Then he erased the computer's hard drive again himself before turning it in.

"Do you think what you did was proper?" asked Chad Atwell, attorney for one of Woods' co-defendants.

"No. I should not have done that," Cessario replied.

He testified all audio he had downloaded was given to U.S. attorneys in 2016 before the computer was wiped.

"Would it be fair to say, because of your actions, there's no way to know that?" asked Travis Story, another defense attorney in the case.

"Yes," Cessario replied.

U.S. District Judge Timothy Brooks questioned Cessario directly, asking if the purpose of the second erasing was, in any way, to conceal or obscure the first disc wipe by a computer repair shop in Bentonville. Cessario swore that was not the intent, that he only wanted to make sure the medical records were gone.

The U.S. Department of Justice alleges Neal and Woods, both of Springdale, took kickbacks in return for steering a total of $550,000 in state grants to Ecclesia College in Springdale.

The kickbacks, according to the government's indictment, were passed through a consulting firm owned by Randell G. Shelton Jr., a mutual friend of Woods and Ecclesia President Oren Paris III. Woods, Shelton and Paris face trial April 9.

Neal and Woods, both Republicans, also accepted kickbacks in return for directing $400,000 in grants to a Bentonville nonprofit organization called AmeriWorks, according to the government's case.

Neal pleaded guilty Jan. 4, 2017, to one count of conspiracy to commit fraud, admitting that he took two kickbacks totaling $38,000 in exchange for directing the grants. He has not been sentenced.

Neal secretly recorded about 140 hours of conversations with Woods using a recorder disguised as a writing pen, according to his testimony Thursday.

Those audio recordings have become a matter of dispute in the case. Thursday's hearing concerned a motion by defense attorneys to dismiss the indictment against Woods, Paris and Shelton because the government failed to disclose the existence of the 79 additional recordings.

Neal recorded Woods from about March 30, 2016, until at least October of the same year. Some recordings were given to defense attorneys, but the defense did not learn of the 79 additional audio files until Nov. 15, 2017.

Karri Layton, a paralegal for the Wilkinson law firm, which was representing Neal, testified about when and how the audio files were shared. Layton testified she put the audio files in a Dropbox file-sharing folder on Nov. 2, 2016. She said she checked a few days later and realized that four additional files containing more recordings had been missed. She put those files in the same Dropbox folder.

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Cessario testified he downloaded the audio as soon as he was told they were available, on or about Nov. 3. He did not check the Dropbox file after that. He also said he used the laptop because filters on desktop computers at FBI offices bar the use of Dropbox. Cessario also told the court the government never intended to use Neal's audio because it was gathered without the government's supervision, without proper documentation, verification, context or notes.

Cessario said he was very concerned about possible release of the medical records if they were left on the computer because information that was supposed to be kept under seal in this case had leaked before. He referred specifically to the posting on the court's website of the fact that Woods' former defense lawyer, W.H. Taylor of Fayetteville, had also been Cessario's attorney in his divorce.

Taylor simultaneously being an attorney for Woods and Cessario is the source of a motion to dismiss the case, citing a conflict of interest. Taylor no longer represents Woods.

Atwell, the attorney for one of Woods' co-defendants. argued that Cessario plans a medical malpractice suit that will make his medical matter public record anyway. Cessario acknowledged that that was true, but said any lawsuit he files is unlikely to get the attention the Woods case has received.

Wilkinson testified it was Neal's idea to record Woods. He said they told U.S. attorneys they were making the recordings, but did not turn any over until Nov. 2, 2016.

After defense attorneys learned of the additional recordings in November 2017, further investigation discovered Cessario's laptop had been wiped, court records show.

Gregory Payne, an attorney for Paris, filed a letter describing those events on a public website in December. The letter was subject to a protective order from the court and should have been sealed, Brooks has ruled. The matter of the letter's release is expected to be a subject of today's proceedings, according to court documents.

Woods faces 15 counts of fraud, all relating to either wire or mail transfers of money. Paris and Shelton are named in 14 of the fraud charges. All three are 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.

The case involves grants from the state General Improvement Fund, which was controlled by legislators at the time of the alleged kickbacks. The fund consists 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 state Supreme Court declared this method of distribution unconstitutional in a ruling Oct. 5.

The indictment does not give a total figure of what Woods is accused of receiving in kickbacks because it says parts of it were paid in cash.

Woods, Paris and Shelton have entered innocent pleas. They were first indicted on March 3 with a superseding indictment filed April 18 and a second superseding indictment filed Sept. 13.

The three defendants face up to 20 years in prison on the fraud and conspiracy charges if convicted. Woods faces an additional 10 years on the money laundering charge if convicted.

All three may also be ordered to forfeit any money or property obtained through their actions if found guilty.

AmeriWorks was incorporated by Milton "Rusty" Cranford of Rogers, a lobbyist. He also held a executive position with Alternative Opportunities, which provided behavioral and substance-abuse treatment. The staff at Decision Point, a subsidiary of Alternative Opportunities, helped file the grant involved in the kickback allegation, according to state records and court documents.

Photo by Jason Ivester
Former state Rep. Micah Neal, R-Springdale
Photo by NWA Democrat-Gazette
Randell Shelton Jr.
Photo by NWA Democrat-Gazette
Oren Paris

Metro on 01/26/2018

Print Headline: Erred in Woods probe, FBI agent testifies

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