Debt not city's, Fort Smith says

Ball-field ruling appeal OK’d

FORT SMITH -- Insisting River Valley Sports Complex partners were responsible for failing to pay four contractors more than $200,000 for work on the failed ball-field project, city directors voted Tuesday night to appeal a jury verdict ruling the city was liable for the debt.

Directors voted to appeal to the Arkansas Court of Appeals of a Sebastian County Circuit Court jury verdict last month that Fort Smith breached contracts with the contractors. Fort Smith claimed the sports complex's partners, former state Sen. Jake Files and Lee Webb, hired the contractors on their own and that the contractors should seek payment from Files and Webb.

The vote was 6-0 with Director Keith Lau abstaining, saying he had a conflict of interest because he has pressed criminal charges against Files over another matter, which he said remains under investigation.

Director Andre Good said he believed the city should appeal the verdict because directors owed it to residents to protect the city's money.

"I'm beginning to believe if we do not appeal this, we are not actively taking care of citizens' money," Good said.

He also questioned why financial information on the sports complex partners' spending on the project, which directors received from city staff Tuesday, hadn't been presented to jurors during the trial and that may have changed the outcome.

City Administrator Carl Geffken said the city's trial strategy wasn't to attack the contractors who had done work but to go after Files and Webb for failing to fulfill their obligation to pay the contractors.

Director Mike Lorenz said the city should appeal so as not to set a precedent.

"In this case, we paid a contractor to do work they said they did," Lorenz said. "If they engaged in hiring subcontractors outside of that and exceeded the amount of money we provided them, that's an issue between the subcontractor and the contractor that hired them. We cannot be responsible for that."

Director Kevin Settle said he believed the city should consider pursuing criminal charges against Files and Webb for the damage they did to the city and its residents by failing to pay the contractors and leaving the city with an incomplete project, shoddy and substandard work and a $200,000 debt to contractors.

Sebastian County Prosecutor Daniel Shue said Wednesday a special prosecutor was investigating the River Valley Sports Complex along with Lau's complaint against Files and an $80,000 wire transfer David Norsworthy made to Files when he served as a state senator.

"Approximately one year ago, I personally contacted the Arkansas State Police and the Honorable Mike Jones, who was representing the city of Fort Smith in a civil capacity, to officially communicate the request by the city of Fort Smith for a criminal investigation into the River Valley Sports Complex matter," Shue wrote in the statement.

Jason Barrett was appointed special prosecutor in May, and Jones represented Fort Smith in the trial last month involving the contractors' lawsuit against the city and the city's third-party suit against the sports complex.

The four plaintiffs in the lawsuit -- B&A Electric, Megehee Fencing Contracting, Grimes Dozer Service and James Griffith -- charged the River Valley Sports Complex was acting as an agent of the city and, as such, the city was responsible for the sports complex's debt after the city terminated its contract with the partners in February 2017.

The jury also ruled against Fort Smith in its third-party complaint River Valley Sports Complex breached its contract with the city in failing to complete the proposed tournament-quality ball field complex as set out in the 2014 agreement.

The verdict also meant the city would not recoup the $25,945 in state General Improvement Fund grant money, to which Files pleaded guilty in U.S. District Court to falsely taking.

Files had persuaded city officials to apply for the grant money, over which he had control, and use it to pay for infrastructure work on the sports complex, which by December 2016 was unfinished and far behind schedule.

But Files submitted falsified bids for the job so that an employee of his was awarded the project. After the employee received the money, Files instructed her to turn it over to him, which he used to pay his construction company employees and to deposit into a bank account in his name.

He pleaded guilty to wire fraud and money laundering and began serving an 18-month sentence in federal prison in August. Part of the restitution order in the sentence included return of the General Improvement Fund grant money.

NW News on 10/18/2018

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