State bureau OK'd to hire legal counsel; in corruption probe, it’s to go with firm it used before

The Arkansas legislative staff intends to rehire a Little Rock law firm to represent it in the face of increasing requests from federal investigators.

The Executive Subcommittee of the Arkansas Legislative Council on Thursday approved a request from the Bureau of Legislative Research to again hire the firm of Mitchell, Williams, Selig, Gates & Woodyard as counsel for probes into corruption at the state Capitol.

Jane Duke, a former attorney with the firm, was one of the primary lawyers who initially advised the Bureau of Legislative Research. But the bureau cut ties with Duke and the firm after a pair of Missouri nonprofit executives were indicted and charged in March in the federal corruption investigation because one of the executives was represented by Duke.

A federal investigation into public corruption involving Arkansas lawmakers started at least six years ago with reports of legislators directing state General Improvement Fund grants to two nonprofits, a small college and a substance abuse treatment center, in exchange for kickbacks.

The probe expanded to include lobbyists and former executives of a Missouri nonprofit, Preferred Family Healthcare Inc., accused of paying bribes to Arkansas legislators in exchange for laws or state regulations favorable to their businesses. Also caught up was a former administrator of a Magnolia youth lockup, accused of hiring a state legislator who was an attorney to perform political favors.

Bureau Director Marty Garrity said Thursday that the attorneys who created a potential conflict are no longer with the firm. The firm confirmed Thursday that Duke had left. Garrity assured lawmakers that no conflicts existed with the new attorney who will represent the legislative staff bureau, Anton Janik Jr.

Garrity, in an interview, said her agency had been using in-house attorneys since cutting ties with the Little Rock firm earlier this year, but the volume and nature of requests from investigators had prompted her to again seek outside counsel.

She recalled the recent questioning of a bureau attorney by investigators in which they asked Garrity and the bureau's in-house legal counsel to leave the room.

"They do continue to interview our folks," Garrity told the subcommittee. "It makes me nervous to have one of our bureau employees being [interviewed] without representation."

Garrity declined to comment when asked directly in an interview if the uptick in requests from investigators was related to the federal corruption probe. Federal prosecutors have said the public corruption investigation is ongoing.

However, she alluded to the legislative bureau's attempt in 2017 to kill an initial subpoena from the FBI for legislative records. That motion to quash the subpoena was resolved in federal court in 2017, though under seal.

For its work that year, the bureau paid Mitchell, Williams, Selig, Gates & Woodyard just over $100,000 in fiscal 2018, Garrity said.

The bureau will pay the firm on an as-needed basis going forward. Garrity said she expects the bureau to spend significantly less with the firm this time than in fiscal 2018. With the large subpoena out of the way, she said the bureau paid the firm about $13,000 in fiscal 2019, which ended June 30. She expects spending levels moving forward to remain around the 2019 marks.

The Bureau of Legislative Research provides nonpartisan research and bill-drafting services to the General Assembly, working closely with lawmakers and state officials.

Lawmakers accepted Garrity's request with little discussion, but Sen. Terry Rice, R-Waldron, did express some concern. He said he was displeased in the past when learning that a potential conflict existed with the attorney representing the legislative bureau.

He said he had confidence in Garrity, and he felt comfortable after she assured lawmakers that no conflicts exist now.

"We need to be as publicly open as possible," Rice said. "I do see the need for due process for anybody involved. If a [bureau] employee has been intimidated or coerced or whatever by any legislator in the past, I would hope they have actions that they would feel comfortable with. I want them to be open and truthful with any investigation, and with where we're at with the investigations, I want the truth to come out."

Five former Arkansas lawmakers have been convicted so far in the two-state federal investigation: former Rep. Micah Neal and former Sen. Jon Woods, both Springdale Republicans; former Rep. Eddie Cooper, D-Melbourne; former Rep. Henry "Hank" Wilkins IV, D-Pine Bluff; and former Sen. Jeremy Hutchinson, R-Little Rock. Among 10 others convicted: Little Rock lobbyist and former Preferred Family regional executive Milton "Rusty" Cranford and former South Arkansas Youth Services in Magnolia executive administrator Jerry Walsh.

Hutchinson, the most recent, pleaded guilty June 25 to conspiring to commit bribery involving an orthodontist who sought favorable legislation, and to one count of filing a false tax return. Hutchinson also pleaded guilty July 8 to conspiring to defraud a federally funded charity, Preferred Family Healthcare Inc.

Hutchinson awaits sentencing. His attorney was overheard in federal court setting up at least one meeting with prosecutors. Hutchinson faces up to 13 years in prison in the three cases against him, according to plea agreements.

In the same indictment as Hutchinson, federal prosecutors charged the married couple who ran Alternative Opportunities Inc. of Missouri before its 2015 merger with Preferred Family Healthcare with conspiracy, bribery, fraud and falsifying tax returns.

Those executives -- Chief Operating Officer Bontiea Goss and Chief Financial Officer Tom Goss -- pleaded innocent to the charges. Tom Goss was represented by Duke, the Mitchell firm attorney, at the same time she advised the Bureau of Legislative Research.

Duke, a former assistant U.S. attorney, said in 2017 that no conflict of interest existed in her representation of both parties because she said the bureau and Tom Goss had no dealings with each other.

Court records show at least three more people have attracted the notice of investigators. None has been charged with any crime.

University of Arkansas board of trustees' chairman John Goodson of Texarkana has been under federal investigation, starting in 2013, in connection with more than $500,000 in payments from his law firm to Hutchinson when the latter was a state senator. That information was contained in federal court records in the Hutchinson case that were unsealed Aug. 7. Goodson said he has done nothing wrong.

Rep. Jeff Wardlaw, R-Hermitage, was named in a Feb. 20 FBI interview with Cranford as a legislator whom investigators wanted to know more about. Agents said they wanted information because of "press reports," according to an interview transcript. A few weeks earlier, the Arkansas Democrat-Gazette reported Wardlaw's business ties to two top nursing-home industry executives while Wardlaw served as a member and later chairman of the House panel overseeing the health care industry. Wardlaw has denied wrongdoing.

Former state Sen. Michael Lamoureux, R-Russellville, has been identified in court records more than once. Lamoureux's legislative terms and experience matched the identity of "Senator C," identified as a state senator who worked for Walsh at South Arkansas Youth Services. A 2017 FBI interview showed Cooper talking with agents asking questions about any role Lamoureux might have played in helping Woods secure state grants. Lamoureux has denied wrongdoing.

Information for this article was contributed by Doug Thompson of the Northwest Arkansas Democrat-Gazette.

Metro on 08/23/2019