FBI gathers records on legislative-directed GIF spending at Lonoke agency | Arkansas Blog

Friday, July 8, 2016

FBI gathers records on legislative-directed GIF spending at Lonoke agency

Posted By on Fri, Jul 8, 2016 at 11:06 AM

SUBPOENA SERVED: At planning office.
  • SUBPOENA SERVED: At planning office.

An FBI agent visited the office of the Central Arkansas Planning and Development District in Lonoke on Thursday and delivered a subpoena for three years worth of records on the District's spending of state general improvement funds (GIF).

GIF money is surplus that has been doled out to legislators, who guide much of the money to regional planning and development districts that then spend the money on local projects, typically at the direction of state legislators. The process was developed after a lawsuit struck down direct legislative appropriations as unconstitutional local legislation. Jacksonville lawyer Mike Wilson, a former legislator who brought that first lawsuit, has filed another against the Central Arkansas District over the current practice, which he says is just a sham to continue the old practice of legislators' guiding money to local projects — a fireworks show in Benton, a pole barn for the FFA in White County and similar projects are among the many approved by CAPDD.

Nobody has alleged that process is criminal, though Circuit Judge Chris Piazza may eventually rule it runs afoul of the state Constitution. But a legislative audit turned up highly questionable spending of GIF money in Northwest Arkansas and rumors have been rampant that an ongoing federal public corruption probe is delving into the question of whether legislators may have received kickbacks in return for guiding money to certain projects.

Rodney Larsen, director of the CAPDD, said an FBI agent "asked me a little about the process of how we do business and then handed me a subpoena."

Larsen said the agent wasn't so much interested in how the board of the agency considers and grants money "but wanted information to see where the money went, where the money ultimately ended up." Larsen took that to mean potentially beyond payments to grant recipients and into improper hands. Larsen said he was confident the CAPDD procedure was proper. He said if agencies didn't spend the money they received as stipulated, it meant they submitted false records.

Larsen added, "He said we were not a target." He said the agency had until Aug. 9 to produce the records requested. Many of those records have been entered as evidence in Wilson's lawsuit, including e-mails in which legislators suggest how money should be spent.

The CAPDD and at least one other planning district have stopped distributing GIF money since the Wilson lawsuit was filed. 

I left a message with the FBI, but a comment on an ongoing investigation would be unusual.

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