Former state Sen. Jon Woods found guilty in federal corruption case | Arkansas Blog

Thursday, May 3, 2018

Former state Sen. Jon Woods found guilty in federal corruption case

Posted By on Thu, May 3, 2018 at 3:27 PM

click to enlarge FOUND GUILTY: Former state Sen. Jon Woods at the Arkansas legislature (file photo). - BRIAN CHILSON
  • BRIAN CHILSON
  • FOUND GUILTY: Former state Sen. Jon Woods at the Arkansas legislature (file photo).

Former state Sen. Jon Woods was found guilty today on 15 of 17 counts in his federal corruption trial. Consultant Randell Shelton Jr., on trial on related charges, was found guilty on 12 of 15 counts. They face up to 20 years in prison on each charge of fraud and conspiracy to commit fraud; Woods was also found guilty on one count of money laundering, for which he would face a maximum of ten years in prison. They could also be forced to forfeit any money or property they acquired through illegal activities.

Woods stood accused of participating in a kickback scheme in exchange for guiding state money to a small Christian college in Springdale, Ecclesia College, and to a nonprofit under the umbrella of Preferred Family Healthcare, a major provider of Medicaid-funded services in the state. Former state Rep. Micah Neal pleaded guilty to being a co-conspirator in both schemes before the trial started and cooperated with the government. Oren Paris III, president of the college, pleaded guilty to being a co-conspirator in the Ecclesia scheme less than a week before the trial began, cooperating with the government.

Shelton Jr. stood accused of participating in the Ecclesia scheme, with the kickback payments disguised as payments to his consulting company.

The jurors heard testimony that Woods and Neal directed $400,000 in public General Improvement Fund (GIF) money to Ecclesia in exchange for kickbacks. They also communicated by text message with their co-conspirators about directing additional GIF money to the college via other legislators, including identifying who would target which lawmaker and how much they would ask for. Paris also suggested that a good selling point would be that Ecclesia "produces graduates that are conservative voters" whereas "all state and secular colleges produce vast majority liberal voters." Woods replied: "Agreed."

None of the other legislators recruited for the GIF grab have been charged with a crime, but the efforts of Woods and Neal were quite successful. Between 2013 and March of 2015, the following lawmakers sent GIF money to Ecclesia: Sen. Bart Hester (R-Cave Springs) sent $60,000, Sen. Cecile Bledsoe (R-Rogers) $60,000, former state Rep. Randy Alexander (R-Rogers) $26,500, Rep. Stephen Meeks (R-Greenbrier) sent $25,000, Rep. Charlie Collins (R-Fayetteville) sent $14,000, Rep. Jim Dotson (R-Bentonville) sent $13,500, Rep. Bob Ballinger sent (R-Hindsville) $8,500, and Rep. Debra Hobbs (R-Rogers) sent $10,000.

An additional $100,000 in GIF grants to the college was pushed through by former Senate President Pro Tem Michael Lamoureux (R-Russellville), according to testimony heard by jurors, despite the fact that the grant applications were faulty. Lamoureux, who was Governor Hutchinson's chief of staff until May of 2016 and is now a lobbyist, has likewise not been charged with a crime.

Yet more GIF money was sent to the college by multiple former and current legislators later in 2015.

According to testimony from Neal, the GIF system was a "slush fund." Hester also testified for the prosecution, and told jurors that legislators had total control of sending their allotted amounts of GIF money to pet projects. The regional development districts ostensibly in control of the approval for GIF grants rubber stamped them for lawmakers, Hester testified (despite the Supreme Court calling direct legislator control of such local grants unconstitutional).

Jurors also heard testimony that Woods engaged in other efforts to steer money to the college, including passing a law that created an account in the state's Department of Higher Education for grants that would only be available to Ecclesia because of a particular designation it has as a "work college" (a program for incorporating employment for all on-campus students into the academic experience). Ecclesia is one of only seven such colleges in the nation and the only one in Arkansas, so the account was exclusively for the tiny Springdale school. Woods unsuccessfully made attempts to insert language into the ballot initiative for medical marijuana that would have steered marijuana tax money to the college. "I think it is great to take money from Satan and Kingdom of darkness and put it to Kingdom of God use," Paris told Woods.

According to the indictment, Paris disguised the kickbacks as payments to Shelton's consulting company. Neal testified that Shelton delivered two envelopes stuffed with $100 bills, totaling $18,000, to him behind his family-owned restaurant in Springdale, Neal's cafe. The total amount of the kickback payment to Woods was not specified by the government, but the indictment stated that it involved both cash and a $40,000 wire transfer.

The jury also heard evidence and testimony about another alleged kickback scheme, this one involving corporate entities associated with Preferred Family Healthcare, a Missouri-based nonprofit with a large footprint in the state's health care system, which has received (and continues to receive) tens of millions of dollars from the state in Medicaid contracts, general revenue funding, and GIF largess.

Woods directed $275,000 to an entity under the PFH umbrella and Neal directed $125,000. The grant application was originally drafted by Bontiea Goss, then chief operating officer at PFH. Little Rock lobbyist Rusty Cranford, then another PFH executive, signed the application for the grants and accepted the funds, which he then deposited into the account of yet another corporate identity, AmeriWorks, a new nonprofit that he incorporated the day after accepting the grants (Cranford later returned this money the day after federal investigators spoke to him, according to prosecutors). The jury heard evidence that Cranford paid Woods an unknown amount of money in kickbacks the next month; Woods paid Neal $20,000 on Cranford's behalf; and AmeriWorks sent Cranford's lobbying firm a check for $16,500. Cranford has also been indicted on unrelated federal charges in Missouri for a separate kickback scheme involving PFH.

In addition to the kickbacks, the jury heard testimony that Cranford and Tom Goss (husband of Bontiea), then the chief financial officer at PFH, helped secure an overpaid job for Woods' fiancee. Four months after the $400,000 windfall, Cranford and Goss landed her a job at Dayspring, one of the nonprofits under the PFH umbrella. She was hired in February as an on-the-job trainer for Dayspring at $70,000 a year, helping clients at the substance abuse treatment center with employment. She also received $300 per month in mileage allowance and cell phone reimbursement. When she left the position in June, her replacement was hired for half the salary. Originally, Cranford and other PFH leadership had hoped to hire Mitchell at a salary of $90,000 a year, according to emails between Cranford and Goss. However, they apparently concluded that this would be too outrageous because literally no position outside of the parent company PFH had a salary that high. In email discussions with Cranford about paying her an exorbitant salary, Tom Goss stated, "Senator is taken care of. He is a new bubba for our team."

In addition to the GIF giveaways, the jury heard testimony that Woods and Neal tried to  send $4.7 million in state grants and other public no-interest loans to move a thermostat manufacturer from Springfield, Mo., to northwest Arkansas. Woods was tapped to gather support for the deal in the Senate and Neal in the House, according to evidence presented by the government (the deal ultimately never materialized). Tom and Bontiea Goss were members of that private company's board.

Justice Department attorney Sean Mulryne told the jury, "Mr. Woods used his office as senator as a legislative ATM." Woods' attorney argued to the jury that it was all legal and routine legislative activity and "there's sunshine on everything. ... It's all open. There is nothing behind the scenes."

Neither Woods nor Shelton testified. Woods's attorneys called an FBI agent who had admitted to wrongdoing in the investigation, but the judge had previously restricted discussion of that topic and there was little substantive testimony. Paris was also called by the defense but asserted his Fifth Amendment right against self-incrimination and otherwise offered no testimony. Shelton's defense called a few character witnesses as well as someone who allowed Shelton to live in his basement apartment — crappy digs, the defense contended, for someone on the take. 

Tom and Bontiea Goss have not been charged with a crime. They also appear to be implicated in the separate kickback scheme that Cranford has been indicted on in Missouri. Cranford was denied bail in March after a judge found that allegations that Cranford had attempted to hire someone to murder his alleged co-conspirator were credible. According to court filings by federal prosecutors, Cranford told an unnamed felon, "He needs to go away. He needs to be gone." According to the court filing, Cranford made a gun-shooting gesture with his hand when he made this statement. No charge has been filed in the alleged murder-for-hire scheme. He is set for trial this summer on one count of conspiracy and eight counts of accepting bribes.

Woods and Neal are two of the five former lawmakers who have faced federal charges related to improper use of GIF money.

Former state Rep. Hank Wilkins pleaded guilty Monday to accepting kickbacks. According to his plea agreement and statements in previous court proceedings, Cranford appears to be the lobbyist involved in arranging those bribes. He awaits sentencing.

Former state Rep. Eddie Cooper pleaded guilty to an embezzlement and kickback scheme involving Cranford and PFH. He awaits sentencing.

Former state Rep. Jake Files pleaded guilty in January on charges of wire fraud, bank fraud and money laundering. He admitted to pledging a forklift he did not own as collateral for a $56,700 bank loan, misdirecting more than $25,000 in taxpayer money for a sports complex his construction company was supposed to build, and pocketing GIF funds for personal purposes. He faces sentencing in federal court this summer.

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