Woods guilty in kickbacks scheme, Co-defendant also convicted.

FAYETTEVILLE — Former state Sen. Jon Woods, whose legislative legacy includes sponsoring an ethics amendment to the state constitution, was convicted Thursday of 15 charges of public corruption for taking kickbacks from state grants he directed to nonprofit groups.

Woods’ indictment resulted from an ongoing federal investigation known to involve at least three states.

Also, co-defendant Randell Shelton Jr. of Kemp, Texas, was convicted of 12 of the 15 charges against him. The two men are best friends who each served as best man at the other’s wedding, according to testimony and attorneys’ statements.

“Today is a bittersweet day for the people of Arkansas,” U.S. Attorney Duane “Dak” Kees of the Western District of Arkansas said after the trial. “We should always rejoice when our justice system works, but it is nonetheless painful when that justice system has to be directed at those individuals we have placed our trust and confidence in.”

Neither Woods nor Shelton commented after the trial, each leaving accompanied by his wife and other family members. Neither defendant showed emotion as the verdicts were given or as the jury was polled at Shelton’s attorneys’ request, each juror reaffirming his verdict on each count.

The legal fight is not over, attorneys for both defendants said.

“Right now, I can’t count that high,” said Shelly Koehler of Fayetteville, defense attorney for Shelton, when asked what issues might be up for appeal in the case.

Shortly before 3 p.m., defense attorneys were in a hearing, objecting to instructions that U.S. District Judge Timothy L. Brooks had given to jurors, and had just been denied a mistrial request on the issue when the jury announced that it had reached a verdict.

Woods and Shelton were charged in a kickback scheme involving Ecclesia College in Springdale. Woods was also charged in a similar scheme for AmeriWorks, a Bentonville nonprofit company. One of the expected issues for appeal is Shelton’s repeated requests for a separate trial, Koehler said.

Shelton and Woods were both convicted of conspiracy to commit fraud. Woods was also convicted of money laundering in connection with the purchase of a cashier’s check. The remaining charges were all wire or mail fraud charges. Shelton was acquitted on three of those, while Woods was acquitted on two.

Seven women and five men served on the jury in a trial that began April 9.

“I 100 percent respect the jury’s decision and have no doubt they did a conscientious job — with what was given to them. What was given to them, though, was hamstrung in a number of ways,” said Patrick Benca of Little Rock, Woods’ attorney.

Benca and Koehler ranked the admitted misconduct of FBI Special Agent Robert Cessario as a top appeal issue in the case. Cessario, former lead investigator in the case, wiped the hard drive of a laptop used to gather evidence. His actions were referred to the Office of the Inspector General of the FBI for investigation, but the pretrial defense request for dismissal of the case because of that misconduct was denied.

More than 300 motions, replies and orders filled the case file, and the trial had more than 400 exhibits, according to court records. The case has been among the most disputed he has ever tried, Brooks said in a pretrial court order March 2.

Woods and Shelton face up to 20 years in prison on each of the fraud and conspiracy charges. Woods faces an additional 10 years on the money laundering charge. The two must also forfeit any money or property obtained through their actions regarding the charges on which they were convicted.

A report on recommended sentencing normally takes up to four months to compile, “but this is not a normal case,” Brooks said from the bench after the ruling. A vast amount of information has been collected already in this case, he said. The conduct of the two men during the time they were free on bond before trial has been exemplary, he said. So the pre-sentencing could be ready in less time, he said.

While they await sentencing, both defendants are free on the same bond they had met before the trial, but their travel is further restricted. Woods was allowed to travel throughout the Western District of Arkansas before, but now must get permission to travel outside Benton, Washington and Madison counties. Shelton had similar restrictions placed on his movements in Texas.

Shelton and Woods were indicted in March 2017. An alleged co-conspirator, Oren Paris III, former president of Ecclesia College in Springdale, was indicted with Woods. They were first indicted on March 3 with a superseding indictment filed April 18 and a second superseding indictment filed Sept. 13.

Woods cooperated with federal investigators from November 2015 through early 2016.

Paris pleaded guilty April 4 to one count of conspiracy. He resigned as Ecclesia’s president and from the private Christian college’s board before his guilty plea. His sentence is pending.

Paris disguised the kickbacks as consulting fees paid to Shelton’s business, Paradigm Strategic Consulting, according to the indictment. Shelton then passed the money along to Woods and former state Rep. Micah Neal of Springdale, the government said.

Neal pleaded guilty Jan. 4, 2017, for his role in the scheme and was the government’s first witness in the case. His sentence is also pending.

The kickbacks involved $550,000 of the more than $717,500 in General Improvement Fund grants Ecclesia received from 2013 through 2014, the U.S. Department of Justice said. Woods directed the most grant money Ecclesia received, at more than $350,000, court records show.

Legislators controlled a portion of the state General Improvement Fund before a state Supreme Court ruling on Oct. 5 found the process unconstitutional. 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.

Woods directed a $200,000 grant to Ecclesia in September 2013, grant records show. Neal supported a $50,000 grant to the college and Woods another $150,000 in December 2014, also according to grant records. The amount of money Woods received as a kickback wasn’t specified in the indictment. It claims much of that money was paid in cash, except for a $40,000 wire transfer from Shelton.

That Oct. 1, 2013, wire transfer was a loan, Shelton’s defense contended.

Woods and Neal also directed $400,000 in grant money to AmeriWorks, court and state records show. Neal said he received $20,000 delivered by Woods for steering $125,000 to AmeriWorks. Grant records show Woods directed $275,000 to the company.

AmeriWorks is a corporation formed by Milton R. “Rusty” Cranford, a lobbyist who is charged in Missouri with one count of conspiracy and eight counts of accepting bribes in an unrelated indictment.

Cranford described AmeriWorks in a grant application as a work-training program. Cranford, 56, is set for trial June 11 in federal court in Springfield, Mo.

Woods’ indictment was the first in what Department of Justice officials and Brooks have said is a wide-ranging investigation into public corruption in Arkansas and other states. Since Jan. 4, 2017, four current or former legislators have pleaded guilty to corruption involving state General Improvement Fund grants.

Freedom of Information Act requests by the Northwest Arkansas Democrat-Gazette in January 2017 found at least three of the state’s eight economic development districts, which administered the grants, had been subpoenaed by federal investigators. Another development district would not confirm nor deny whether it had.

Since then, staff members for the state Legislature obtained permission to hire outside legal counsel to represent them in dealing with federal investigators who have requested more records relating to the improvement fund grants. The records include state legislators’ working papers.

Known to be overseeing the investigation are U.S. attorneys for the Eastern District of Pennsylvania, Western District of Missouri, Western District of Arkansas and the Eastern District of Arkansas. Federal agencies involved in at least one of those investigations are the FBI, the Internal Revenue Service, Housing and Urban Development, and Health and Human Services.

Henry “Hank” Wilkins IV of Pine Bluff, a former state legislator, pleaded guilty Monday to accepting bribes. A U.S. attorney in Springfield, Mo., has said those bribes were from Cranford. Wilkins’ kickbacks first came to light in Cranford’s bond hearing in Missouri on March 16.

In addition to Wilkins and Neal, other current or former lawmakers who have pleaded guilty to corruption related to General Improvement Fund grants include former state Rep. Eddie Cooper of Melbourne and former state Sen. Jake Files of Fort Smith. Timeline of Woods case Former state Sen. Jon Woods of Springdale was convicted Thursday on fraud charges. Woods took kickbacks from Oren Paris III, president of Ecclesia College in Springdale, in return for directing state grants to the college. Randell Shelton Jr., of Kemp, Texas, was also convicted of fraud for being the middleman who passed the bribes to Woods through his consulting firm in return for a share.

The following timeline is based on federal court records, records from the Northwest Arkansas Economic Development District and reporting by the Northwest Arkansas Democrat-Gazette.

2017

Jan. 4: Former state Rep. Micah Neal of Springdale pleads guilty to one count of conspiracy to commit fraud.

March 1: Woods, Shelton and Paris indicted.

April 19: U.S. attorney files revised indictment removing and adding additional wire fraud charges against Woods, Paris and Shelton.

April 24: Paris files motion requesting a separate trial. The request is denied.

May 23: Remarks at a pretrial hearing reveal the federal investigation is still underway and more indictments are expected.

July 31: Woods asks judge to disallow secret audio recordings made by Neal.

Sept. 8: Judge rules secret audio recordings Neal made of conversations with Woods can be used at trial. Paris files motion to keep from evidence any incriminating statements Woods made to prosecutors while he was cooperating with them. The motion is later denied.

Sept. 13: A second revised indictment is filed against Woods, Paris and Shelton, adding a count of conspiracy to commit fraud.

Sept. 27: Defense complains at hearing that government provided its evidence in 4.3 million computer files with no usable format.

Sept. 29: Government replies to computer dispute saying the files can be searched using a program that can be downloaded for free.

Nov. 3: Judge rules government provided defense more information than law requires; that it did so in a timely manner; and it was in a usable format.

Nov. 30: Judge rejects Woods’ motion to delay the trial because his defense attorneys has not had time to thoroughly review the government’s evidence.

Dec. 1: Judge delays trial after 79 additional audio recordings, secretly made by Neal and not provided to the defense, are discovered.

Dec. 18: Defense files renewed motion to dismiss, attaching a government letter disclosing the laptop with copies of Neal’s secret audio recordings has been erased by FBI agent Robert Cessario.

2018

Jan. 10: Woods calls his former attorney W.H. Taylor to testify at hearing in judge’s chambers about information Taylor shared with the government after he no longer represented Woods.

Feb. 15: Government tells judge it doesn’t believe Cessario’s stated reason for erasing his laptop.

March 2: Judge denies motions to dismiss the case from Woods, Paris and Shelton. Brooks also rules the Neal audio recordings cannot be used at trial and Cessario cannot testify for the government.

March 20: Appeals court refuses to hear appeal of Brooks’ refusal to dismiss the case.

April 4: Paris pleads guilty to one count of wire fraud. This is a conditional plea that will be dropped if an appeal to have the case dismissed is successful.

April 9: Trial for Woods and Shelton begins.