Northwest Arkansas Democrat-Gazette
Judge sentences Shelton
Brooks: Ecclesia accomplice’s crimes too serious to excuse
FAYETTEVILLE — Randell Shelton Jr. will probably never defraud taxpayers again, U.S. District Judge Timothy L. Brooks declared from the bench, but those who would must be deterred.
Brooks was an accomplice in a kickback scheme executed by his friend, then-state Sen. Jon Woods, R-Springdale. To deter others from attempting the same in the future, Brooks said, he had to impose a sentence that couldn’t “in any way, shape or form be construed as a slap on the wrist.”
Shelton, a new father, received a sentence of six years in prison to be followed by three years probation. Shelton was also sentenced to pay $660,698 in restitution for his conviction on 12 charges of conspiracy and fraud, involving state General Improvement Fund grants to the private college run by a mutual friend. Shelton must also forfeit another $664,000 in assets.
The judge told Shelton after a day-long sentencing hearing Thursday he was a good man who had lost his way despite a strong, supportive family, but the judge couldn’t grant the leniency Shelton and his family pleaded for.
Ecclesia paid Shelton’s firm, Paradigm Strategic Consulting, fees for fundraising. Shelton passed most of those “fees” along to Woods and a cooperating lawmaker, then-Rep. Micah Neal, as kickbacks in return for their
support for state grants to Ecclesia.
Brooks noted Shelton’s first retainer of $50,000 was about $10,000 more than the entire yearly salary of the college’s full-time, professional and experienced fundraiser. The consulting contract with Ecclesia was “a thin veil,” Brooks told Shelton.
Shelton asked for a delay in his sentencing last month, noting his first child was born in July. At sentencing he asked for any amount of time the judge thought was fair as long it was served in house arrest at his home in Kemp, Texas.
“You are asking to be locked in your home with your newborn baby,” Brooks replied. “Many parents would consider that a joy.”
As a defendant, Shelton showed greater apparent strain before the sentencing than after it. Just before final sentence was pronounced, Shelton made an impassioned 10-minute plea to the judge, his voice wavering but never breaking.
“I ask and beg you, not for me but for my family and for my daughter’s sake, please do not keep me from my responsibility of being a father,” Shelton said at the conclusion of his remarks to Brooks. Throughout his talk, with defense counsel at his side, Shelton gripped the rail in front of the judge’s bench with both hands.
Woods was sentenced Wednesday to more than 18 years, four months in prison for his part in the Ecclesia scheme and others. The two men were tried together. The lack of a separate trial is one of the grounds of the expected appeal, his attorneys have said.
Brooks told Shelton there was a “mountain of evidence that was also microscopic in its detail” at the trial. That proceeding in April took four weeks to get through it all, the judge reminded Shelton. The record of telephone calls, texts and financial records compiled by investigators and the U.S. Attorney’s office “gave an account that was almost in real time, minute by minute,” Brooks said.
Duane “Dak” Kees, U.S. Attorney for the Western District of Arkansas, asked for an even stiffer sentence. Most defendants to appear in federal court have “horrible upbringings” that, to some extent, explain their behavior. Shelton had every advantage growing up, Kees said during the hearing. Brooks ruled later Shelton was clearly distressed at the cost of his actions upon his family.
Shelton’s sentencing was the second of four in an ongoing federal and state investigation. The remaining two are set for next week. Shelton and Woods’ corruption case was the first in a string of indictments involving abuse of grants from the state’s General Improvement Fund. Further investigations resulted in other charges for other former lawmakers involving bribery and Medicaid fraud.
Five former lawmakers stand convicted in the investigations. Jeremy Hutchinson, who was chairman of the Senate’s Judiciary Committee, also resigned Friday after he was charged by federal authorities with diverting campaign money to his personal use.
Woods and Shelton were charged in a kickback scheme involving Ecclesia College in Springdale. Shelton lost his property manager’s job in Little Rock in July 2013 and helped Woods launch the scheme that September, according to the government.
The kickbacks involved $550,000 of the more than $717,500 in General Improvement Fund grants the small, private Christian college received from 2013 through 2014. Woods directed the most grant money to the school at more than $350,000, court records show. The amount of restitution to be paid also includes the amount of money received in grants from lawmakers who were unaware of the scheme but talked into awarding grants by Woods and his accomplices, Brooks ruled.
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 amount of money Woods is accused of receiving as a kickback isn’t specified in the indictment. It claims much of that money was paid in cash, except for a $40,000 wire transfer from Shelton.
An alleged co-conspirator, Oren Paris III, Ecclesia president, was indicted with Woods and Shelton in March 2017. Paris pleaded guilty April 4 to one count of conspiracy. He resigned as Ecclesia’s president before his guilty plea. His sentence is pending.
Ecclesia wasn’t the only fraud involving state money Woods and Shelton undertook, according to court documents released Aug. 31 and testimony at Thursday’s sentencing.
Shelton helped start a Benton-based nonprofit group, Arkansas Health and Economic Research Inc., that secured $39,198 in state grants to buy alternative medicine equipment such as ozone equipment, mats with magnets in them and foot baths, according to court testimony Thursday.
The stated purpose of Arkansas Health and Economic Research was to explore alternative medicine approaches, according to its state grant application. The true purpose was to provide alternative treatment free of cost to Woods’ father, James, for multiple sclerosis and to supply Shelton with a bank account he could draw on for other business and personal expenses, Kees argued during Shelton’s sentencing.
Brooks noted numerous withdrawals by Shelton for personal expenses such as an large amount of travel and many meals at Neal’s Cafe in Springdale, Micah Neal’s family business. “Most of these are in the $10 range, which are probably individual meals, but there is one here for Neal’s that $40,” Brooks said. “I’m not aware of any blue-plate specials at Neal’s that would cost one customer $40.”
The government argues Shelton and Woods’ plan to steer of state grant money to Arkansas Health and Economic Research of Benton to benefit Woods father should add to the potential sentence Shelton faces, although neither Shelton nor Woods was ever charged in the Health Research grant awards. Brooks agreed, although he said the amount of money involved wouldn’t carry much weight in his sentencing decision.
Other patients used the equipment Health Research bought, company director Charles Snider of Benton testified Thursday, but the only treatment with documentation was for James Woods. Woods family took one of those pieces of equipment, an ozone therapy machine, home, Snider said. It was never returned, he testified. Also, Shelton never fully repaid a $3,428 withdrawal he loaned from Health Research’s account to benefit another business venture of Shelton’s, Snider said.
Health and Economic Research received a $20,000 state Improvement Fund grant on Sept. 26, 2013, 16 days after it was created. The grant had been applied for the same day the Benton-based company had been incorporated, court documents say.
A third scam, according to court documents, involved Shelton, Woods and Paris. Shelton, Paris and another individual formed a company called Shingle Resource Recycling LLC in December 2014.
On Feb. 17, 2015, Woods sponsored Senate Bill 393 that became Act 441 of 2015. The law allowed for up to $250,000 in Improvement Fund money for a pilot program to develop a method to recycle asphalt roofing shingles.
Total deposits to Paradigm Strategic Consulting’s account at Arvest Bank from 2013 through 2015 were $285,994, with Ecclesia providing $267,500, or 93.4 percent, of all deposits, according to bank records presented by Steven Williams, a certified public accountant assigned to criminal investigations for the FBI.
Shelton made the $40,000 wire transfer directly to one of Woods’ bank accounts, another $1,800 to a band Woods’ managed called the Plaid Jackets, $170,420 in cash withdrawals and another $9,235 in automatic teller machine withdrawals from the Paradigm account in the same time period, bank records summarized by Williams show.
Shelton made a total of $221,455 of either cash withdrawals or direct transfers to Woods or Woods-related accounts, Williams testified.
That Oct. 1, 2013, wire transfer was a loan, Shelton’s defense contended. Shelton also claimed his business as a consultant and fundraiser for Ecclesia was legitimate and money paid by Paris was for services provided.
Sean Mulryne, attorney for the public integrity section of the U.S. Department of Justice, said it was no coincidence Shelton landed a high-paying job at Ecclesia within months of losing a job.
“Think not only of what happened, but what did not happen,” Mulryne said. “What did not happen was anything that would justify paying Randell Shelton more than $267,000 through Paradigm.”
Shelton moved back to his family’s ranch in Kemp, Texas, southeast of Dallas after his indictment.
Government evidence and testimony at the trial also showed Shelton’s company was paid by Ecclesia College half of the amounts paid in grants from the West Central Arkansas Planning and Development District, along with smaller payments after other grants.
Two grants of $50,000 each are involved from the West Central district, based in Hot Springs. The records showed cash deposits of $25,000 by Shelton into the Paradigm accounts and also showed cash withdrawals from Paradigm’s account of $21,000 after the first grant and $13,000 after the second.
Shelly Koehler of Fayetteville, one of Shelton’s attorneys, said Shelton had a long history of successful enterprises including fundraising. He was helping Ecclesia pursue an $18 million expansion plan, she said during his trial.