Witness at former state lawmaker’s graft trial says Arkansas college struggled

FAYETTEVILLE — Ecclesia College was failing to raise enough money to cover its expenses in January 2015, after almost two years of paying consultant Randell Shelton to bring in donations, the college’s former professional fundraiser testified Friday in a public-corruption trial.

Ecclesia, a private Christian college, is at the center of an indictment against former state Sen. Jon Woods of Springdale; Oren Paris III, former president of Ecclesia; and Shelton, formerly of Alma. The three were indicted in March 2017, accused of participating in a kickback scheme.

Paris pleaded guilty April 4 to one count of conspiracy and will testify for the government. He resigned as Ecclesia’s president and from the college’s governing board the previous day. Former state Rep. Micah Neal pleaded guilty Jan. 4, 2017, for his role in the scheme and was the government’s first witness in the case.

The kickback allegations involve $550,000 of the more than $717,500 in state General Improvement Fund grants the college received from 2013 through 2014, the U.S. Department of Justice has said.

Much of the grant money was used to buy property adjoining the campus, state grant records and Benton County land records show. Yet the college was tapping a line of credit to pay its bills by early 2015, its former business manager testified Friday.

Ecclesia paid Shelton’s company, Paradigm Strategic Consultants, at least $267,000 during the time it also was receiving the grants, according to records presented at trial.

The trial of Woods and Shelton began Monday in federal court in Fayetteville.

Paris disguised the kickbacks as consulting fees paid to Paradigm, according to the indictment. Shelton then passed money along to Woods and Neal, the government contends.

Defense attorneys have said the money transfers to and from Woods were loans and money to repay loans.

Former Ecclesia business office manager Shannon Newman had to use the college’s line of credit to pay bills, sometimes several times in a single week, she testified Friday. The line of credit was used to pay Paradigm at least once that she was sure of, Newman testified.

Newman went to work for Ecclesia in February 2015 as its business office manager and stayed until May of 2016, she testified.

Ecclesia hired Seth Duell, also in February 2015, to raise money, Duell testified Friday morning. Paris never told Duell that Paradigm Consulting had a contract to raise money, he said.

In cross examination, defense attorneys produced emails from Paris to Duell dated as early as February 2015 referring specifically to Shelton and Paradigm in reference to fundraising suggestions. Duell testified he did not remember the emails and said they only made suggestions. He never coordinated fundraising with Shelton, he said.

Ecclesia’s campus was run-down when he took the job, Duell testified.

“Dorms were in a terrible state,” he said.

Ecclesia had no record of any donations greater than $15,000 when he came on board, Duell testified. The college lacked enough enrollment to cover its expenses with tuition, he testified.

“I was kept in the dark about who Paradigm was,” he said.

Duell raised the possibility of seeking General Improvement Fund grants but was told by Paris that Paris handled those, Duell testified.

“Many people in Springdale had never heard of a Ecclesia, and there was skepticism from those who did know,” Duell testified about his fundraising efforts.

Paris had paid Shelton’s consulting company the $267,000 out of college funds from 2013 to 2015 without notifying his college’s board until October 2015 when federal investigators questioned Paris, according to the indictment and testimony.

Paris reported to his board in October 2015 about the payments to the consulting business over the previous two years, the indictment says.

Duell started looking for another job when a meeting he was having with Paris was interrupted by the arrival of two federal agents, one from the FBI and the other from the IRS, wanting to talk to Paris, Duell testified.

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 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 one transaction made to Woods by wire transfer for $40,000.

In one transaction, Paris authorized $50,000 to Shelton’s firm Sept. 27, 2013 — the same day Paris signed an agreement for the college to accept a $200,000 state General Improvement Fund grant, the indictment says. Shelton used the $50,000 that day to open an account for his business, which had been incorporated the day before, the document reads.

Less than a week later, on or about Oct. 1, 2013, Shelton transferred $40,000 by wire from that business account into the personal bank account of Woods, according to prosecutors.

The college’s board awarded Paris a $25,000 bonus Oct. 3, 2013, which was the day the college deposited the check, the indictment says.

The trial is expected to take at least three weeks. Prosecutors called witnesses Wednesday and Thursday to detail Woods’ and Shelton’s finances. Woods maintained at least four bank accounts in the time period he is accused of taking kickbacks, with none sustaining a positive balance, according to testimony.

Woods also received $87,250 in loans from Arvest Bank between 2012 and 2014, all guaranteed by others, according to financial records presented Thursday at his trial.

Prosecutors began the week with Neal’s testimony. He admitted receiving two kickbacks, one in 2013 and one in 2014, totaling $38,000 in exchange for directing state grants to two nonprofit groups. His sentence is pending.

Woods faces 15 counts of fraud, all relating to either wire or mail transfers of money. Paris and Shelton were named in 14 of the fraud charges. All three were charged with one count of conspiracy to commit fraud. Woods also is charged with one count of money laundering in connection with the purchase of a cashier’s check.

Metro on 04/14/2018

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