Former state Rep. Micah Neal on Wednesday detailed his role in a kickback scheme he said involved former state Sen. Jon Woods and money from the state’s General Improvement Fund.

Neal was the first witness in the federal corruption trial of Woods and consultant Randell G. Shelton.

Also Wednesday, U.S. District Judge Timothy Brooks ruled statements made by Woods during a time when he was cooperating with federal investigators cannot be used to call Neal’s testimony into question — for now.

Woods cooperated with federal investigators from November 2015 through early 2016, according to a March 2 ruling from Brooks. In a discussion held away from jurors, Shelton’s attorneys asked to use some of his statements in their cross-examination of Neal on Wednesday. Woods’ attorneys objected.

Woods, a Springdale resident; Oren Paris III, former president of Ecclesia College in Springdale; and Shelton, formerly of Alma, were indicted in March 2017. Paris pleaded guilty April 4 to one count of conspiracy and will testify for the government.

Neal, a Springdale resident, pleaded guilty last year to one count of conspiracy. He admitted receiving two kickbacks, one in 2013 and one in 2014, totaling $38,000 in exchange for directing grants to two nonprofit groups. His sentence is pending.

Woods is accused of taking kickbacks from Paris in return for directing $550,000 in Improvement Fund grants to Ecclesia, all in 2013 or 2014. Paris reportedly disguised the kickbacks as consulting fees paid to Shelton’s company, Paradigm Strategic Consulting, Assistant U.S. Attorney Kenneth Elser said in his opening statement Tuesday afternoon. Shelton then passed money along, the government contends.

Neal testified Wednesday that Shelton delivered $18,000 in $100 bills stuffed in two Arvest bank envelopes in December 2014 behind his family’s Springdale restaurant, Neal’s Cafe. The money was a kickback for directing $50,000 in Improvement Fund grants to Ecclesia, Neal said. The grants were directed by legislators, but the system has since been found unconstitutional.

“It’s like a slush fund. It’s what it is,” Neal said of the grants, adding they also helped win votes and garner media publicity.

Shelly Koehler of Fayetteville, one of Shelton’s attorneys, said Tuesday that Shelton has a long history of successful enterprises including fundraising that extends to before he entered college. He was helping Ecclesia pursue an $18 million expansion plan, she said.

Neal said he became involved in the kickbacks because he was having financial trouble and asked Woods how he made money. Neal said he asked Woods because he observed Woods had a nicely furnished Little Rock apartment with sports memorabilia such as a baseball bat signed by Pete Rose and a signed photograph of Michael Jordan.

ADVERTISEMENT

More headlines

Woods said he had a deal worked out and came back to him a few days later with the kickback plan in which the two would receive 20 percent of any grant money steered to Ecclesia and another nonprofit, AmeriWorks, Neal said.

Neal’s guilty plea indicated he took kickbacks along with Woods for $400,000 in state grants to AmeriWorks. 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.

The company was incorporated by lobbyist Russell “Rusty” Cranford a day before it received the grants. The $400,000 from the 2013 grant was returned in 2014, grant records show.

Cranford, 56, is set for trial May 7 in federal court in Springfield, Mo., on one count of conspiracy and eight counts of accepting bribes in an unrelated indictment.

Neal also testified Wednesday that he put in his personal account a $1,000 campaign donation from Cranford for his 2012 state House race. Neal said Woods told him to make sure his campaign showed a deficit at the end of the year so Cranford could legally write a check to the campaign fund.

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 is also charged with one count of money laundering in connection with the purchase of a cashier’s check.

Read Thursday's Democrat-Gazette for full details.