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Chocolate and Peanut Butter (Gwen Moritz Editor’s Note)

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Anyone who subjects himself to this column with any regularity should know that I have a couple of favorite topics: white-collar crime and personal finance. It may be perverse, but I feel equal parts fascination and revulsion for people who choose to live on the edge of legality or solvency. A story that combines the two is as irresistible as chocolate and peanut butter.

What’s it like waiting for the FBI to call? Or the longsuffering banker? Especially if one is a prominent person, someone who masquerades as a successful businessman or civic leader, maybe a religious figure or even someone trusted with public office. Man, that’s more terrifying to me than any Stephen King plot — and, of course, it describes the General Improvement Fund scandal.

In a story in the Arkansas Democrat-Gazette on Sept. 9, the Sunday after U.S. District Judge Tim Brooks sentenced former state Sen. Jon Woods to more than 18 years in federal prison, reporter Doug Thompson spelled it out:

Woods “had the best lodgings at the Capitol Hill Apartments in Little Rock, his rooms bestrewn with costly sports memorabilia.” A teetotaler, Woods had the “best-stocked liquor cabinet” for entertaining associates and fellow lawmakers. In 2016, his last year in office, he collected more in per diem and other expense payments ($33,700) than any other member of the Legislature. He spent $39,000 on jewelry. He had a nice car.

This beautiful lifestyle was impressive to his fellow Springdale legislator, Micah Neal, who presumably didn’t know the ugly side of Woods’ financial life.

Woods, Thompson reported, had borrowed $35,000 from payday lenders — an industry unconstitutional in Arkansas that Woods nonetheless tried to help by introducing favorable legislation. He was highly leveraged, paying off loans with new loans that obliging businessmen agreed to guarantee (potentially creating yet another kind of leverage).

That nice car carried a $52,000 note, which was refinanced with other debts in a single loan bigger than an average mortgage in Arkansas.

It takes money to keep up appearances, and by the time Neal joined him in the Legislature at the start of 2013, Woods had a system. He would steer money from the state General Improvement Fund to “nonprofits” that were willing to show their appreciation by kicking some of it back. It was such a straightforward scam that it’s almost like the GIF was set up to be abused.

Neal does not seem to have been a crook before he was elected, but he had let his personal finances get away from him. Although he was earning more than $100,000 a year from his family’s restaurant in Springdale and would begin receiving several thousand each month in legislative salary and per diem payments, he “still was struggling financially.”

Neal, wowed by the public side of Woods’ financial life, asked how he could make some money, and Woods brought him into his criminal enterprise. Together, they could jointly steer much more GIF money to Woods’ friends at Ecclesia College — more like a family-owned business for the Paris clan than the church it pretended to be for IRS purposes — and to a nonprofit called AmeriWorks that lobbyist/health care exec Rusty Cranford set up for no apparent purpose except to receive GIF money.

The tens of thousands of dollars in bribes and kickbacks propping up the self-indulgence of legislators like Woods, Neal and Hank Wilkins IV were modest compared with the tens of millions flowing from Medicaid to Cranford and the rest of the management team at Preferred Family Healthcare. But they were enough to corrupt not just GIF but also the legislative process.

Neal, to his everlasting credit, doesn’t seem to have kidded himself about his corruption. He confessed early, cooperated with federal prosecutors and, according to Judge Brooks, helped convict others in this case and other cases. I’m content with his sentence of three years of probation plus restitution.

I still do resent highly Neal’s self-serving legislation that exempted Advertising & Promotion Commission taxes from disclosure under the state Freedom of Information Act. Springdale doesn’t even have an A&P tax, but Neal persuaded other legislators to deprive Arkansas Business readers of beloved restaurant and hotel rankings on the off chance his own business might someday be subject to that transparency.

One restaurant whose sales I’d really love to track right now is the 1836 Club in Little Rock, established by and for the political establishment before the indictments started to flow. Current legislators could restore the public’s right to know.

Email Gwen Moritz, editor of Arkansas Business, at GMoritz@ABPG.com and follow her on Twitter at @gwenmoritz.
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