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State Rep. Micah Neal Pleads Guilty to Taking Kickbacks on GIF Money

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State Rep. Micah Neal, R-Springdale, waived indictment Wednesday and pleaded guilty in federal court in Fayetteville to conspiracy to commit honest services fraud, admitting that he and an unnamed state senator directed money from the General Improvement Fund to two nonprofits in exchange for bribes.

Neal, who will be sentenced at a later date, received approximately $38,000 in kickbacks, according to the news release from the Justice Department.

More: Read the charging information in the case here; read the plea agreement with Neal here

In waiving his right to be indicted by a grand jury, the 42-year-old agreed to plead guilty to a single charge filed directly by federal prosecutors in the Western District of Arkansas. The maximum sentence is 20 years in prison, but prosecutors have agreed not to seek a sentence outside the recommended guideline, which is likely to be in the range of two and a half to four years. 

Neal agreed to cooperate with the government’s continuing investigations and to testify before a grand jury or in a trial if asked by prosecutors.

Neal was first elected in 2012 and did not seek re-election in 2016. He announced his candidacy for Washington County judge on May 1 but abandoned that campaign at the end of June, saying he wanted to spend more time with his family.

The announcement from the DOJ said Neal admitted that between January 2013 — his first month in the Legislature — and January 2015 he and the unidentified state senator used their official positions to direct $600,000 in state GIF funds to the Northwest Arkansas Economic Develoment District, which then distributed it to two nonprofit entities. Neal personally directed that $175,000 be given to the nonprofits, according to the announcement — $125,000 to Entity A and $50,000 to Entity B.

The General Improvement Fund is made up of budget surplus money, and each legislator is given a certain amount to spend on local projects. 

The nonprofits are not identified by prosecutors, but the one referred to as Entity A “purportedly sought to create manufacturing jobs in northwest Arkansas, specifically for a specialized workforce including disabled veterans, disadvantaged youth, and individuals recovering from substance abuse.”

The other, called Entity B by prosecutors, is a “non-profit corporation operating a college located in Springdale…” That description fits Ecclesia College, but President Oren Paris was not available to take a call on Wednesday.

According to the charge, the state senator with whom Neal admitted conspiring served in the state House of Representatives from 2007 through 2012 and in the state Senate since 2013. One senator who meets that decription is Jon Woods, R-Springdale, who did not immediately return a call seeking comment.

In his plea agreement, Neal acknowledged that it was the senator who told him that the incorporator of Entity A would pay him a portion of the GIF money directed to the nonprofit.

“In return for his official actions, Neal received approximately $38,000 in bribes from officials at those non-profit entities,” the release said. Specifically, Neal received $20,000 in cash from the senator “on behalf of” the incorporator of Entity A and $18,000 in cash from a representative of the president of the nonprofit college.

The unnamed senator allegedly directed $275,000 to Entity A and $150,000 to Entity B.

The case was investigated by the Internal Revenue Service and the FBI and prosecuted by U.S. Attorney Kenneth Elser and Assistant U.S. Attorney Kyra Jenner in the Western District of Arkansas and by Sean Mulryne of the DOJ Criminal Division’s Public Integrity Section.

Neal is represented by Shane Wilkinson of Bentonville.

Gov. Asa Hutchinson, who was participating in an Associated Press event with legislators and reporters when the news broke, said he was saddened by the development, which he called “troubling.” He said it strengthened his concern about the potential for abuse of GIF funding and pointed out that he had no GIF funds in his budget for the coming biennium.

A reporter asked Hutchinson about the DOJ’s allegations that another unnamed legislator was involved.

“We’ll just have to wait to see how that develops,” Hutchinson said. “Obviously it’s a concern, but I don’t have enough facts to know what’s next or whether there’s anyone else involved.”

Neal’s family owns Neal’s Café in Springdale.

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