Arkansas lawmaker pleads guilty over pocketing state funds
LITTLE ROCK, Ark. (AP) — A top Arkansas lawmaker pleaded guilty Monday to federal charges that he pocketed thousands of dollars in state funds intended to go toward the construction of a sports complex, and said he planned to step down.
Republican state Sen. Jakes Files pleaded guilty to wire fraud, money laundering and bank fraud charges, which also include falsifying bids to ensure he’d get the money and pledging a forklift he did not own as collateral for a bank loan.
Files, chairman of the Senate Revenue and Taxation Committee, told The Associated Press he would submit a letter of resignation Tuesday but declined to comment further.
Files is the second lawmaker in a little over a year to plead guilty to charges related to misuse of state surplus funds that were intended to go toward local projects.
Files was released on a $5,000 bond after entering his plea in Fort Smith. Arkansas Gov. Asa Hutchinson said he talked to Files and said the lawmaker indicated he would resign in the coming days.
“While I have known and respected the Files family for many years, it is essential that the voters are able to trust elected officials to have the public’s interest free from criminal conduct,” the Republican governor said in a statement released by his office. “Given today’s turn of events, it is clear Senator Files will not be able to fulfill his obligations to his constituents.”
Federal prosecutors said Files authorized and directed the Western Arkansas Economic Development District, which was responsible for administering the state funds, to award $46,500 to the city of Fort Smith. Files prepared and submitted three fraudulent bids to the district, and instructed an associate to open a bank account under her name to conceal his role as the ultimately beneficiary of the fund, prosecutors said.
When a first installment of $26,900 was wired to the associate from the city, prosecutors said, she withdrew $11,900 in a cashier’s check payable to Files’ construction company and gave the rest to him in cash. The check was deposited in Files’ personal bank account, prosecutors said.
Files announced last year that he would not seek re-election.
The state Democratic Party, which last year said Files should step down, again called on the lawmaker resign after his plea.
“In pleading guilty, Sen. Files is admitting to the corruption that he and the Republican party have denied for months,” state Rep. Michael John Gray, who chairs the state Democratic Party, said in a statement. State GOP Chairman Doyle Webb said Monday he had spoken to Files and had encouraged him to resign.
Files’ bank fraud plea stemmed from the lawmaker obtaining a nearly $57,000 bank loan in 2016 after listing as collateral a forklift he had given a masonry company for an unpaid bill.
Files’ plea is the latest case involving misuse of the state’s surplus money, also known as General Improvement Funds. Republican former state Sen. Jon Woods and two others have pleaded not guilty to corruption charges after prosecutors said they participated in a scheme under which Woods allegedly directed state money to Ecclesia College in return for kickbacks, and are set to go to trial this spring. Republican former state Rep. Micah Neal pleaded guilty last year to one count of fraud related to the case.
The state Supreme Court in October said the system of grants lawmakers had used to fund local projects with the state surplus money violated Arkansas’ constitution. The court said the local project grants violated a constitutional requirement that budget measures distinctly state their purpose.
Files’ vacancy could add to the uncertainty of the state’s hybrid Medicaid expansion when the Legislature convenes next month. The state Senate was already at least one vote shy of the three-fourths needed to continue the program, with two vacancies in the 35-member chamber that won’t be filled until a special election in May. Files had supported the hybrid program, which uses federal and state funds to purchase private insurance for low-income residents.
Associated Press Writer Kelly P. Kissel contributed to this report