Prosecutor questions 2014 wire transfer to former state Sen. Jake Files

Times Record (Fort Smith, AR)

April 27--A recent letter from the Sebastian County prosecutor to the U.S. Attorney for the Western District of Arkansas questions whether a 2014 wire transfer for $80,000 from a nursing home group partner to then-state Sen. Jake Files' construction company was "made in violation of federal law."

The letter, obtained through a Freedom of Information Act request, was sent April 10 from Sebastian County Prosecutor Daniel Shue to new Western District U.S. Attorney Duane "DAK" Kees.

Kees was nominated by President Donald Trump in September, confirmed by the U.S. Senate in December and took office Jan. 5.

The $80,000 wire transfer from David L. Norsworthy was exposed by the Times Record in May 2017 following its appearance in court documents not listed as confidential as part of discovery in a lawsuit against Files' now defunct business FFH Construction.

The wire transfer came into FFH Construction's First National Bank account one week after Arkansas Senate Joint Resolution 1 was filed to amend the Arkansas Constitution concerning civil claims and court procedures. That measure died in committee, but a similar attempt to limit civil suits was revived with a petition and failed to reach a public vote as Issue 4 in 2016 when the Arkansas Supreme Court took it off the ballot.

However, a similar effort through Senate Joint Resolution 8, which Files co-sponsored, will be up for a vote in November as Issue 1. State Rep. Bob Ballinger, R-Berryville, who is a candidate for state Senate District 5, was also a co-sponsor of SJR8.

Files is set to be sentenced June 18 for wire fraud, money laundering and bank fraud after pleading guilty in January in U.S. District Court for misuse of state General Improvement Fund grants related to the River Valley Sports Complex. Last May, Files would not comment on the unrelated $80,000 wire transfer from Norsworthy other than to provide a protective order that noted that any documents "that have been or may be designated as 'Confidential' shall be so designated by stamping the documents with the label 'Confidential' in a manner that does not interfere with the legibility of the document ... ."

The protective order was issued in March 2015, about one month before Files received a $30,000 loan from lobbyist Bruce Hawkins. The loan surfaced in October 2015. It was not illegal at that time, though, for a legislator to receive a loan from a lobbyist. Act 1108, which passed in April 2016, made it against the law.

Norsworthy is currently a board member of the Arkansas Health Care Association, an advocate for Issue 1 on the November ballot.

No explanation has been given by Norsworthy for the $80,000 wire transfer.

Shue's recent letter also questioned whether the $80,000 transfer was "part of the conduct for which he (Files) will be sentenced ..."

A spokesman for the U.S. Attorney's Office, Charlie Robbins, confirmed Thursday the letter had been received by Kees, but he could not comment any further because it is an "ongoing investigation."

As could be seen in the Brandon Woodrome fraud case, federal judges use a formula for sentencing based on the amount of money in question.

Issue 1 connection

Because of its apparent connections to the previous tort reform attempt in the Arkansas Legislature with File's co-sponsorship, the wire transfer in question is linked to Issue 1 on the November ballot. It caps punitive damage awards at $500,000, or three times the amount of compensatory damages awarded to the claimant.

"There is good and bad tort reform ... I believe Issue 1 is bad tort reform," Jerry Cox, executive director of the Family Council Action Committee in Little Rock, said by phone Thursday.

Cox explained that in addition to "putting a dollar value on human life," Issue 1 includes a measure that would allow the Legislature to "decide what evidence" can be submitted into a negligence trial. In 2003, Cox noted, a similar effort attempted to limit the medical examiner's report, testimony by nursing home staff and other negligence victims.

"What would be be left with?" Cox asked. "They're really trying to nail the door shut on this."

The Family Council Action Committee is a conservative political organization based in Little Rock.

"Being a pro-life organization, we are concerned about abortion, but we're also concerned about what happens to old people at the end of life and disabled people nearing the end of their life," Cox said. "The way we see Issue 1 is it shields nursing homes and other long-term care facilities from lawsuits when they abuse or neglect people who are there under their care ... . We're afraid that some of these big nursing home chains will figure it in to normal business. "

Arkansans for Jobs and Justice, a group led by the Arkansas State Chamber of Commerce, is in favor of Issue One for economic development reasons.

Carl Vogelpohl, campaign manager for Arkansans for Jobs and Justice, stated in an April 4 email that "data shows clear and convincing evidence that the civil justice climate of a state impacts job creation and economic development and Arkansas deserves better than our current out-of-date system."

Issue 1 "protects the right of individuals to receive unlimited, full and complete compensation for actual economic damages," Vogelpohl added.

The proponent said that Issue 1 limits the contingency fees charged to victims and their families by their lawyers, but "to no more than one-third of victim's net settlement," Vogelpohl added.

"It also sets reasonable and fair limits of up to half a million dollars in non-economic damages and provides for fair limits on punitive damages of either half a million dollars or up to three times actual damages whichever is greater," Vogelpohl wrote.

Issue 1 allows a "fair and open process for future changes to our civil justice system including that either cap to be increased by a two-thirds vote of the Legislature without the need for another constitutional amendment," Vogelpohl added.

Issue 1 "removes the punitive damages cap in cases of intentional misconduct" and "provides a mechanism so that the Arkansas General Assembly, with a super-majority vote, can reform our state's laws that can directly impact frivolous lawsuits that plague job creators large and small and drive up the cost of healthcare across our country."

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