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Arkansas State Sen. Jake Files (R-Fort Smith). (Photo: Courtesy of the Arkansas State Legislature)

An Arkansas state senator who set up a scheme to siphon government grant funds into his private bank account pleaded guilty to wire fraud, money laundering and bank fraud in federal court this week.

State Sen. Jake Files (R-Fort Smith) waived his indictment in open court on Monday—and then pleaded guilty to the scheme, which occurred in 2016, according to court papers.

The evidence presented by the U.S. Attorney’s Office included an email trail, a text message, bank records, as well as conversations with other public officials, according to the court records.

Files admitted to using an associate to launder $46,500 in public funds to his personal bank account, and also to fraudulently getting a bank loan of $56,700 involving a forklift used for collateral, which he had already sold, according to the filings.

Files, 45, was elected to the State Legislative District 8 in 2010. He also owns and operates an LLC called FFH Construction involved in real estate and construction, which is centered in Fort Smith.

Starting in 2012, Files approached the municipality of Fort Smith and proposed a project called the River Valley Sports Complex. The series of softball fields and other facilities was going to be constructed on land donated to the city by the Chaffee Redevelopment District. The city approved the plans, and committed $1.6 million to the project, with a completion date of 2015.

To date, the project remains unfinished—though Files and his associate have been paid about $1 million by the city.

But the accusations stem from further funding discussed in 2016. The city met with Files and his associate to discuss delays in the project. Around the same time, Files asked city officials if they would be interested in securing General Improvement Fund (GIF) money through the Western Arkansas Planning and Development District agency. The city agreed.

“As the elected Senator representing State Legislative District 8, Defendant Files, in his official capacity as state senator, exerted substantial control and authority over a set amount of GIF money that had been appropriated for disbursement by the WAPDD and was allowed to direct and approve which eligible organization would receive GIF money and in what amounts,” the criminal information states.

Files needed three written price quotes to have the grant released. He admitted to sending emails with three fraudulent bids using the names of other persons and businesses that had worked with Files and his company before.

The fraudulent emails were sent through an Apple email server—the servers of which were outside Arkansas, according to the documents.

“Emails that defendant Files sent and received in the Western District of Arkansas while using (his) email account were interstate wire communications,” they write.

The WAPDD released the money to the city. The spouse of one of the bidders then received a text message from Files instructing the bidder to set up a new bank account. The bidder did so, and the first $26,945.91 was tranferred into the account. Then the person withdrew $14,000 in cash and $11,931.91 in a cashier’s check.

The cash and cashier’s check was brought to Files, who deposited the check and apparently kept the cash, according to the plea.

The fraudulent loan was acquired around the same time. Files owed a businessman $55,000 for masonry work. The businessman eventually got Files to admit he had already spent the money he owed for the masonry work. Instead, Files offered a forklift to offset some $25,000 of the money owed. The businessman agreed, according to the filings.

But eight months later, Files signed for a loan for $56,746.55 with the First Western Bank—in which he granted the bank a security interest in the Skytrack Forklifft Model 6042 that he no longer owned, according to the court documents.

Files will reportedly resign in the coming days, according to Gov. Asa Hutchinson’s office.

The state senator remains free on a $5,000 unsecured bond—and no sentencing date has yet been set.

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