Former State Senator Sentenced to 18 Months In Federal Prison On Fraud, Money Laundering Charges

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FORT SMITH (KFSM) — A former state senator was sentenced Monday (June 18) to 18 months in federal prison on fraud and money laundering charges.

Jake Files resigned earlier this year after pleading guilty to wire fraud, bank fraud and money laundering. He admitted to taking thousands of dollars intended for construction of a sports complex in Fort Smith that was set to be built at Chaffee Crossing.

Files’ plea deal didn’t guarantee a specific sentence. However, according to our partners at Talk Business & Politics, federal prosecutors were asking for up to two years of prison time.

Carl Geffken, Fort Smith City Administrator, lambasted Files, saying the former senator “lied repeatedly to me, personally, and to the City concerning the grant application” for the Western Arkansas Planning & Development District.

Geffken’s full statement is below:

“Soon after coming to work with the City of Fort Smith in April of 2016, I was briefed concerning a project to build a state of art softball complex on land at Chaffee Crossing that is owned by the City.  Mr. Files was the lead principal of a non-profit corporation, River Valley Sports Complex, Inc., which had a contract to build and operate a softball complex through a lease with the City.  I was told the project was Mr. Files’ vision for a facility that would benefit the citizens of Fort Smith by providing a tournament quality recreational venue for citizens’ use and that would attract large softball tournaments that would be attended by significant numbers of visitors from throughout the state and region; that the facility would showcase the community while providing significant economic benefit to the City.

“At the outset I observed that the project was unusual because Mr. Files had convinced the City that he could build the project that he estimated would cost from $4-6 million largely through donations of time and material by local contractors and vendors if the City would commit to pay $1.6 million for construction costs and provide the land.  According to City officials, Mr. Files’ pitch was that he only needed some money and use of the land to bring this dream to fruition.  It was apparent to me that the leadership of the City trusted Mr. Files to use his expertise and connections within the construction industry to obtain the donations of time and material to make the facility a reality.  However, when I assumed my position in April of 2016, the project had not met the original date for completion, July 1, 2015, and had not met a second completion date of March 31, 2016.  Further RVSC had been recently given yet another extension, until July 31, 2016, to complete the project.  When I questioned City officials concerning why the project required repeated extensions of the construction deadline, I was told that, each time, Mr. Files would insist that if RVSC were given just a little more time it would complete the project, but each time Mr. Files and RVSC failed to meet its obligations.  Unfortunately, within a matter of weeks after I assumed the City Administrator position, RVSC failed to complete the project by July 31, 2016.  By this time the City had already paid over $1 million for a facility that was far from complete.

“This was the project status at the time I began to deal with Mr. Files concerning the project.  The pattern of failing to make progress on the project continued during the fall of 2016.  In response to a request from the Board of Directors, Mr. Files produced, on October 12, a timeline that stated the remainder of the work on the project would be completed by December 15, 2016, with the fields ready for use by March of 2017.  However, little work was performed on the project during the remainder of the fall.

“In late November, Mr. Files approached me with a plan to access a new source of funding for the project.  He told me that he believed that the City could receive funding for an aspect of the project from the Western Arkansas Planning & Development District (WAP&DD).  Files said the grant would allow the completion of water lines to various structures on the property that were important to the completion of the project.  As part of the grant application it was required that RSVP obtain competitive bids for the work.  Mr. Files, as part of the grant process, delivered several bids from area contractors for labor and material for the grant project.  The entity that was the successful bidder for the work was Dianna Gonzalez.  After the grant was awarded to the City, Mr. Files requested that an initial payment to Ms. Gonzales be expedited by wire transfer prior to the end of 2016. While this seemed somewhat unusual, the City complied with Mr. Files’ request and $26,945.91 was transferred to Ms. Gonzalez’ account.

“Soon thereafter the City learned that much of the information prepared by Mr. Files and submitted by the City to WAP&DD to obtain the grant was false.  Mr. Files had prepared and submitted false bids from three contractors who told City officials they had never been asked to bid the work that was to be paid from the WAP&DD grant.  Further, the City learned that, in the past, Ms. Gonzalez had represented to the public that she was affiliated with Mr. Files’ construction Company, and this had not been revealed to the City during the grant process.

“I asked Mr. Files to meet with me and the City’s internal auditor, Tracy Shockley, on January 27, 2017, to address the problems with the grant application.  During the meeting, in response our questions, it was revealed that the winning bidder, Ms. Dianna Gonzalez, did not execute a W-9 to allow for the distribution of grant funds.  The W-9 containing her signature was signed by Mr. Files.  In the meeting, Ms. Gonzalez admitted she used excavating equipment owned by Mr. Files’ construction company to perform work on the project—a direct violation of Mr. Files’ commitment to the City that his construction firm would not be involved in any aspect of the work performed on the project.

“When Mr. Files was questioned about these problems it was further learned that the WAP&DD grant was from funds allocated to Mr. Files rather than funds that were pooled among all elected officials within the WAP&DD jurisdiction as he had asserted when he approached me to request the grant.

After the meeting ended it was clear that Mr. Files lied repeatedly to me, personally, and to the City concerning the grant application and had submitted false information to the City that it used in requesting the grant from WAP&DD.

“Without question the City of Fort Smith was greatly damaged by Mr. Files’ lies, which were incorporated into the grant application submitted to WAP&DD by the City.  In effect, Mr. Files used the City to obtain money that should have been spent on a project he promoted and convinced the City to undertake.  It is impossible to determine the amount of damage Mr. Files’ actions have done to the credibility of City, its employees, and elected officials who trusted Mr. Files.  In turn, the citizens of Fort Smith will suffer not only by not having a completed on-time project for which they had expended in excess of a million dollars, but through the impact this affair will have upon their willingness to support future projects that are essential to everyone that lives in Fort Smith.”

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