Fort Smith businessman Brandon Woodrome, who ran for an Arkansas House seat in 2008 and attempted in 2010 to broadly change Arkansas’ tax code, has pleaded guilty in federal court to one count each of bank fraud and wire fraud.
U.S. Attorney for the Western District of Arkansas Kenneth Elser announced the action Thursday (Sept 22), noting the U.S. District Judge P.K. Holmes III, accepted the plea deal in a matter in which Woodrome fraudulently collected $2.1 million. Possible prison time could be as much as 50 years, or 30 years if sentencing is concurrent.
A two-count federal information was filed against Woodrome, 28, charging him in a scheme to defraud First Western Bank in Fort Smith and RIOUX Capital, Austin, Texas. Woodrome’s construction company, BEHR, obtained a $795,000 construction loan at First Western Bank to buy land and build a medical clinic and strip center in Fort Smith. The loan agreement required him to submit invoices for completed subcontractor work.
Woodrome instead filed fraudulent invoices that contained “material misrepresentations about construction work he knew had not been done by subcontractors to First Western Bank for payment,” noted the statement from Elser’s office.
First Western then issued cashier’s checks based on the invoices. The bank and subcontractors verified the invoices were paid by the bank were false. Woodrome was paid in excess of $300,000 from First Western Bank between November 2014 and December 2014 for fraudulent invoices he submitted.
Woodrome also defrauded RIOUX of $1.8 million by submitting fraudulent invoices by email. RIOUX buys accounts receivable from businesses and then pays the business approximately 80% of the face value of the accounts receivable purchased. Woodrome established a line of credit with RIOUX allowing him to sell his accounts receivable. In February 2015, Woodrome began building a retail shopping center in Fort Smith for a company that owned the undeveloped land.
“The land owner had already obtained financing for the project. In his scheme to defraud RIOUX, Woodrome created and submitted by interstate wire communications false and fraudulent documents that contained forged signatures, fraudulent invoices, and fake assignment schedules,” noted the Elser statement.
A sentencing date has not been set.
Woodrome, through his company, filed for Chapter 11 bankruptcy (reorganization) in October 2015 listing more than $4.89 million among the 20 largest unsecured creditor claims.
In early 2011, Woodrome accused Fort Smith officials with development delays and increased costs on a project. Specifically, Woodrome said the city cost him about $21,000 because of conflicting advice from city staff and misinformation on the location of a water line. Then City Administrator Ray Gosack denied the allegations.
Woodrome also became active in politics in 2008. He ran in the 2008 Republican primary for the then House District 64 seat representing part of Fort Smith. He lost to Stephanie Malone in the primary.
He also was a director and lead vocal advocate with the Arkansas Progressive Group that sought, among other things to repeal all state taxes and enact a flat rate sales tax effective July 1, 2012. The “AR OneTax” would not cut government revenue, but would merely shift all tax collections to an easily identified tax structure and would remove the “thousands of hidden taxes Arkansans pay each day but don’t know about,” Woodrome explained in an October 2009 interview. The item never made the ballot, with the group withdrawing their ballot attempt in May 2010.