The former top Arkansas executive for a nonprofit that receives millions each year in Medicaid reimbursements is set to appear in federal court in Fayetteville today on a nine-count indictment involving kickbacks and illegal lobbying.
Milton Russell "Rusty" Cranford, 56, of Bentonville was indicted by a Springfield, Mo., federal grand jury Tuesday and arrested Wednesday, according to a statement from Timothy A. Garrison, U.S. attorney for the Western District of Missouri. Cranford was the chief executive officer and lobbyist for Preferred Family Healthcare of Springfield, Mo.
Preferred Family received almost $93 million in Medicaid payments from four states in 2016, according to federal court records. That figure includes $33.4 million in Arkansas.
"The indictment alleges that Cranford and co-conspirator Eddie Wayne Cooper, 51, of Melbourne, Arkansas, received $264,000 in secret kickback payments from co-conspirator Donald Andrew Jones," the statement says.
Cranford also played a role in the kickback case of former state Sen. Jon Woods and state Rep. Micah Neal, both of Springdale, according to authorities. Neal pleaded guilty to one count of conspiracy on Jan. 4, 2017. Woods faces trial April 9, accused of taking a kickback in exchange for his and Neal's support in getting a $400,000 state grant to a company incorporated by Cranford.
Cooper is a former Arkansas representative who pleaded guilty in Missouri last week to one count of conspiracy. Jones, also known as D.A. Jones of Willingboro, N.J., is a lobbyist and political consultant who was hired by the nonprofit, Preferred Family Healthcare.
Jones pleaded guilty in federal court in Springfield on Dec. 18 to a similar charge of being paid for illegal lobbying services. Under federal law, nonprofits that receive federal funds such as Medicaid are barred from direct lobbying efforts. Money paid to Jones was hidden in Preferred Family's records as training and consulting costs, according to the indictment.
Cranford persuaded three executives of Preferred Family, a client of his, to agree to a contract with Jones in 2011 in which Jones received $973,807 in payments from February 2011 until January 2017. Cranford "demanded payments to himself and Cooper of a portion of the funds Jones obtained from the charity in exchange for Cranford's influence on Jones's behalf," Garrison's statement said.
Cranford was both the employer and business partner of Cooper. Cranford employed Cooper at the Cranford Coalition lobbying firm in Little Rock from 2011 to 2015, and they co-founded a lobbying firm in Missouri in 2013, records in each state show.
Cooper pleaded guilty in federal court in Springfield to conspiring with the same three Preferred Family executives to embezzle $3 million of the company's money for political contributions, lobbying and kickbacks, according to his guilty plea last week. This was in addition to the money paid to Jones.
Cranford is charged with one count of conspiracy and eight counts of receiving a bribe by an agent of an organization that receives federal funds.
Cranford, formerly of Rogers, was booked into the Washington County jail at 10:49 a.m. Wednesday pending his appearance in federal court.
Cranford's attorney, Nathan Garrett of Kansas City, did not return telephone calls to his firm.
Cranford has registered as a lobbyist since at least 2005 in Arkansas, as an individual and under the corporation names Cranford & Associates, the Cranford Coalition, Outcomes of Arkansas and Progressive Politics. His clients included Alternative Opportunities, Preferred Family's predecessor organization, which is also involved in the embezzlement scheme, and several of its subsidiaries in Arkansas. His lobbying continued under Preferred Family.
Cranford's lobbying firms employed several former lawmakers over the years besides Cooper, including former state Sen. Gene Jeffress, D-Louann. Arkansas Legislative Audit released a report in September that noted continuing education fees paid by bail bondsmen in Arkansas went to an industry association that used much of the money to pay for a lobbyist.
That lobbyist was Cranford, said Jon Moore, deputy legislative auditor. Payment of those fees was required by Act 36 of 2011 by Jeffress. Cranford was a registered lobbyist for the Arkansas Professional Bail Bonds Association from 2008 to 2016, records from the Arkansas secretary of state's office.
Two other former lawmakers who lobbied for Cranford were Rep. Curran Everett, D-Salem, and Rep. Tim Summers, R-Bentonville, who also works for a subsidiary of Preferred Family called Decision Point. Everett now manages Health Resources of Arkansas, which is owned by Preferred Family.
From 2010-17, an Arkansas lobbying firm received the $3 million from Preferred Family with Cooper's cooperation, according to his plea documents. The nonprofit's financial records show its payments were for "consulting services," training and other expenses allowed by federal law when the real purpose of the payments was for lobbying and political campaign contributions, the documents say.
The lobbying efforts were to get grants and other funding, including money from Arkansas' General Improvement Fund, according to a statement from the U.S. attorney for the western district of Missouri about Cooper's guilty plea.
Cooper was an executive in Preferred Family Healthcare's operations in Arkansas from April 20, 2009, until April 26, 2017, in addition to being a lobbyist, according to court records. He was also a member of the Missouri nonprofit's board of directors, where he voted against an independent audit requested by at least one other board member as early as 2013, according to court records.
Three unnamed executives of Preferred Family and its Arkansas lobbyist conspired with Cooper to pay the lobbyist's firm $3 million, the plea documents say.
Cranford was mentioned by name in a pretrial hearing in the corruption case of Woods. Cranford was chief executive of AmeriWorks, a Bentonville nonprofit accused of paying kickbacks to Woods and Neal in return for their support in securing a $400,000 state grant.
The grant was returned after federal investigators began questioning it, according to court documents in Woods' case.
Metro on 02/22/2018