FAYETTEVILLE -- Indicted lobbyist Milton Russell "Rusty" Cranford of Bentonville agreed Thursday to his transfer to Missouri, where he faces federal charges of one count of conspiracy and eight counts of accepting bribes.
His indictment was also released Thursday, detailing $264,000 in kickbacks federal prosecutors say went to either Cranford or his lobbying firms and a former lawmaker who was an employee and business associate.
Cranford, 56, appeared at a five-minute transfer hearing before U.S. Magistrate Judge Erin Wiedemann at the federal courthouse in Fayetteville. He didn't oppose his transfer to Missouri.
Cranford was arrested Wednesday by federal authorities and held at the Washington County jail, its records show. He was still in custody there Thursday evening, records show.
A Springfield grand jury indicted him on Tuesday, court documents show.
Defense attorney Kathryn Platt of Fayetteville said after the hearing that neither she nor Cranford had any comment. Cranford appeared for his hearing wearing Washington County jail uniform, shackled and with a mask over his mouth. The mask was issued to him, his attorney said, because Cranford has the flu.
Federal marshals will take Cranford to Springfield soon, said Assistant U.S. Attorney Aaron Jennen. No hearing date for federal court in Springfield was set Thursday, according to court records. Nathan Garrett of Kansas City, Mo., is Cranford's chief counsel and will represent him in Springfield, Platt confirmed.
According to the indictment, the nonprofit Preferred Family Healthcare of Springfield paid lobbyist and consultant Donald Andrew Jones of Willingboro, N.J., $973,807 from February 2011 until January 2017. Cranford, along with his employee, former state Rep. Eddie Cooper of Melbourne, are accused of taking kickbacks from Jones that totaled $264,000.
Cooper pleaded guilty to his role in the scheme in Springfield federal court last week. Jones pleaded guilty in federal court in Springfield on Dec. 18 to a charge of being paid for illegal lobbying services. Nonprofits that receive taxpayer money such as Medicaid reimbursements cannot legally lobby directly for grants nor make campaign contributions.
Jones, who is also known as D.A. Jones, paid the money in return for Cranford and Cooper's continued support on his behalf to continue receiving payments from Preferred Family, according to Cranford's indictment. Cranford and Cooper were both executives in Preferred Family's operations in Arkansas, and Cooper was a member of the nonprofit's board. Cranford was Preferred Family's lobbyist in Arkansas also.
Preferred Family and its subsidiaries provide behavioral-health and substance-abuse counseling in Arkansas, Kansas, Missouri, Oklahoma and Illinois. It has 47 locations in Arkansas alone. Preferred Family and its subsidiaries 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.
Cranford and Cooper conspired with three executives of Preferred Family to pay Jones without approval of others in the nonprofit's management, according to the indictment. They also conspired to pay two lobbying firms controlled by Cranford, the Cranford Coalition and the Capitol Hill Coalition, for direct lobbying services, the indictment says.
The payments from Preferred Family to Jones and to Cranford's lobbying firms were entered on the nonprofit's books as consulting and training costs, according to the indictment. In all, Cranford's lobbying firms were paid $3 million from Preferred Family and its predecessor organization, Alternative Opportunities, for disallowed lobbying over the course of six years. The intent of the lobbying was to steer taxpayer money, including grants, to Preferred Family operations. Jones lobbied members of Congress while Cranford and Cooper lobbied state lawmakers, according to court records.
Some of the money to Jones was paid by Preferred Family directly and some of it passed through Preferred Family's parent company, unnamed in the indictment. Still other payments were made by subsidiaries of Preferred Family. In some cases, Cranford's lobbying firms paid Jones after they were paid by Preferred Family, the indictment says.
All but one of the $264,000 in kickbacks were received by either Cranford, Cooper or the Cranford Coalition of Little Rock, which Cranford founded and which employed Cooper. One payment of $15,000 went to the Capitol Hill Coalition on July 5, 2014, the indictment says. That lobbying group was founded in the name of a family member of Cranford's, but was operated by Cranford, the indictment says. Cranford opened a bank account listing himself doing business as the Capitol Hill Coalition. Arkansas secretary of state records show the Capitol Hill firm was incorporated in 2010 by Chace Cranford, who has registered as a lobbyist with the Capitol Hill group and with the Cranford Coalition.
State incorporation records do not give Chace Cranford's family relationship to Rusty Cranford.
Calls to Chace Cranford and the Cranford Coalition were not returned.
The Preferred Family executives in the indictment are identified only as the chief financial officer, the chief operating officer and the chief executive officer. The chief financial officer and chief operating officer, along with another member of the executive team, were placed on indefinite leave in November by Preferred Family's board. The company spokesman wouldn't comment on why. All three were terminated in January, Reginald McElhanon, the company's spokesman, confirmed Wednesday.
The chief financial officer placed on leave and then terminated was Tom Goss of Springfield. His wife, Bontiea, was chief operating officer. Also placed on leave before termination was Marilyn Nolan of Springfield, described by the nonprofit group as a member of the senior management team. Nolan, however, doesn't fit the description of the third executive involved in the scheme. That executive is identified in court documents as someone who left the company prior to Cooper's plea.
Cooper's plea documents say one of the Preferred Family executives involved in the scheme is the same one who signed the group's IRS Form 990, the tax return for nonprofit corporations, for 2015. An online check of Preferred Family's 2015 return showed it was signed by Tom Goss.
In a related matter, court records say Cranford also played a role in the kickbacks case of former state Sen. Jon Woods and state Rep. Micah Neal, both of Springdale. Cranford has not been charged in that case.
Neal pleaded guilty to one count of conspiracy on Jan. 4, 2017. Woods faces trial April 9 over allegations that he took a kickback in exchange for his and Neal's support in getting a $400,000 state grant to a company incorporated by Cranford.
Cranford is not named in the indictment against Woods, but was mentioned by name in a pretrial hearing in that corruption case. 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.
Cranford's indictment unsealed Thursday makes no mention of the AmeriWorks allegations.
The Springdale office of Decision Point, a behavioral health provider run by Preferred Family, processed the AmeriWorks grant and received the $400,000 on AmeriWorks' behalf. The grant was returned after federal investigators began questioning it, according to court documents in the Woods case. Tom Goss' signature stamp was on the check that refunded the money, grant records show.
Woods' trial will include charges from a similar case in which he is accused of receiving kickbacks in return for grants from Ecclesia College in Springdale. Two of his alleged co-conspirators also go to trial on the Ecclesia-related charges: Oren Paris III, president of Ecclesia College, and consultant Randell G. Shelton Jr., formerly of Alma. Neal's guilty plea included his participation in those kickback schemes also.
Metro on 02/23/2018