The federal political corruption scandal that has riveted Arkansas' Capitol for almost two years and convicted four former state lawmakers has netted another guilty plea from a top executive at a Missouri mental health care company.
Marilyn Nolan, former CEO of Preferred Family Healthcare Inc. of Springfield, Mo., has pleaded guilty to one count of conspiracy in federal court in Springfield, according to court records.
She admits working with other company executives and political lobbyists to bribe Arkansas lawmakers to influence legislation and state rule-making to boost company profits.
She also admits that she and other executives stole millions from the nonprofit.
Nolan is the highest-ranking executive to plead guilty so far. Two others are former chief clinical officer Keith Noble and the company's Arkansas regional executive and former lobbyist, Milton "Rusty" Cranford.
Nolan's 21-page plea agreement, filed late Friday, outlines how the company violated federal laws that prohibit tax-exempt 501 (c)(3) companies like Preferred Family from making campaign contributions or taking part in significant lobbying activities.
She admits how, from 2008 until June 30, 2017, she conspired with Cranford, Noble and two other company executives to "embezzle, steal, obtain by fraud, and without authority knowingly misapply and convert to their use" property belonging to the nonprofit.
Those thefts were outlined in Noble's guilty plea Sept. 11, detailing how the nonprofit used for-profit companies owned by the same top executives to buy, sell and rent the company's assets and generate millions in illegal profits.
Those profits went to a group of company insiders, including Nolan, that were dubbed the "Resource Team," according to guilty pleas. Friday's federal information outlining Nolan's crimes said she alone received more than $4.1 million.
Nolan worked for Preferred Family and its predecessor Alternative Opportunities Inc. since 1992, according to court documents.
In addition to her duties as chief executive officer, she directed lobbying and governmental affairs. Preferred Family's board ousted her and other executives early this year.
Nolan faces up to five years in prison and fines. Her plea agreement says she will pay $4.1 million in restitution, less credit for amounts paid in taxes on the criminal scheme. She was arrested and released on a personal recognizance bond.
Her plea agreement also notes that the company's other top executives "did not include the defendant in much of the decision-making regarding the financial operations of the charity, the defendant maintains -- and the government agrees...."
Nolan "did not know the full details of the many embezzlement and misapplication of funds schemes," the plea goes on.
Nolan's guilty plea names familiar Arkansas players already charged or linked to the scandal, including Cranford and former legislators Jon Woods, Henry "Hank" Wilkins IV and Eddie Cooper.
It also lists "Arkansas Senator A," previously identified as former Sen. Jeremy Hutchinson, R-Little Rock, who hasn't been charged in the mental health company conspiracy.
It accuses two other company executives -- chief financial officer and "Person #1," identified previously as Tom Goss, and chief operating officer and "Person #2," identified as Tom Goss's wife, Bontiea Goss. They have not been charged.
In response to Arkansas Democrat-Gazette questions, attorneys for the Gosses issued this statement that denies wrongdoing:
"People with intellectual/developmental disabilities, mental illness, behavioral and substance abuse disorders and disabled veterans are among the most vulnerable in our community because they are unable to speak up or out for what they need. While serving as executives of a progressive and innovative health-care organization that represented an underserved client base, it was our mission to constantly champion the interests of these clients.
"We maintain our belief that our actions were within the bounds of the law, motivated by protecting the interests of the clients we served. At no time have we been part of any criminal conspiracy and vehemently deny any allegations to the contrary."
Preferred Family was Arkansas' largest Medicaid-funded outpatient mental health provider until the state suspended it from receiving Medicaid payments earlier this year. Between fiscal years 2011 and 2018, Arkansas paid the company more than $245 million for Medicaid mental health services.
The nonprofit has since sold its network of Arkansas clinics to Hot Springs-based Quapaw House Inc.
As tax-exempt nonprofits, Preferred Family and formerly Alternative Opportunities were prohibited from making campaign contributions or engaging in significant lobbying.
Yet federal charges in Nolan's case say, "The making of illegal campaign contributions was an integral part of the charity's political operations...."
Cranford had regular discussions with Person #1 about the company's "budget" for campaign contributions, even though the company's records contained no such budget category, a federal information document charges.
Preferred Family Healthcare is cooperating in ongoing investigations involving its former leaders, according to a statement provided Monday by spokeswoman Ashly Curry.
"We support these efforts to hold accountable those who violated the law, including taking actions ourselves against certain individuals and entities who victimized the organization for personal gain," the statement says. "At the same time, we are committed and focused on our core mission to provide high quality services in the communities we serve."
The nonprofit has sought to distance itself from Nolan, Noble and the Gosses.
Preferred Family filed a lawsuit in September in Missouri against the four executives, for-profit companies they controlled and Cranford, accusing the defendants of "a series of fraudulent acts, embezzlements, and improper self-serving transactions" amounting to millions of dollars.
The public learned of the ongoing federal investigation into public corruption in Arkansas, Missouri and surrounding states when former Arkansas Rep. Micah Neal, R-Springdale, pleaded guilty to one count of honest services fraud in January 2017 in connection with taking kickbacks to send state grants to a subsidiary of Preferred Family Healthcare and a private Christian school, Ecclesia College.
At least two more former Arkansas legislators have admitted to or been found guilty of accepting bribes or kickbacks from Preferred Family executives in return for legislative favors: Woods, former Republican senator from Springdale and Wilkins, former Democratic representative from Pine Bluff.
Former Rep. Eddie Cooper, D-Melbourne, has pleaded guilty in the conspiracy for acts he committed while working as a lobbyist for Cranford.
Hutchinson has been charged separately with misspending and under-reporting campaign contributions and income. He has pleaded innocent.
Former Preferred Family chief clinical officer Noble pleaded guilty Sept. 11 to one count of concealing knowledge of a felony. He admitted knowledge of multimillion-dollar schemes to funnel money from the mental health company to enrich top executives, including himself.
Cranford pleaded guilty June 7 to one count of federal program bribery. He admitted paying tens of thousands of dollars in bribes to at least three Arkansas legislators: Wilkins, Woods and "Senator A."
A Section on 11/13/2018