Two former employees of an Arkansas-based nonprofit, including an ex-executive, pleaded guilty Thursday to taking thousands of dollars in funds and property from the now-bankrupt organization.
Jennifer A. Knight, the former chief financial officer of South Arkansas Youth Services, and her husband, Aric S. Knight, a former equipment purchaser at the nonprofit, each pleaded guilty to theft of property over $25,000 as part of a plea deal with the state.
Columbia County Circuit Judge David Talley sentenced the two 36-year-old Magnolia residents to 10 years of probation.
Jennifer Knight is also the daughter of former South Arkansas Youth Services CEO Jerry Walsh, whom in July pleaded guilty to a federal conspiracy charge for funneling more than $380,000 in company funds in a pay-for-play scheme to now-convicted state lobbyist Rusty Cranford, the Arkansas Democrat-Gazette previously reported.
The Knights were first taken into police custody Aug. 9, 2017, after an auditor tipped off local authorities June 14, 2017, of potential misuse of agency funds at the Magnolia-based youth organization.
When Magnolia Police Department investigators looked into the matter, they found multiple instances of purchasing abuse and money diversion for the Knights’ personal gain, court documents show. Authorities said that thousands of dollars worth of equipment and property paid for with the nonprofit's funds were used as the couple’s own, and in one instance, a company-owned Honda ATV was sold by Aric Knight, with the proceeds deposited into a personal bank account.
He was first hired as a computer tech, but later became a maintenance official and equipment purchasing manager for the nonprofit. During that time, the affidavit states, mowing contracts of $276.93 per pay period at the organization’s former rural youth dormitory and Boundary Street office properties were not adequately fulfilled.
The company CFO also issued personal loans from company funds, the affidavit states. Jennifer Knight used an $18,000 loan to purchase a hauling trailer and made loans to “multiple employees from SAYS funds,” according to the court document. One loan in the amount of $17,000, was issued “years prior,” to a former agency worker but, as of 2017, it had not been paid back.
In Walsh’s federal plea, he stated that most of the nonprofit's budget came through state-issued dollars.
As part of their Thursday guilty plea, all items stolen by the Knights from 2015-17 will be forfeited, including an ATV, trailer and more. The couple, though, will not be required to pay any restitution in the state criminal case. That aspect will be taken on by Walsh, as part of his federal plea.
“He had agreed to a $100,000 restitution in that case,” said Deputy Prosecutor Ryan Phillips. “That is based almost entirely on the theft involved in [the state] case.”
Phillips in his presentation of evidence, also stated Walsh had in a statement was said to have directed his daughter and son-in-law in their misappropriation of funds.
The information Walsh gave in his federal plea deal, Phillips added, was “relevant” to both the theft case and the larger federal probe into state senatorial corruption.