Today's Paper Latest Coronavirus The Article iPad Core Values Weather Newsletters Obits Puzzles Archive Story ideas

Unsealed files reveal new details on corruption scandal in state

by Lisa Hammersly | August 11, 2019 at 9:33 a.m.
Milton "Rusty" Cranford

State Sen. Jon Woods strode into a building just across the street from the state Capitol, past a secretary and into the office of lobbyist Milton "Rusty" Cranford.

The Springdale Republican lawmaker took off a jacket and pulled up his shirt.

"I'm not wearing a wire," Woods told Cranford and another lobbyist who was present, according to FBI interviews. "I have people that I have to take care of today. I need my $30,000 by the end of work today."

Cranford told Woods to, 'Go f*** himself. I don't know what you're talking about,'" according to lobbyist Eddie Cooper.

Woods replied: "I will ruin you on the hill if I don't have my money at the end of the day."

Cranford remembered the encounter a little differently: After he refused to hand over money, Woods threatened: "Tomorrow is going to suck for both of us.

Asked what he thought Woods meant, Cranford said: "That he was going to go to the FBI or the authorities."

The encounter some six years ago, referred to by federal prosecutors as "the Woods extortion attempt," is contained in FBI interviews with now-admitted felons Cranford and Cooper. The transcripts were sealed from public view until last week.

[DOCUMENT: Eddie Cooper transcript »]

[DOCUMENT: Milton "Rusty" Cranford transcript »]

U.S. District Judge Kristine Baker on July 30 ordered the interviews and other documents redacted and unsealed, after requests from prosecutors and the Arkansas Democrat-Gazette. The redacted documents were made available to the newspaper Wednesday.

The transcripts offer new information and vivid accounts of the early stages of investigation into what has become Arkansas' biggest political corruption scandal in at least 20 years.

They show how lawmakers, lobbyists and executives of the Missouri nonprofit, Preferred Family Healthcare Inc., tried as early as 2013 to control the damage of the federal investigation, and their fear, anger and disbelief as it unfolded.

Cranford remembered a dinner after the Woods meeting, with then-state Sen. Jeremy Hutchinson at Arthur's Prime Steakhouse in west Little Rock.

Hutchinson, a Little Rock Republican, said a grand jury was investigating Woods and three lobbyists -- including Cranford himself.

"I like to threw up at Arthur's when he said that. Really," Cranford told the FBI.

The documents also demonstrate federal authorities' interest, as recently as early this year, in others who haven't been charged with any crimes.

The transcripts include 28 pages of talk with Cranford dated Feb. 20 this year and a six-page excerpt of a Feb. 16, 2017, interview with Cooper.

Cranford's interview took place about eight months after he pleaded guilty in June 2018 to one count of bribery involving a federal program. Cooper's happened about a year before he pleaded guilty in February 2018 to one count of conspiracy to embezzle.

Woods is no longer a senator, convicted May 3, 2018, of taking kickbacks for directing state funds to a small religious school and to the Preferred Family behavioral health care nonprofit.

Hutchinson, who resigned his Senate seat in August 2018, pleaded guilty June 24 to accepting multiple bribes and committing tax fraud.

The Democrat-Gazette sought responses from attorneys for Hutchinson, Woods, Cranford, Cooper and from others named in the transcripts. Most did not return calls or emails late last week. Hutchinson's lawyer, Tim Dudley of Little Rock, declined to comment.

The federal probe that started at least six years ago in Arkansas grew into a two-state investigation into elected officials, lobbyists and nonprofit interests who exchanged political favors for cash. It is still ongoing.

Those convicted so far in Arkansas and Missouri include five former Arkansas legislators, lobbyists from both states and former executives with Preferred Family, which was paid millions in Arkansas Medicaid funds.

In the interviews, federal investigators asked Cranford and Cooper to remember events back to at least 2013. In some instances, they struggled to place dates for what they say happened. Cooper eventually set the time of the Woods encounter as mid-2013. No date is noted in the Cranford transcript.

The two were not sworn under oath for the interviews, as witnesses are in criminal trials. Making a false statement to a federal investigator is a crime.


Cranford had been trying to avoid Woods, he told investigators, because he knew the senator was going to demand money.

"I wasn't going to give him anymore money," Cranford said. "I'd give him enough."

Both Cranford and Cooper were asked why they thought Woods needed $30,000 or more that particular day.

Cranford said: "I don't have a clue...I mean, and even if he told you, I mean, it wasn't going to be the truth. I mean, his car broke down 19 times."

Cooper said his theory was that Woods had other influential people he needed to pay off.

"I think one of them he was talking about was Michael Lamoureux, president of the [Arkansas] Senate at the time," Cooper said.

As senators, Lamoureux and Woods were instrumental in getting a large state General Improvement Fund grant in 2013 for Preferred Family Healthcare, Cooper told the FBI. The nonprofit was then known as Alternative Opportunities Inc.

"Michael worked whatever magic with the governor's office to say, 'Hey, we're going to give this guy $2 million,'" Cooper said.

Although Cooper's interview set the grant amount at $2 million, other court records have shown that Cranford applauded Woods' work on a grant for $1 million.

"So you think Woods owed Lamoureux some money based on that transaction?" an FBI agent asked.

"That's what it sounded like," said Cooper, a former Arkansas House member from 2005 to 2011. "I don't know who else he would have owed it to, because Lamoureux was the one who could say, yeah -- because if you're president of the Senate, you get to say where it's going."

Lamoureux, who left his Senate seat in November 2014, to become chief of staff for Gov. Asa Hutchinson, has not been charged with any crime.

He left the governor's office job in May 2016. He could not be reached for comment Friday. In earlier interviews related to the political corruption scandal, Lamoureux has denied wrongdoing.


After Woods made his financial demand, he wrote the amount he needed -- $30,000 or $35,000, the best Cranford could remember, $30,000 in Cooper's mind -- on a note and handed it to Cranford, according to the interview transcripts.

Immediately after Woods left his office, Cranford said he called Jeremy Hutchinson, who was Cranford's personal attorney as well as an important political connection.

Jeremy Hutchinson arrived about 20 minutes later. Cranford and Cooper recounted the Woods demand, Cranford said.

"Are you serious?" Hutchinson asked. Cranford showed him the note, which Hutchinson pocketed and later said he lost, the Cranford transcript says.

Cranford told the FBI that he called Hutchinson because he wanted his help as an attorney regarding the extortion attempt. But also he needed Hutchinson's political heft to keep Woods from going to state or federal authorities.

"You need to take care of this. You need to handle this, Jeremy," Cranford said he told Hutchinson. Cranford went on to tell the FBI: "And Jeremy is a lot higher-ranking senator [than Woods]. I mean, Ace is his uncle, you know?"

The transcript of Cranford's interview with federal authorities in western Missouri refers to Hutchinson's uncle, now Gov. Hutchinson, as "Ace" rather than "Asa." It also misspells the first name of Jon Woods.

Assistant U.S. Attorney Benjamin Wulff: "So Jeremy -- so you understood that Jeremy could use his influence to get Woods -- "

Cranford: "Oh absolutely."

Wulff: "-- back in line."

Cranford: "Yes."

Wulff went on to ask: "So you wanted Jeremy to go fix it and basically go speak to Woods directly about it ... Not to go -- not to go to the cops ... Not to go to the FBI."

"Right," Cranford replied.


At some point that summer, Cranford said, he traveled to Florida for several weeks with his family. First day there, Cranford was bicycling when he got a call from Jeremy Hutchinson, who said, 'the FBI wants to meet with you.'

"I said, 'What?' and I pulled over on the side of the road."

Hutchinson went on to tell Cranford about a client who was an FBI agent, who asked if Hutchinson knew anything about Woods.

Hutchinson said he told the agent: "I don't know much. I mean, we think he's on the take, what have you ... But I've got a client that could probably answer that real easy for you and give you more insight than I could."

Cranford: "Who's your client, Jeremy?"

Hutchinson: "Well, I told him that you could tell me about Jon because he's always hanging out with [Cranford's son Chase Cranford] ... and talking to you and stuff."

Cranford: "I said, 'Jeremy, why in God's name would you mention my name?' "

Hutchinson: "Because...we got a meeting set up. The FBI wants to talk to you."

The Cooper and Cranford transcripts don't contain further information about why Hutchinson might have set up the FBI meeting.

Whether or not Hutchinson knew at the time, he was himself the target of a new, separate FBI investigation.

A two-day hearing in June in federal court in Little Rock included testimony from FBI agent Mike Lowe that his agency began an investigation into Hutchinson in May 2013, based on information from Hutchinson's former girlfriend.

Phone calls between Cranford and Hutchinson continued during the 2013 Florida vacation, according to Cranford's FBI interview.

When Cranford returned from that trip, he and Hutchinson soon met at an unspecified hotel with two then-executives of Preferred Family Healthcare, Cranford said.

Present were CEO Marilyn Nolan and chief operating officer Bontiea Goss.

"The FBI is wanting to meet with me," Cranford said he told them.

Hutchinson tried to reassure everyone, saying he had talked to his brother, an FBI agent.

"It ain't no big deal," Hutchinson said of the FBI's desire to meet.

"The FBI just wants to ask you questions. They're not even interested in you... They just want to ask you questions about Jon [Woods] and what you know."

Goss said: "Rusty, if you know anything, you need to tell them now ... so that they don't bring us all into this." Nolan agreed.

"Jeremy actually sold them on the fact that it wasn't nothing," Cranford told his federal interviewers.

An investigator then asked Cranford: "At the time, did Bontiea know that you had been giving cash money to Woods?"

Cranford: "No, sir, but I told her that night."

Cranford said he told Goss he had given Woods "about $30,000" in cash.

Investigator: "And how did you -- how did you characterize the payments?"

Cranford: "Loans."

Goss wanted to know, "What have you done wrong? What have -- and several times over the course of the period of time, Bontiea would say... 'If y'all have done anything, go tell them. Otherwise, they're going to drag everybody into this."

Nolan has since pleaded guilty in connection with the federal political corruption investigation. Goss has pleaded innocent and awaits trial, along with her husband Tom Goss.

Other Preferred Family employees pleading guilty include Robin Raveendran, a former state Department of Human Services administrator, and Donald Jones, a former Pennsylvania lobbyist for the nonprofit.


The 25-minute Cranford interview apparently was supposed to run longer and cover more topics, according to the transcript.

But what an investigator described as a "little scratch" on Cranford's head began to bleed and needed a bandage, so the interview ended.

The investigators had said at the meeting's start that they wanted to ask questions involving FBI agent Bob Cessario and also -- because of "press reports" -- about current state Rep. Jeff Wardlaw, R-Hermitage.

A few weeks before Cranford's FBI interview, the Democrat-Gazette in January uncovered Wardlaw's business ties to two prominent nursing-home industry executives, David Norsworthy and Michael Morton, while Wardlaw served as a member and later chairman of the House panel overseeing the health care industry.

Wardlaw, Norsworthy and a third partner in 2013 co-founded Mallard Medical Supply. Wardlaw and Norsworthy bought out the third partner, Richard "Rick" Williams of Hot Springs, in 2016 and late last year sold the company to Morton, who owns about 35 nursing homes throughout the state.

Wardlaw, who said he held one-third of the company's stock when Morton acquired it, said he received no cash from the transaction and was kept on as a managing employee.

Told last week of the FBI's interest in him in the Cranford interview transcript, Wardlaw said that he had no comment and isn't aware of any federal investigation involving him.

Information for this article was contributed by Eric Besson of the Arkansas Democrat-Gazette.

SundayMonday on 08/11/2019

Print Headline: Unsealed files reveal new details on corruption scandal in state


Sponsor Content