Editor’s Note: This story is based upon court filings in nine state and federal corruption cases and interviews with more than 30 current and former lawmakers, state officials, lobbyists and associates of Rusty Cranford. Cranford, through his attorney, declined to comment.
Ahead of former Jefferson County Judge Henry “Hank” Wilkins IV’s Aug. 29 federal sentencing date for conspiring to accept more than $80,000 in bribes in exchange for influencing Arkansas state legislation and transactions during his time in the Arkansas Legislature, The Arkansas Non-Profit News Network has produced this in-depth and, at times, shocking report on the trail of corruption that began with a longtime Arkansas lobbyist. Wilkins has not commented on the case since his guilty plea. Since The Journal is a Wednesday weekly newspaper, we will be unable to publish Wilkins’s sentencing information until next week’s edition.
On Feb. 21, 2018, federal agents arrested longtime Arkansas lobbyist Milton “Rusty” Cranford at a residence in Bentonville where he was staying. They found $17,700 in $100 bills in a black backpack and multiple bottles of pills for which he did not have a prescription, including Xanax, Ambien and Hydrocodone.
Cranford was asked whether there were any weapons in the home and he showed agents a Bond Arms Defender, a .45-caliber derringer-style pistol in a box in the closet. The government would later allege that Cranford planned to hire an old family friend to murder a witness who was cooperating in a federal corruption investigation against him.
“This mother f***** right here,” Cranford had told the family friend, a felon who was acting as a confidential informant for the FBI and recording the conversations. “He’s in Philadelphia. He’s in South Jersey.”
Cranford then whispered: “He needs to go away. He needs to be gone.”
According to the informant, Cranford then made a gun-shooting gesture with his hand.
Before his downfall, Cranford had been an executive at one of the largest Medicaid providers in the region, and a powerful lobbyist who helped bankroll countless political campaigns in Arkansas and influenced state policies that remain in place today.
During the recorded conversations, he complained that he was being railroaded by the feds: “So those comments have been made that, ‘There’s no way he could have accomplished all this sh** without being dirty.’ Well f*** that. Show me where I’m dirty. I mean, yeah, have I wrote a hell of a lot of — have I paid a hell of a lot of politicians? I sure have over the years. A s***load of money. But I’ve wrote them all checks, so there’s a paper trail of everything I wrote. If mother f****** tryin’ to buy somebody, they ain’t going to write ’em a check for it.”
THE KEYS TO THE KINGDOM
Cranford was a well-known presence at the state Capitol for around 20 years. He was a smoky-voiced hustler, a country rogue in a rumpled suit. He was as persistent and tenacious as a pawnshop broker closing a sale. He worked hard, and he was always working — always working you — whether you knew it or not. He’d lean in, perspiring with possibility, and tell you: “OK, bub, this is how it’s gonna be.”
Cranford was at the center of a web of public corruption uncovered by federal investigators. More than a half-dozen former legislators and lobbyists have been criminally charged, and a cloud hangs over numerous others. Cranford was charged in the U.S. District Court for the Western District of Missouri on one count of conspiracy and eight counts of bribery. In June, he pleaded guilty to one count of bribery; he is now awaiting sentencing in Greene County Jail in Missouri.
Cranford had endless schemes, a finger in every money pie he could find. But his big ticket was Preferred Family Healthcare, the nonprofit formerly known as Alternative Opportunities, where he occupied a murky role as both a top executive on staff and an outside consultant engaged in clandestine lobbying. (This article will refer to the nonprofit as AO/PFH; the name changed after a merger in 2015.)
The Springfield, Missouri, based conglomerate operates in five states and in more than 40 sites across Arkansas, providing behavioral health services such as treatment and counseling for mental health and substance abuse, as well as aiding people with developmental disabilities and other services. That might not sound like an obvious target for graft, but the Medicaid program in Arkansas has a $7.6 billion budget. For Cranford and company, this proved a tempting pot.
Cranford, with the help of crooked lawmakers, swallowed up millions of dollars in taxpayer money for AO/PFH and other clients, then pocketed some of that money for himself and his co-conspirators. Each new filing from federal prosecutors has exposed more details on the rot in Little Rock: Grubby backroom deals greased with cash.
Lawmakers hooked up with World Series tickets and overpaid jobs. Four-digit tabs at Arthur’s Prime Steakhouse in West Little Rock. Mysterious wire transfers, surreptitious meetings with cash-stuffed envelopes, sham contracts to hide the flow of money. At various times over the last five years, Arkansas’s government was taken hostage by a criminal enterprise.
By 2014, Cranford realized that the FBI was keeping an eye on him and he began to take steps to cover his tracks. It was too late.
The first domino to fall came in June 2017, when an accountant at AO/PFH pleaded guilty to a $2 million embezzlement scheme, among other charges; later that year he committed suicide at his family farm outside of Springfield. A series of pleas and indictments on federal corruption charges followed: Donald Andrew Jones, a Pennsylvania lobbyist who advocated for AO/PFH in Congress; Eddie Wayne Cooper, a former Democratic state legislator from Melbourne, lobbyist, and AO/PFH executive; three other former Arkansas lawmakers; and finally Cranford himself.
Cranford is now presumably cooperating with federal investigators. Most assume that more indictments and pleas are to come.
“F***, Arkansas, man, they puttin’ the hammer on probably 20 people up there,” Cranford said during one of the conversations secretly recorded by federal investigators. “But their words to my attorney was ... ‘He holds the keys to the kingdom.’ That was the words they used. That I hold the keys to the kingdom.”
SANTA IS COMING
In December 2013, shortly after a bought-off legislator helped AO/PFH secure a million-dollar state grant, Tom Goss, then the chief financial officer for the nonprofit, wrote to Cranford: “awesome on the mill.”
Cranford responded: “Thanks, brother.”
“Santa is coming,” Goss wrote. Cranford wrote back: “I need Santa.” This was how they talked, like thieves celebrating a score over highballs at a strip joint. They hustled after public money with a pulpy frat-boy zeal. They were getting rich, and they were relentless. They were winning. They were enjoying themselves.
Goss and two other top executives — his wife, the former Chief Operating Officer Bontiea Goss, and former Chief Executive Officer Marilyn Nolan — were fired from AO/PFH earlier this year after federal court filings implicated them in the corruption scandal (they were unnamed, but identifiable based upon the descriptions). They have not been charged and deny wrongdoing. A fourth top executive was put on administrative leave the day after an Arkansas Times reporter asked about apparent references to him in Cranford’s plea.
AO/PFH spokesman Reginald McElhannon has said that the nonprofit was a victim of rogue employees and has repeatedly maintained that AO/PFH has cleaned house. However, citing credible allegations of Medicaid fraud, the state announced in June that it was ending Medicaid reimbursements and terminating all state contracts with the nonprofit. The loss of public funding leaves the future of AO/PFH’s 45 Arkansas service sites in limbo; their sale or closure would affect hundreds of employees and thousands of patients.
Cranford, who first joined AO/PFH in 2007, was eventually named executive vice president in charge of the nonprofit’s operations in Arkansas. He took a circuitous route to the position. His mother was a prominent figure in the Democratic Party in the Texarkana area; Cranford started to make his own political connections in Central Arkansas as a fundraising staffer, state president and national officer for the Junior Chamber of Commerce (Jaycees) in the 1990s. He registered as a lobbyist in 2000 and by 2002 had left the Jaycees to pursue lobbying full time.
He was always a big talker, but he started as a very small fish. His first few clients were substance abuse treatment providers and providers of alternative medicine, such as acupuncture. His lobbying business brought in $13,000 before expenses in 2002 and $30,000 in 2003. Associates from the time remember him having constant money trouble — bouncing checks, grousing for extra money from clients and stiffing bills. He filed for bankruptcy twice in 2004, and again in 2005.
That didn’t stop him from boasting even back then that he was a major player at the Capitol — one client recalled overhearing Cranford on the phone growling that he was at a meeting in the governor’s office. He was sitting in his car.
Cranford had grit, and eventually he started to deliver on his grandiose claims. His shtick wasn’t for everyone, but he had a grimy charisma, a gift for indulging the impulses of the powerful. The ones that liked him called him “Cowboy.” He started signing up more clients, and carved out a niche working for behavioral health providers, a sector that was beginning to take in impressive revenues in the state. He managed to parlay his association with one of his lobbying clients, Dayspring Behavioral Health Services, into a top management position on staff. When AO/PFH acquired Dayspring in 2007, they acquired Cranford, too.
Cranford’s powerful position with the behemoth AO/PFH always raised eyebrows: He was a lobbyist, a political moneyman, not a health care administrator. Cranford’s ally Cooper, the former state representative, meanwhile, was brought aboard AO/PFH in 2009, while he was still in the legislature (Cooper also joined Cranford’s lobbying firm after his term was up).
Cooper chaired the Public Health, Welfare and Labor committee, but he was no one’s idea of a policy wonk. Capitol observers assumed he was put in place, at a six-figure salary, for his political connections. These moves fit a pattern for AO/PFH. The nonprofit, heavily reliant on revenues from the Arkansas government, stacked its roster with former state officials.
Whatever they were doing, it was working: Business was booming, especially in Arkansas. AO/PFH’s annual Medicaid reimbursements in the state topped $30 million, and AO/PFH was taking in tens of millions more in state contracts and grants. Revenues soared, and totaled more than $800 million across five states between 2009 and 2016, much of that thanks to Medicaid. According to the Arkansas Democrat-Gazette, an astonishing one quarter of AO/PFH’s total revenues came from taxpayer money from Arkansas state agencies. Executives at the top of AO/PFH were rewarded handsomely with salaries between $400,000 and nearly $1 million.
To keep the band playing, Cranford and his co-conspirators undertook elaborate efforts to influence lawmakers and state policymakers in ways that would help AO/PFH’s bottom line. Cranford soaked up grant money and doggedly fought efforts by state officials to implement oversight or changes to the Medicaid payment system. He said he was protecting kids who needed care; critics argued that he was gaming the system to overcharge the state and keep the money rolling in.
AO/PFH funds were poured into improper lobbying, campaign contributions and political advocacy, according to court filings. Cranford and other executives conspired to conceal these activities, which broke IRS rules and requirements regarding tax-exempt charitable organizations. And they went further than that, according to Cranford’s plea, as top executives engineered hundreds of thousands of dollars in bribes to legislators.
The more public money that AO/PFH brought in, the more money would wind up in the pockets of Cranford and his co-conspirators. According to court filings, revenues were diverted toward extravagant personal spending with the nonprofit’s corporate credit card, premium tickets to sporting events on AO/PFH’s dime, payments to private companies owned by AO/PFH executives and a series of direct cash kickbacks. Millions of dollars changed hands in illicit schemes.
All that grease and toil to pile up public money was not to provide better services, but to line their own pockets. Their goal, according to Cranford’s plea: ”[T]o increase the Charity’s total receipts so they had more funds available from which to embezzle and steal.”
NEW BUBBA FOR OUR TEAM
Cranford was short, loud and crude. Crusty Rusty, sneered his enemies. He was a good ol’ boy, not a blueblood. He smoked pack after pack of cigarettes and spoke in a froggy croak from the back of his throat, like a hillbilly pirate, sparking endless impressions at the Capitol.
In court, Cranford’s own defense attorney described him as “an unapologetic and avid gambler.” He was a “seven star” member of the Horseshoe Casino in Shreveport, Louisiana, and former state Rep. Cooper told federal investigators that he had seen Cranford win and lose hundreds of thousands of dollars on individual bets. Cooper also told them that he had frequently witnessed Cranford buying cocaine from a dealer known as “Uncle C.” Cranford told another associate that he would “hit the streets of Texarkana” to buy hydrocodone.
Cranford himself didn’t drink, according to multiple associates, even if his antics sometimes fooled observers into assuming he was drunk. But he was happy to cavort and oblige lawmakers who did. He was a relic of the state’s old booze-and-bubbas politics, when lobbyists held court into the wee hours, more comfortable in a bar than a boardroom.
Cranford may not have been the subject of “top lobbyist” profiles of top-tier, big-name movers and shakers, but in more recent years, he started pulling significant weight. The bigger lobbyists cast a wide net; Cranford zeroed in on a few foot soldiers and worked them hard.
He contacted then-Rep. Wilkins (D-Pine Bluff) by telephone 344 times from February 2013 to December 2013 alone. Wilkins was a pastor; Cranford joined his church. He bought lunch for the Public Health committee that his buddy Cooper chaired. He stayed up past closing time to shoot the breeze and then was back the next morning for testimony from state officials, in the back row feeding questions to his allies by text message.
Somewhere along the line, he reckoned that he could exert significantly more power if the lawmakers doling out public money were cut in on the paydays. There was always more juice if you knew who to squeeze.
According to government court filings, Cranford coordinated paying bribes to at least four sitting legislators, in addition to favors granted to Cooper at the end of his term in the House. Along with cash, checks and wire transfers, they were treated to other goodies. Cranford and his co-conspirators, for example, paid for a hotel stay in St. Louis and luxury box seats and tickets to the 2013 World Series for two lawmakers, former Sen. Jon Woods (R-Springdale) and Sen. Jeremy Hutchinson (R-Little Rock).
Woods, who was found guilty by a jury on federal corruption charges in May, was one of Cranford’s most reliable operators in the legislature, and he received multiple cash payments from Cranford in 2013 (the total amount is not known). Prosecutors also presented evidence of more creative strategies that Cranford and his co-conspirators used to buy off Woods. After Woods helped deliver $400,000 in state grant money to an entity connected to Cranford, he emailed him, “Wanted you to see the good news.” Cranford replied, “You did great bubba.” Four months later, Cranford got Woods’ fiancée a $70,000 job with AO/PFH affiliate Dayspring (when she left the position, her replacement was hired for half the salary).
Once her hire was arranged, AO/PFH’s Tom Goss wrote Cranford, “Senator is taken care of. He is new bubba for our team.”
Some of Woods’ colleagues noticed that he was enjoying a lifestyle that seemed lavish for a legislator whose only other employment was a bit of consulting work. In 2013, former Rep. Micah Neal (R-Springdale) was impressed by Woods’ Little Rock apartment, which was decorated with high-priced sports memorabilia, including items autographed by Pete Rose and Michael Jordan. Neal was hard up for money at the time. He asked Woods how he was scoring cash.
According to Neal, who pleaded guilty in January 2017, that’s when Woods let him know about kickback schemes he had worked out, including a deal by which Cranford would cut them in on 20 percent of any public grant monies sent to entities of Cranford’s choosing. In October, according to Neal, as reward for directing such funds, Woods handed off $20,000 in cash from Cranford to Neal.
Former Rep. Wilkins also received cash kickbacks for pursuing favorable legislation for Cranford and his clients, according to his own guilty plea in April.
Most of the bribes —more than $80,000 — were hidden as donations to St. James United Methodist Church in Pine Bluff, where Wilkins was a pastor. Between 2010 and 2016, lobbying firms associated with Cranford made at least 29 deposits, between $1,000 and $5,000, into a discretionary account at the church that Wilkins controlled. Cranford also gave Wilkins envelopes containing around $5,000 in cash on multiple occasions. AO/PFH deposited $30,000 into the church discretionary account in December 2013.
That same month, Wilkins wrote checks to himself from the account for more than $7,000 and paid more than $10,000 toward the balance on his personal Discover credit card.
Meanwhile, on Sundays, he preached the gospel of good over bad to his congregation.
By 2014, Rusty Cranford realized that he was being investigated by the FBI. According to Wilkins, Cranford arranged a meeting, saying that he would need to continue the payments to the church discretionary account even after Wilkins left the legislature — which Cranford did, through at least January 2016. According to Wilkins, Cranford said that he needed to make it “look like I wasn’t paying you.” Cranford told Wilkins to display a plaque on the wall of the church to state that Cranford had donated money for a church bookshelf.
Asked by auditors in 2015 about the $30,000 payment from AO/PFH to Wilkins’ discretionary account, Tom Goss said it was a “donation to a youth summer program in Pine Bluff, United Methodist Church. That’s about it.”
A practicing attorney and part-time legislator
Between 2012 and 2017, according to Cranford’s plea, a person identified as Senator A — acknowledged by his attorney to be Jeremy Hutchinson — received more than $500,000 from Cranford, his lobbying firms, AO/PFH and other Cranford clients (Cranford himself directly gave Hutchinson around $15,000 in cash). In early 2013, according to the federal information, Cranford pushed Tom Goss to hire Hutchinson as an attorney because having a senator on the payroll could be beneficial in advancing their agenda in the legislature. Hutchinson was put on retainer in April 2013 at $7,500 a month, which was bumped up to $9,000 a month by May 2014. Later that year, Hutchinson’s uncle, Asa Hutchinson, was elected governor.
Hutchinson to date has not been charged and denies wrongdoing. It is not in dispute that Hutchinson was paid by AO/PFH and other Cranford clients, but such payments occupy a gray area in the state’s ethics laws: fees ostensibly for private legal work, paid to a legislator who just so happens to also advocate for that client’s interests in the legislature. According to the federal information, the arrangement between Cranford and Hutchinson was a quid pro quo: “Cranford offered and gave, directly and indirectly, cash; checks, wire transfers; retainers; attorney’s fees; and professional referrals to [Hutchinson] in exchange for [Hutchinson] taking favorable legislative action on behalf” of Cranford and his clients.
In response to the insinuations in Cranford’s plea, Hutchinson’s attorney, Tim Dudley, stated, “It clearly mischaracterizes Mr. Hutchinson’s work as a practicing attorney and part-time legislator. Mr. Hutchinson has done nothing illegal or unethical.”
It is not against the law for a legislator to vote on bills that might impact a person or company that same legislator works for as a private attorney. However, ethics watchdogs have long warned that lawmakers who also work as private attorneys could be motivated to take actions in the legislature that happen to help their paying clients. Even if it’s not a bribe under the law, the incentives could work in the same direction.
Hutchinson had something of a reputation for just this sort of arrangement: He participated in legislative action, for example, that benefited a mattress merchant and a maker of gambling machines, both clients. His legal work was on the up and up and separate from his legislative activities, Hutchinson said, but critics snickered that retainer fees might be buying help at the Capitol.
Hutchinson wasn’t the only lawyer at the Capitol who blurred the lines. Former Senate President Pro Tem Michael Lamoureux (R-Russellville), for example, passed legislation benefiting rural telephone companies that also paid him as a private attorney.
Jerry Walsh, former executive director at South Arkansas Youth Services, another Cranford client, pleaded guilty to a federal corruption charge in July. According to the federal information, Cranford arranged for more than $120,000 to be paid in ostensible legal fees to an unnamed senator to help SAYS at the legislature. The senator described resembles Lamoureux, although this has not been definitively confirmed. According to Walsh, both Lamoureux and Hutchinson were employed by SAYS as attorneys. Lamoureux — who left the Senate to serve as Governor Hutchinson’s chief of staff from 2014 until May 2016 — said he has done nothing wrong, telling the Arkansas Times after Walsh’s plea was announced, “Neither legal fees nor campaign contributions have ever influenced my behavior as a public official.”
Whatever the arrangement was, Cranford got a cut: According to Walsh’s plea, Cranford and his lobbying firm received more than $130,000 in unauthorized payments. Walsh also gave Cranford’s son sham jobs at SAYS, despite the fact that he failed a background check. He was not expected to do any work, according to Walsh’s plea, but was paid more than $130,000 between 2013 and 2016.
IT’S DONE DARLING
Legislators on Cranford’s payroll were utility players. In exchange for hundreds of thousands of dollars in purported legal fees, the federal information filed along with Cranford’s plea alleges that Senator A [Hutchinson]’s services included “holding up agency budgets; requesting legislative audits; sponsoring, filing and voting for legislative bills; and influencing the award of [General Improvement Fund] funds to [AO/PFH] and Cranford clients.”
Cranford’s most significant victories often can’t be traced to a particular piece of legislation, or a grant with a paper trail. If he wanted to fight against changes to Medicaid reimbursements, new rules for how patients were assessed, or policies for state oversight, the heavy lifting typically happened in backroom negotiations with executive branch officials. They would water down rules, delay new policies that could impact their bottom line, dicker and squeeze over any new regulation.
Their foot soldiers in the General Assembly had the power to block agency decisions in the legislative review process. State officials knew it, so they would try to hammer out negotiated agreements rather than fight a battle they couldn’t win against powerful lobbyists at the Capitol.
There is no public record of such horse-trading. Cranford might threaten to run a bill that would make life difficult for state regulators in order to win policy concessions. These were technical changes, deep in the weeds. Millions of dollars were at stake, but more often than not, even most legislators were unaware of what was happening.
In addition to manipulating the rules to increase revenues from the Medicaid pot, Cranford was likely also aiming to shield the nonprofit from oversight to hide overbilling schemes. An arrest affidavit by the state’s Medicaid Fraud Control Unit alleged that another former AO/PFH executive, Robin Raveendran, engineered a multimillion-dollar overbilling scheme from 2014 through 2017, and that Raveendran and Cranford worked hand-in-hand to manipulate the legislative process to block state regulators from disrupting the scheme.
But Cranford’s specialty was a more straightforward quid pro quo: the GIF giveaway. Cranford proved highly effective at gathering money from the General Improvement Fund — the now-defunct system that allowed individual legislators to allot surplus money from the state’s general revenue to pet projects of their choosing. According to an analysis by the Arkansas Democrat-Gazette, subsidiaries of AO/PFH received more in GIF money between 2013 and 2017 than any other entity in the state.
A good portion of this may have been legal, if greasy, arm-twisting and influence peddling. But in at least some cases, lawmakers were receiving a cut for directing grant money to AO/PFH and other Cranford clients. The circle of kickbacks typically gave Cranford a cut, as well.
Act 791, for example, sponsored by Woods, enabled a $1 million grant for AO/PFH, for which Woods and Hutchinson sent letters of support. Woods also sent a letter of support for South Arkansas Youth Services to receive hundreds of thousands more. When AO/PFH was approved for the full $1 million requested, Cranford forwarded the approval to COO Bontiea Goss: “We are 100 percent funded in one lump sum. ... It’s done darling, Money on way.” On the same day that AO/PFH received the $1 million check, AO/PFH sent Cranford’s lobbying firm, Cranford Coalition, a check for $187,175.
The bubbas on Cranford’s team had their hands in a wide range of activities. A jury heard testimony at Woods’ trial that Woods and Neal tried unsuccessfully to send $4.7 million in state grants and other public-interest loans to relocate Pro-1, a private company that repackaged and sold thermostats imported from China, from Springfield, Mo., to Northwest Arkansas. Turns out Tom and Bontiea Goss had an ownership stake in the company.
Hutchinson, meanwhile, helped another Cranford client, Teach For America, secure a $3 million grant (Democratic gubernatorial candidate Jared Henderson was the executive director of the Arkansas branch of TFA at the time). TFA is not accused of wrongdoing, but the federal information implies that Hutchinson went to bat for that Cranford client in return for tens of thousands of dollars in purported legal fees that AO/PFH and two other Cranford clients were paying him at the time. The grant money for TFA came from the discretionary funds of Governor Hutchinson, Jeremy Hutchinson’s uncle.
THE YEAR OF THE GREED
The various pleas and indictments describe a dizzying array of kickback schemes to enrich Cranford and the other key players. According to Cranford’s plea, an AO/PFH executive identified as Person 1 — who matches the description of CFO Tom Goss — greased the wheels for AO/PFH to dole out a massive contract to Cranford’s lobbying firm for “consulting” in exchange for Cranford kicking back cash his way. Between 2013 and 2017, under Person 1′s direction, the nonprofit paid the Cranford Coalition nearly $3 million. Cranford then paid kickbacks to Person 1 totaling $613,600, in cash and checks. Everyone wins.
Cranford used his position at AO/PFH to command a similar scheme, landing a “consulting” contract for the Pennsylvania lobbyist, D.A. Jones, to advocate for the nonprofit in Washington, D.C., for which he was paid $973,807 from 2011 to 2016. Jones, in turn, paid $264,000 in kickbacks to Cranford and Cooper. This was their formula: They would take in more public money, hand out exorbitant contracts, and then skim their own personal cut. More taxpayer money meant more to skim.
While there was subterfuge involved, Cranford’s behavior ultimately suggests a man who believed he could get away with anything. One of the improper uses of AO/PFH’s funds described in the federal information involved simply paying rent to Cranford for out-of-state properties he owned, supposedly for “executive leadership.” Cranford ended up taking in more than $50,000 over an 18-month period for his vacation house in Florida. During the same period, the Cranford Coalition was paid nearly $200,000 for “training,” as well as thousands more in lease payments for a house Cranford owned in Texas and another he owned in Arkansas.
Even if they didn’t take outright bribes, legislators benefited from the nonprofit’s largesse as well. Between March 26, 2013, and Jan. 6, 2016, Cranford made 54 transactions at Arthur’s Prime Steakhouse in Little Rock with the nonprofit’s credit card. He racked up bills totaling more than $15,000. The credit card was also used for thousands of dollars in fundraisers for candidates for the legislature and statewide office at Sims Bar-B-Que, Cajun’s Wharf, the Capital Hotel and elsewhere.
At other times, they would hide such spending using Cranford’s lobbying firm: When Cooper, then a representative, asked in 2010 to be paid back for a $500 contribution check to a political candidate and a $2,851 tab at a Texarkana restaurant (including more than 100 alcoholic beverage orders), Goss told Cranford, “that one is going to be tough to pay out of [AO/PFH].” He arranged for Cranford to send AO/PFH a phony bill from the Cranford Coalition to conceal the payment to Cooper.
Because AO/PFH operated as a 501(c)(3) charity, it was exempt from federal income taxes and was prohibited from making contributions to political campaigns. According to court filings, Cranford and other AO/PFH executives flouted that prohibition for years, using Cranford’s lobbying firm to route tens of thousands of dollars in clandestine campaign contributions, which would then be reimbursed via AO/PFH funds.
“Welcome to campaign season,” Cranford wrote to Tom Goss in 2012, attaching nine checks totaling $7,000 sent from the Cranford Coalition to the campaigns of incumbent Arkansas legislators. “The YEAR of The Greed is what it is called! ... This is contributions well spent.”
AO/PFH executives likewise attempted to conceal the lobbying activities that Cranford and D.A. Jones were doing on the nonprofit’s behalf, according to court filings, in order to dodge certain limits and reporting requirements on lobbying that the IRS imposes for 501(c)(3) organizations.
In the federal information on Cranford, prosecutors describe what appear to be smoking-gun emails on the slapdash efforts to conceal lobbying activity and political contributions behind phony “consulting” and “training” arrangements. AO/PFH CEO Marilyn Nolan at one point wrote to Cranford, “Do not — and I repeat — do not — put lobbying on another invoice — just put consultation or training and development.” She also became alarmed when an AO/PFH staffer asked how to expense reimbursement payments for campaign contributions Cranford had made. “We cannot call contribution. ... I do not like her inferring contribution,” Nolan wrote to the Gosses, flagging the problem. “Rusty told me he thought you were calling consultation.”
“I told her consult and training,” Tom Goss replied. “Will send again.”
HE NEEDS TO BE GONE
By 2017, AO/PFH’s leadership had been informed that the nonprofit was the subject of a federal investigation. On June 2, 2017, Cranford signed a settlement agreement terminating his contract. As part of the settlement, AO/PFH forgave a $35,000 debt (Cranford failed to reimburse AO/PFH after a Missouri state senator returned an unlawful campaign contribution that Cranford had made on the nonprofit’s behalf); repaid him $165,000 for personal expenditures that he described as “reasonable legal fees and expenses ... on matters subject to company advancement”; and paid him a final settlement of $400,000.
According to Cranford’s attorneys, the feds undertook a “relentless pursuit of Mr. Cranford,” trying again and again over a period of years to get him to cooperate. “That pressure has continued to escalate,” his attorney Nathan Garrett told a judge in March 2018, when Cranford initially pleaded not guilty. “They have sought his cooperation repeatedly. Each time upping the ante. Each time suggesting that Mr. Cranford’s situation is worse than it was the last time.”
When his co-conspirator Jones pleaded guilty in December, Cranford knew that the noose was tightening. He complained to an old family friend that Jones had “cut himself a deal” and was a “snitching m***** f*****.”
Unfortunately for Cranford, this old acquaintance, who had known Cranford’s father and Cranford in his youth, was a confidential FBI informant who was secretly recording his conversations with Cranford. The informant was referred to in court as Person A, or “Uncle X.” Cranford was aware of his criminal background: Uncle X had prior felony convictions for aggravated robbery, assault and aggravated battery with a dangerous weapon, among other charges, and had been under suspicion for murder. The feds paid him $3,000 and $17,800 in relocation expenses for providing information on Cranford.
During rambling conversations with Uncle X, Cranford said that the feds believed he had significant political clout. He boasted that a few years prior, he had managed to arrange an early release from prison for an old high school buddy who was locked up on a murder charge, after Cranford was hired by the family to help. “I got a m***** f***** that killed somebody ... just got him out of prison,” Cranford told Uncle X. “He killed a boy in Fouke, Arkansas ... about seven years ago ... wrapped him up in a ... rug, and threw him in Mercer Bayou down there in Fouke.”
According to Uncle X, in January 2018, Cranford told him that he had a job for him. He said there was a lot of money in it, and he “would like it.” Uncle X asked if he would need a “piece.” Cranford said he would provide him with a gun.
They met at Uncle X’s house and Cranford confided that he was worried that Jones would testify against him. “He needs to be gone,” Cranford told him. The sound of Cranford flipping through cash is audible toward the end of the recording as the two arranged to meet again. According to Uncle X, Cranford gave him $500 as an initial down payment on a planned agreement to murder Jones.
When Cranford was arrested, in addition to the 45-caliber pistol, prescription pills and $17,700 in cash, federal agents found two loan request forms for $10,000 from the cash value of his life insurance policy. Later investigation revealed that the pistol had been illegally purchased by someone with a felony conviction in the fall of 2013. He gave Cranford the gun later that year, around Christmas (the man who gave him the gun is now incarcerated in the Federal Bureau of Prisons for an unrelated crime). Prosecutors would later argue that it is “very well-suited for use as a murder weapon” because it is easy to conceal, powerful, and does not leave spent shell casings.
Cranford was charged in the Western District of Missouri, and the government argued that Cranford should be held without bail, contending that he had tried to hire Uncle X to murder D.A. Jones (no charge has been filed in the alleged plot). They also alleged that he had previously attempted to tamper with witnesses — Jones and Wilkins — and, when those efforts were unsuccessful, exhibited signs of preparing to flee, including growing out and dyeing his hair. Previously, Cranford’s hair was gray, short, spikey and gelled.
Upon his arrest, his hair was dark, and coiffed in the fashion of Rod Stewart. Garrett, his defense attorney, said that Cranford had always dyed his hair. Assistant U.S. Attorney Steven Mohlhenrich responded, “You know, maybe Mr. Cranford was having a bad hair day on the day he was arrested ... but the government would suggest there is a change in his appearance.”
Garrett told the court that Uncle X was unreliable and that it was unrealistic to imagine that such a pathetic character (Uncle X told Cranford that he had no car and had to hitchhike to the grocery store) would be hired to murder a lobbyist in the Philadelphia area. Garrett argued that Cranford’s shady activity wasn’t evidence that he was behaving unusually or was a flight risk — he was just a shady character. Rusty being Rusty.
“He has not hidden the fact that he is a man who commonly deals in cash,” Garrett explained to the judge. ”$17,000 is nothing unusual.”
“I would venture to guess,” Garrett argued, “that we could back a semi-truck up to this courthouse and fill it full of [currency transaction reports] and suspicious activity reports over the years of Mr. Cranford.”
On March 29, U.S. Magistrate Judge David Rush denied bail for Cranford, concluding that Cranford was a flight risk and that the allegations of witness tampering and murder for hire were credible. By June, Cranford had enough and pleaded guilty to bribery. No date has yet been set for sentencing, and he remains in the Greene County Jail.
AO/PFH continued to receive millions of dollars from Arkansas taxpayers for months after the Jones plea revealed the extent of the top-level corruption. In late June, three weeks after Cranford pleaded guilty, Raveendran was arrested and the state finally pulled the plug. “We had received assurances that they had cleaned house,” Governor Hutchinson said at the time, explaining why it took more than six months to take action.
On his recorded conversations with Uncle X, Cranford complained that if you Googled his name, he was “in the f****** paper every other week. ... I really thought that I was gonna ... end the year with my being one of the top three stories in the state of Arkansas. That’s how f****** much publicity I don’t want, I’ve got.”
The story isn’t over yet.
“While Raveendran was a key leader of this scheme ... the State does not believe he acted alone,” the arrest warrant for Raveendran stated. An investigation into Cranford, his associates, and “the connections with several Medicaid providers” is ongoing, according to the Medicaid Fraud Control Unit, which acted on a tip from federal investigators. Meanwhile, the feds are mum, but speculation runs high that their own investigation continues apace.
“Unfortunately,” Arkansas Attorney General Leslie Rutledge said at a press conference announcing Raveendran’s arrest, “this is a very large, tangled web.”
This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.