Jeremy Hutchinson faces new indictment in bribery scheme with health provider | Arkansas Blog

Thursday, April 11, 2019

Jeremy Hutchinson faces new indictment in bribery scheme with health provider

Posted By on Thu, Apr 11, 2019 at 12:34 PM

click to enlarge A SECOND INDICTMENT: Jeremy Hutchinson charged anew in Missouri.
  • A SECOND INDICTMENT: Jeremy Hutchinson charged anew in Missouri.
Former Republican state Sen. Jeremy Hutchinson, nephew of Gov. Asa Hutchinson, has been indicted in federal court in Missouri for taking payments from a health provider in return for legislative influence. His indictment was part of a broader action that reaches to the top of the multistate nonprofit organization at the center of a long-running public corruption probe.

Hutchinson already faces trial for tax and other charges related to spending of campaign money for personal expenses. He resigned from the Senate after he was indicted. At the time that indictment was announced, sources indicated a review of his work for Preferred Family Healthcare was ongoing. He's been identified in previous court filings as receiving putative legal fees from the provider of various health services in return for providing legislative influence. Rusty Cranford, who's pleaded guilty to bribing legislators to advance the interests of his former employer, Preferred Family Healthcare, and other entities, has been cooperating with authorities in the case.

Today's charges, in an indictment returned last month but not unsealed until today, included Tom and Bontiea Goss, who'd led Preferred Family until removal by the board of directors following a spate of criminal charges against others. Tom Goss founded the organization, which grew to encompass organizations in five states operating dozens of mental health and other social services agencies funded primarily by Medicaid, to the tune of tens of millions of dollars.

The Gosses and Hutchinson all made initial appearances today before a federal magistrate in Springfield and were released pending trial on their own recognizance. A trial date was set for Hutchinson on June 10, but is likely to be delayed.

Marc L. Mukasey of New York, trial counsel for Jeremy Hutchinson, provided this statement:

Jeremy Hutchinson pled not guilty to today’s charges and he will be exonerated after trial. Today’s indictment is a reminder that the government's power to violate the Fifth and Sixth Amendments by forcing the same person to defend himself on multiple charges in multiple places, all at the same time, must be checked. We will fight the government no matter how many times, or in how many places, they bring their trumped-up charges. 

The Arkansas Democrat-Gazette obtained a statement from Tim Hutchinson, the former senator and governor's brother, who stands by his son. His statement:

“This recent ploy undeniably increases the pressure on Jeremy, who now faces a costly two front defense against the government’s unlimited resources. But I respect and support Jeremy in his decision to not plead guilty to any accusation of which he is innocent.”
Tim Hutchinson and former U.S. Attorney Bud Cummins are promoting a legal defense fund for Jeremy. None has been willing to provide an accounting of it.

The 32-count indictment, recounted in an 85-page filing, includes 12 charges against Hutchinson. The charges span conspiracy, fraud, bribery and, by the Gosses, false tax returns. It recounts many of those named in previous criminal charges, but also lists in its narrative some unnamed former employees, including at least one former Arkansas legislator and a former state employee. One is identified as a former director of program integrity. That matches the description of Robin Raveendran, a former DHS employee who faces state Medicaid fraud charges. A former legislator who served from 2009 to 2013 is also referenced, a likely reference to former Republican Rep. Tim Summers, who's previously denied wrongdoing as an employee of a PFH affiliate. They are not charged but not specifically named.

As David Ramsey noted in an extensive report on the tentacles of PFH, Hutchinson received some $500,000 from the nonprofit and other firms for putative legal work. Hutchinson has contended he did legitimate work. Cranford has told authorities it was a quid pro quo. In one famous case, Hutchinson actually did real work poorly. He was the lawyer on a lawsuit against a PFH related nonprofit in Batesville, but failed to file the paperwork and that resulted in a default judgment against the company. Other "work" was more important. As Ramsey noted:

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."

The latest indictment was unsealed today in Springfield, home of Preferred Family Health. It is a multistate provider of services financed by Medicaid and other federal and state grant programs. The investigation of it and others has led to multiple indictments and guilty pleas. Former legislators Eddie Cooper, Hank Wilkins, Micah Neal, Jon Woods and Jake Files have been convicted or pleaded guilty to charges of public corruption, some with multiple schemes, but all the allegations except for those against Files had ties to PFH or an affiliate.

The continuing investigation has also produced charges against several former employees of PFH or its predecessor corporations and caused the company to stop doing business in Arkansas. It has new leadership and has said it is endeavoring to cleanse itself of ties to past illicit dealings. Its two top officers were removed by the organization's board but had not been charged previously though some other top executives, a former lobbyist and a former accountant have all been implicated.

Hutchinson's indictment is a sign, sources say, that the investigation is not over. In seeking dismissal of his first indictment, Hutchinson has already revealed efforts of the government to get him to enlist as a cooperating witness, an effort that originally came to naught. With new charges, he might take a different view of negotiating. Past charges related to legislative influence peddling have contained hints, if not direct charges, about the involvement of other members of the legislature in receiving pay from PFH or similar operations for helping them with allocations from the state General Improvement Fund. GIF was an unconstitutional pork barrel whose expenditures sometimes produced kickbacks for legislators charged so far.

Here's the indictment.

It details the corruption of the General Improvement Fund and efforts by Preferred Family and its agents to work around accountability programs begun by the Department of Human Services. As a nonprofit, Preferred Family was supposed to stay out of politics, but it played heavily through various organizations and people.

It says the Gosses and others conspired to corruptly influence and reward Hutchinson, Jon Woods, Eddie Cooper, Hank Wilkins and Micah Neal, all then legislators. Improper spending included money for resort homes, outings to sports events and charter air flights, including for family pets. Kickbacks and illicit payments ran up to $2 million for Cranford, the indictment says.

The indictment says Hutchinson aided in the misapplication of funds and benefitted himself by being paid a legal retainer while doing "little, to no" legal work.

This paragraph is interesting. Might it mean there are others under investigation?

By a variety of means, including the following, B. GOSS, T. GOSS, Person #9, and Cranford, and others known and unknown to the Grand Jury, offered and gave money and other things of value, including Charity money and property, to public officials, in exchange for the public officials agreeing to take, and taking, legislative and ofhcial action favorable to the Charity, B. GOSS, T. GOSS, and Cranford for specific acts, and as opportunities arose. Moreover, those public officials, including HUTCHINSON, Woods, Neal, and Wilkins, solicited, demanded, accepted, and agreed to accept money and other things of value, in exchange for agreeing to take, and taking, legislative and official action favorable to the Charity, B. GOSS, T. GOSS, and Cranford for specific acts, and as opportunities arose.
Many specifics were revealed in earlier charges, such as money directed to Wilkins through a church he pastored and a friend of Woods' hired for a fat PFH job. There's mention too of the fraudulent GIF grant that Preferred Family returned after it became clear the feds had smelled something funny.

The Gosses made a fortune, not only through pay nearing $1 million but interest-free loans and lease of things they owned at exorbitant rates, the indictment said. Such benefits weren't properly reported to the IRS.

I think it safe to assume from the details that Rusty Cranford has provided a great deal of cooperation to investigators, as he'd indicated he'd do in a plea bargain. The Gosses were always the big fish in the probe, but there could be other fish in public life in Arkansas given the scope of activities detailed. Several unnamed Missouri legislators are mentioned as beneficiaries of illicit political help from the nonprofit, sometimes paid with its credit card.

The conspirators organized campaign fund-raisers in Missouri and Arkansas for various public officials, again outside the bounds of permitted activity for the nonprofit. Much of the accounting of campaign contributions to candidates was given in previous indictments.

As for Hutchinson, the indictment said:

From 2012 to 2017, B. GOSS and 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 legislative and official action favorable to the Charity, Cranford, Cranford Clients, and others, including but not limited to, holding up agency budgets; requesting legislative audits; sponsoring, filing, amending, and voting on legislation; and supporting the award of GIF funds to the Charity, Cranford clients, and others
The indictment says Cranford gave Hutchinson $15,000 cash and he was paid $350,000 in legal retainer fees. When an auditor wanted Hutchinson to provide a letter about pending legal action Tom Goss responded:

[Cranford] will. [HUTCHfNSON] doesn't work for us in a legal capacity though. He is a consultant. There is no need for the letter since he doesn't provide legal services
Hutchinson and Bontiea Goss conspired, the indictment says, to create a document to cover illegal payments.

Additionally, "Person 9" funneled bribes to Hutchinson from a credit union account, the indictment says.

The bald criminality of a scheme to get $400,000 in GIF money for something known as Ameriworks is something to behold. It ultimately fell apart, but according to the indictment, Jon Woods and Micah Neal were to rake 20 percent of the state money sent to the project.

The indictment says Hutchinson was important in beating legislation PFH opposed.

On or about May 30, 2013, Cranford e-mailed B. GOSS that an ADHS official submitted a Medicaid proposal that would negatively impact the Charity. In response to the proposal, Cranford informed B. GOSS that "we have Jeremy issuing a freeze in every committee of any Medicaid proposal." B. GOSS responded on the same day: "Jeremy rocks." Cranford later forwarded B. GOSS's reaction to HUTCHINSON.

On June 10, 2013, HUTCHINSON received a $7,500 payments to his BOA account ending 8003 from the Charity through Dayspring.

On or about June 26, 2013, Cranford e-mailed HUTCHINSON bullet points that consisted of points Cranford expected and understood HUTCHINSON to make against the Episodes of Care initiative during legislative sessions or to other Arkansas legislators to advance the Charity's agenda of impeding the Episodes of Care initiative.

Between June 10, 2013, and January 7,2074, HUTCHINSON deposited seven (7) additional $7,500 payments to his BOA account ending 8003 and his Arvest account ending 7632 from the Charity through Dayspring
The document continues to detail Hutchinson's lobbying on the issue and his work to amend legislation to benefit PFH. Other unnamed Arkansas senators are mentioned in the course of progress of the legislation. Ultimately, Hutchinson succeeded in amending the bill.

On March 11,2014, Cranford emailed B. GOSS, T. GOSS, and five Arkansas regional directors for the Charity stating:

House Bill I129 has passed the Arkansas Senate with the Amendment! Now we can breathe and live to fight another day! It's over!

Thank you Senator Jeremy Hutchinson and all. It's a great day!
Other legislative help followed, the indictment details.

It boils down pretty simply. An outfit making millions in government programs profiteered at taxpayers' expense and did so with help of illegal campaign contributions and bribes to public officials. Some of them got caught. Others may yet be brought to justice.

Here's the news release from the U.S. attorney's office for the Western District of Missouri. The earlier indictment of Hutchinson was the work of attorneys in the office of the Eastern District of Arkansas. That office apparently continues to pursue information about others in Arkansas.

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