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Rusty Cranford's tainted contributions 

The man in the middle of a massive public corruption probe gave money to dozens of Arkansas lawmakers.

click to enlarge BIG SPENDER: In addition to bribing some public officials outright, lobbyist Rusty Cranford also cultivated influence by making over $150,000 worth of contributions to at least 85 Arkansas politicians from 2010 to 2016. - COURTESY HARRISON DAILY TIMES
  • Courtesy Harrison Daily Times
  • BIG SPENDER: In addition to bribing some public officials outright, lobbyist Rusty Cranford also cultivated influence by making over $150,000 worth of contributions to at least 85 Arkansas politicians from 2010 to 2016.

Milton "Rusty" Cranford, the former lobbyist at the heart of multiple public corruption cases unfolding at the state Capitol, contributed at least $153,132 to candidates in state and federal elections in Arkansas between 2010 and 2016, according to public campaign finance records indexed by the National Institute on Money in Politics (http://followthemoney.org).

Eighty-five candidates in Arkansas, 19 of them in the legislature today, received funds from Cranford over that period. () The tally includes both Republicans and Democrats. Some contributions were made by Cranford individually, others by two of his lobbying firms, The Cranford Coalition and The Capitol Hill Coalition.

Here's a spreadsheet compiling the data, retrieved Aug. 28, 2018.

At least some of these campaign contributions are connected to a criminal conspiracy that Cranford admitted to in June. In his plea agreement with federal prosecutors, Cranford said much of the money he directed to candidates in Arkansas from 2010 to 2016 originated with the state's largest behavioral health provider, a Missouri-based nonprofit now called Preferred Family Healthcare. Before its 2015 merger with another company, it was known as Alternative Opportunities. As a tax-exempt 501(c)(3) nonprofit, AO/PFH was and is strictly prohibited from donating to political campaigns.

To circumvent the law, Cranford or one of his firms would make donations to candidates, after which he would bill AO/PFH for services such as "consulting" or "training." When former leaders at AO/PFH paid those invoices, they were actually reimbursing Cranford for campaign contributions and other improper political activity, according to the criminal information attached to his plea agreement. The information implicates at least four other former top executives of AO/PFH as co-conspirators, though none have been charged with a crime.

Cranford was compensated handsomely for his services: AO/PFH was both his client and his direct employer during this time period. Cranford was the executive who oversaw the nonprofit's operations in Arkansas from 2009 to 2017, during which time it grew to be the largest behavioral health provider provider in the state. Today, it operates 45 mental health and substance abuse treatment sites statewide. (The state cut off Medicaid reimbursements to AO/PFH earlier this summer and terminated contracts with the provider after separate charges of Medicaid fraud were brought against another executive, Robin Raveendran, who was a close associate of Cranford's.)

Cranford has admitted to bribing several state lawmakers in exchange for favors, such as steering taxpayer-funded grants to AO/PFH. The kickbacks came in a variety of forms: Payments to former Rep. Hank Wilkins (D-Pine Bluff) were laundered through the bank account of a Methodist church where the legislator served as pastor, for example, while a $20,000 bribe to Rep. Micah Neal (R-Springdale) was delivered in cash. Sen. Jeremy Hutchinson (R-Little Rock) and former Sen. Jon Woods (R-Springdale) were provided with box seats at the 2013 World Series and hotel rooms.

In such cases, money and gifts were directly funneled to legislators for their personal gain. But prosecutors say Cranford also spread smaller sums to many additional lawmakers by more conventional means: donating to their campaigns.

The federal information includes a Jan. 13, 2012, email Cranford sent to an unnamed AO/PFH executive with attached images of nine checks written from The Cranford Coalition to Arkansas senators and representatives. (The information makes it clear the executive is former CFO Tom Goss, who was fired earlier this year.) Cranford wrote, "Welcome to campaign season and 2012. 'The YEAR of The Greed' is what it is called! We documented the big checks so you would know who these people are ... This is contributions well spent."

In addition to the contributions, Cranford and his associates would bankroll political fundraisers on behalf of AO/PFH. For example, the federal information says that on May 30, 2012, Cranford and another AO/PFH employee, former state Rep. Eddie Cooper, used their corporate credit cards to split the cost of a $5,000 political fundraiser at The Capital Hotel in Little Rock. The event was for an unnamed "Arkansas Executive Branch Official C" who was a candidate for governor.

In an interview, former Attorney General Dustin McDaniel confirmed he was the official described in the federal information. In 2012, McDaniel was the leading Democratic gubernatorial contender; he dropped out of the race in 2013.

McDaniel said he only recently realized he made a cameo in Cranford's plea agreement. "When I saw the story in the paper I thought, 'Holy cow, that's got to be me — what is that about?' " he said. Upon examining his finance reports, McDaniel said, he realized the fundraiser in question must have been for his leadership PAC, which hosted one event each year. The PAC's finance reports show Eddie Cooper paid the hotel $5,000 that evening, the maximum donation for a PAC.

McDaniel said he had no knowledge that Cooper split the cost of the dinner with Cranford or that AO/PFH may have paid the bill. "If he had ... been reimbursed by somebody else or used a company credit card that he wasn't supposed to use, that would be evidence that he used the money of the nonprofit in a way that would be inappropriate — but there would be no way for us to know it," he said. "If any donor is improperly reimbursed from some third-party source, there's no way for a candidate to know that without having investigative powers, which no candidate does.

"It's obviously unnerving," McDaniel said. "Nobody wants to be anywhere within a thousand miles of any of this." The information references several other four-figure tabs at restaurants and bars for fundraisers for unnamed elected officials.

Along with running afoul of federal tax law, such political contributions may also violate state campaign finance law. Graham Sloan, director of the Arkansas Ethics Commission, said political contributions can't be made on someone else's behalf. It's impermissible "for A to take B's money and then make the donation in A's name," he said.

State law also changed in 2015 to prohibit business entities and charitable entities from making donations to campaigns, though most of the contributions made by Cranford occurred before this change.

***

The federal information attached to Cranford's plea doesn't spell out exactly what proportion of his political giving was comprised of unlawful contributions from AO/PFH secretly routed through Cranford. Nor does it suggest that the politicians who received the contributions knew the money was tainted.

In terms of dollars spent, the top two recipients of contributions from Cranford and his entities in Arkansas are former Rep. Johnny Hoyt (D-Morrilton) and former Sen. Robert Thompson (D-Paragould), both of whom received $7,000 over the course of multiple election cycles. Hoyt left the legislature in 2011 after losing a race for an open Senate seat; Thompson lost his seat in 2015 to a Republican challenger. Neither could be reached for comment.

By email, the Arkansas Nonprofit News Network asked all 19 current officeholders who received contributions from Cranford over this time period whether they were aware some of the money may have originated with AO/PFH. Most did not respond.

Of those legislators who still hold office, six received cumulative contributions of $4,000 or more: Sen. John Cooper (R-Jonesboro) at $6,230, Sen. Joyce Elliott (D-Little Rock) at $6,000, Sen. Jeremy Hutchinson (R-Little Rock) at $6,000, Rep. Jeff Wardlaw (R-Hermitage) at $4,177, Sen. Eddie Cheatham (D-Crossett) at $4,000 and Rep. Dan Sullivan (R-Jonesboro) at $4,000.

Elliott, by email, said she was not aware at the time that money donated by Cranford may have originated with AO/PFH. Asked whether she received anything else of value from Cranford, his firms or his associates between 2008 and 2016 — including checks, cash, gifts or favors — Elliott wrote, "I have not."

Cheatham also said he didn't know the contributions may have came from AO/PFH. "All I can tell you, just off the top of my head, is that I had never heard of Preferred Family Healthcare before all this stuff broke loose," he said. Cheatham also said he received no cash, checks or gifts from Cranford, his firms or his associates aside from the contributions on record. "No, no — never," he said.

Sullivan said he wasn't aware that Cranford's political contributions may have been made on behalf of AO/PFH. He said he hadn't received any other money or gifts from Cranford. Cooper, Hutchinson and Wardlaw did not respond to requests for comment by phone and email.

Rep. Mark Lowery (R-Maumelle), who is defending his seat against a Democratic challenger this fall, responded in an email, "I did receive a [$1,000] contribution from The Cranford Group in my 2012 election campaign. Since then I have had no interaction with Rusty Cranford or any of his associates on any legislation, state contracts or requests for GIF funds."

Sen. Bryan King (R-Green Forest) said in a phone interview that he had forgotten he received a $1,000 contribution from Cranford in 2014 until the issue was raised this spring by his primary opponent, Rep. Bob Ballinger (R-Berryville). (Ballinger won the race, and King's term will end in January.) King also said he received nothing of value from Cranford aside from the single contribution.

The legislative candidates supported by Cranford follow no clear ideological pattern. Cooper, a staunch conservative, first won office campaigning against Medicaid expansion. Elliott is one of the most progressive legislators at the Capitol. Hutchinson — the governor's nephew — is generally seen as a moderate Republican, while Sullivan appeared at a campaign fundraiser this spring with Jan Morgan, a far-right gubernatorial candidate who unsuccessfully challenged Governor Hutchinson in the Republican primary. Wardlaw switched his party affiliation to Republican less than two weeks after winning re-election as a Democrat in 2016.

Cranford also donated to larger political contests. In 2014, he gave $5,000 to then-U.S. Sen. Mark Pryor's re-election campaign; the Democratic incumbent lost to Republican Tom Cotton. In 2010, Cranford and his firms gave $4,000 each to the reelection campaigns of Gov. Mike Beebe and Attorney General McDaniel, both Democrats. Both incumbents won.

Unlike legislative races, statewide and federal elections tend to attract thousands of donors, meaning the impact of any single individual is typically smaller.

In a phone interview, Beebe said he didn't specifically recall getting contributions from Cranford, but said he was confident the campaign finance records were correct. Beebe raised over $5.1 million in the 2010 cycle. Asked whether he ever received gifts, cash or anything else of value from Cranford other than a campaign contribution, Beebe said no.

"Anything I would have received from Cranford would have been reported, and it would have been in the form of a regular campaign contribution," the former governor said. "We were notorious about following that law. So, whatever the records show that we filed, that's what it is. We never took anything we failed to report.

"As a matter of fact, I was never approached like that," he continued. "I was approached as a freshman in the Senate and declined the money — cash — but that was way back in '83." After that, Beebe said, "nobody ever approached me with anything under the table." Beebe said he has not been contacted by the FBI about its public corruption investigation involving Cranford.

McDaniel also said he never received any other cash, checks or gifts from Cranford. "Anything that we got was reported. ... We always followed the rules carefully," he said.

It's not uncommon for a campaign to return an unwanted contribution to a donor during election season. However, Sloan, the director of the state Ethics Commission, said it's unlikely current or former elected officials could give back the Cranford contributions, because too much time has passed.

After an election, a campaign may "carry over" a limited portion of its unexpended funds for use in a future election. It can also return the money to donors on a prorated basis, or donate it to a political party, a nonprofit organization or the state. But once a new election cycle begins and new contributions begin flowing, Sloan said, "that's just a different pot of money."

"At that point, as a practical matter, it's too late to start trying to refund money," he said. "I would advise against that."

Sloan said it would be permissible at the end of an election cycle for a campaign to make a donation to a nonprofit that was equivalent to a tainted contribution received in a previous cycle, but he questioned whether such a divestment would have more than a symbolic impact.

"If someone robbed a charity and gave you the money — two election cycles later, [you're] going to give that money back and it's going to restore the money taken?... Well, OK," Sloan said. "As a gesture, you could make a donation to a 501(c)(3) charity. ... But did you really unring the bell?"

Rebekah Hall contributed reporting to this story.

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.

(Totals are cumulative across multiple election cycles. Data retrieved Aug. 28, 2018 from the National Institute on Money in State Politics, http://followthemoney.org)

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