SPRINGDALE — Two state lawmakers began supporting a grant of $400,000 in taxpayer money to a nonprofit organization two months before it incorporated in 2013, according to government records.
The nonprofit group, AmeriWorks of Bentonville, signed an agreement accepting the grant Sept. 26, 2013, to get started in a job training program — the day before the company’s incorporation was filed Sept. 27, 2013, according to the records of the secretary of state’s office.
The job training proposal came to light when then-state Rep. Micah Neal, R-Springdale, pleaded guilty Jan. 4 to helping arrange two grants from state taxpayer money in return for kickbacks. One was a private college in Springdale. The other was a nonprofit workforce training program that was to receive $400,000 in grants from Neal and an unnamed state senator. Neal recommended $125,000 of the grant and the unnamed senator recommended the remainder, according to the plea. Neal received $20,000 in cash for a kickback, according to his plea.
The money for the grant came from the state’s General Improvement Fund. Grants from the fund are obtained through the recommendations of state legislators. In Neal’s case, the grants were distributed through the Northwest Development District based in Harrison.
It is the only workforce training program to receive $400,000 in grants with Neal’s support, according to both Northwest district records and a 2015 state audit. The participating senator in those grants was then-Sen. Jon Woods, R-Springdale, who recommended the remaining $275,000 for AmeriWorks, according to district records.
Those grants weren’t the only GIF awards AmeriWorks sought and received. The nonprofit group also received a $100,000 state grant recommended by a third lawmaker through the White River Planning and Development District, based in Batesville, records show.
In the requests for the grants from both economic development agencies, the name and signature of the “authorized representative” of AmeriWorks on the grant applications was Milton R. “Rusty” Cranford of Rogers. Cranford identifies himself as a board member of AmeriWorks on the Northwest district application and as “CEO,” or chief executive officer of AmeriWorks, on the White River application. Cranford was described by lawmakers, a former client of his lobbying firm and by staff issuing the grants, as a longtime lobbyist with specialized knowledge of behavioral health issues.
Cranford was also the registering agent for AmeriWorks, according to the company’s Sept. 27 filing at the Secretary of State’s office. He was a member of the AmeriWorks board, according to his grant applications. In 2013 and 2014, among other years, he was a registered lobbyist with the state and leader of the lobbying firm The Cranford Coalition. The firm donated money to the campaigns of both Woods in 2012 and Neal in 2013.
Despite the grants, Ameri-Works failed to gain additional financial support and never got off the ground, according to an August 2014 letter from Cranford to the Northwest district. The $400,000 was returned to the Northwest district, according to its records. The $100,000 grant from the White River district was redirected to a long-standing program for the disadvantaged in Batesville and to a substance abuse center in Searcy at the request of Health Resources of Arkansas, said Van Thomas, director of the White River Planning and Development District in Batesville.
In its initial applications, AmeriWorks was starting from scratch and needed almost $7 million for equipment and space to operate, along with at least 100 clients for job training.
Gov. Asa Hutchinson, among others, said after Neal’s guilty plea using the General Improvement Fund at lawmakers’ discretion should end. The governor’s proposed budget before the Legislature contains no money for such grants.
Earlier this month, Sen. Trent Garner, R-El Dorado, introduced a bill in the Legislature to do away with the current system of awarding GIF money. The bill would put the money from the source of the fund — unspent budget balances and interest income on state deposits — into an emergency fund requiring approval of the full Legislature or the legislative council between sessions to authorize the governor to spend the money.
Fund supporters say such measures throw out the good with the bad.
“We hope the people abusing this are fully held responsible, but it appears a program that is very beneficial locally is probably going away because of a few bad characters,” Thomas said.
AMERIWORKS’ PROPOSAL
Neal and the senator’s support for a grant for Ameri-Works was first mentioned to the Northwest district in an email by Neal on July 26, 2013, according to federal court documents related to Neal’s guilty plea. Records show AmeriWorks accepted the grant Sept. 26, incorporated Sept. 27 and deposited the $400,000 check Sept. 30.
Incorporating a company can be done in as little as one day in person at the Secretary of State’s office in Little Rock or two weeks by mail, according to a spokesman at that office. Cranford hasn’t returned repeated requests for comment since the Jan. 4 guilty plea of Neal. Cranford no longer resides at his address in Rogers, according to the current occupant. Cranford’s attorney in an unrelated civil matter agreed Thursday to get a message to his client, but no reply was received. Calls to both the Cranford Coalition, his lobbying firm, and his cellphone number as listed in the grant documents weren’t returned Friday.
AmeriWorks promised in its grant applications to train workers for 100 jobs in two years. More than half of those jobs would go to disadvantaged workers and veterans, according to the application. The project would train workers and would attract manufacturing jobs back to Northwest Arkansas from overseas, the application said. The grant was a portion of the project’s estimated $7 million budget, according to the application.
“AmeriWorks is uniquely positioned with its relationships with electronics manufacturers and human service providers,” the grant application said. “This allows the organization to meet employment needs and support workers who have historically struggled with obtaining or maintaining jobs.”
The application and supporting documents went on to say the project would need to buy $6 million worth of equipment for manufacturing, $300,000 for first-year building costs and $100,000 for miscellaneous equipment including a forklift. The capital would consist of private investment, tax credit incentives and money from job programs, the project description to the Northwest district said. The $400,000 in GIF money would go to building costs and the miscellaneous equipment.
Grant records dating back to January 2012 relating to Cranford were sought in an April 16 federal subpoena of the Northwest Arkansas Economic Development District. The subpoena asked for documents related to Cranford by name and “any entities known to be associated with him” including AmeriWorks. The subpoena also asked for information on any government grants and any legislator who sponsored them.
The Northwest district is one of eight in the state distributing General Improvement money. At least three of those have been served with federal subpoenas regarding money from the improvement fund to various recipients, their records show.
PROGRAM FIZZLES
The $400,000 from the Northwest district was returned Aug. 13, 2014, district records show. “The grant is being returned following many months of meetings with Arkansas Economic Development and our inability to identify and acquire the necessary facility,” said a letter to the Northwest district the same day from Cranford.
The Arkansas Economic Development Commission has no record of having met with AmeriWorks, a spokesman for the commission said. The agency did meet with a manufacturing company called Pro 1 in that time period, the spokesman said.
Cranford represented Pro 1 in those discussions, said Grant Tennille, then-director of the development commission.
“Yes, he was there, representing Tom and Bonitea,” Tennille said Wednesday. Tom and Bonitea Goss of Springfield, Mo., are board members of Pro 1.
“He was authorized to negotiate for their company,” Tennille said of Cranford. A very big part of the Pro 1’s push for money from the commission was they would employ veterans plus others, some of whom had difficulty finding employment because of head injuries or other disabilities, Tennille said.
“They were going to cooperate with Dayspring in finding workers,” Tennille said. Dayspring is a nonprofit behavioral health service provider.
The project fell through because it hinged on Pro 1 getting a large contract from Google, Tennille recalled. The company never qualified for the assistance from the development commission, he said. “We didn’t think they would get the capital infusion they would need, and it wasn’t going to come from the state,” he said.
AmeriWorks had no business address of its own and was having its grant correspondence sent to offices of Decision Point, a potential partner in work program, according to the Northwest district and secretary of state records. Grant checks for the $400,000 were sent to Decision Point’s then-business address in Springdale on Holcomb Street, according to the district.
The grant checks from the Northwest district for the program were made out to “Decision Point d/b/a Ameri-Works.” The check from the White River District was made out to “Decision Point.” Neither should have been the case, according to Decision Point’s parent company, Preferred Family Healthcare of Kirksville, Mo.
“I have no idea why there is ever a reference to ‘Decision Point dba AmeriWorks,’” said parent company spokesman Reginald McElhannon.
AmeriWorks was “a separate taxable nonprofit for the purpose of working with other area agencies to identify potential employees who met certain criteria that were often found unemployable or underemployed,” he said.
Some of the clients served by Decision Point were expected to benefit from the type of training AmeriWorks would offer, but Decision Point was never a partner, he said.
Decision Point never entered a partnership with AmeriWorks, returned the $400,000 in full and never paid any kickbacks, the parent company has said in a statement. The entities discussed a possible collaboration, but it never materialized, according to Preferred Family Healthcare.
Preferred Family became Decision Point’s parent company in 2015, after the events involving the grants. When asked for an interview with anyone who was a management member at Decision Point at the time when a collaboration with AmeriWorks was still an active prospect, Preferred Family replied with its statement instead.
Documents from Neal’s guilty plea say, “Following the receipt of Neal’s GIF money in the amount of $125,000, in return for Neal’s official actions to authorize and facilitate the appropriation of the GIF money” an unnamed state senator paid Neal $20,000 on behalf of another unnamed person.
The person who directed the kickback is described in Neal’s plea as “Person A.” Person A is described in the documents as the incorporator of “Entity A,” which received Neal’s grant from the Northwest district. The plea filing further identifies “Person A” as a registered agent and a member of the board of directors for Entity A. The plea also says, “Person A also worked as a licensed lobbyist in the State of Arkansas.”
CRANFORD AND DECISION POINT
Cranford served as an Arkansas lobbyist for Preferred Family Healthcare for years, according to a statement by the health care provider, which operates in five states.
Preferred Family became involved in Arkansas through a series of mergers. In 2011, the nonprofit corporation Alternative Opportunities merged with Decision Point. Both entities provided health services including treatment for substance abuse.
In 2014, Alternative Opportunities merged with Health Resources of Arkansas, another nonprofit. Similarly, Alternative Opportunities acquired Dayspring Behavioral Health Services in 2007. In all, these entities have 49 locations in Arkansas, according to the company’s website.
In 2015, Preferred Family Healthcare merged with Alternative Opportunities. The name Alternative Opportunities no longer exists while the other three brands — Decision Point, Dayspring and Health Resources — continue operating under Preferred Family Healthcare, according to the company.
Cranford “was an employee with Dayspring when it was acquired in 2007 and later provided executive leadership for our various Arkansas services,” according to Preferred Family. “Our organization also has contracted with Cranford Coalition for government relations services for many years.”
“In August, 2016, Rusty’s involvement with the organization transitioned, and he began providing both government relations and management services through a contract with Cranford Coalition,” the company said. “In January of 2017, his work through the contract with Cranford Coalition was placed on an inactive status.” The company’s statement didn’t give a reason for the change in status.
State Rep. Dan Douglas, R-Bentonville, said Feb. 11 he remembers attending a meeting three or four years ago to discuss a thermostat manufacturer locating in the Springdale area that would employ veterans and disabled workers. Douglas began his first term in 2013. He said the meeting was at the offices of the Northwest Arkansas Council, a group of business and community leaders, and Tennille attended.
Cranford was also present, Douglas recalled, saying the thermostats to be made would be state-of-the-art, able to be reset remotely through use of a phone app. Asked if he could recall the manufacturer’s name, Douglas said he had one of their thermostats installed in his home. He checked the device later and said it was a Pro 1 device.
The development commission confirmed Monday at least two meetings between Pro 1 and commission staff took place in February 2014, but the project never proceeded. According to Douglas, he inquired about the project later in 2014 and was told by Tennille the number of jobs and the wages it would pay didn’t meet the threshold for the commission’s grants.
Tom Goss, who Tennille described as board member of Pro 1, referred all questions Monday to Jane W. Duke of Little Rock, his attorney. Goss is also listed as the chief financial officer for Preferred Family Healthcare, according to his biography on the Pro 1 website. Bonitea Goss is chief operating officer for Preferred Family, according to the same website. Both are named as members of the leadership team on Preferred Family Healthcare’s website.
Duke represents Tom Goss individually and AmeriWorks, she said. She confirmed Goss is chief financial officer for Preferred Health. Ameri-Works and Tom Goss were aware Cranford was seeking GIF money on behalf of Ameri-Works, but “my client knows absolutely nothing about the ‘kickbacks’ to which former Representative Neal has pledguilty to receiving, nor does my client know anything about kickbacks alleged paid to anyone else in state government.”
Doug Thompson can be reached by email at [email protected] or on Twitter @NWADoug.