Grants from the General Improvement Fund obtained through bribes to Arkansas lawmakers by a former lobbyist followed two distinctly different paths through state government, court records show.
Hank Wilkins, a former state representative and Jefferson County judge, admitted in federal court filings in April he took bribes from Milton R. "Rusty" Cranford. In exchange he funneled state General Improvement Fund dollars to entities affiliated with the lobbyist and his firm and supported legislation Cranford favored. Court documents say Wilkins directed the improvement money through a division of the state Department of Human Services.
In Northwest Arkansas, former lawmakers Micah Neal and Jon Woods directed General Improvement Fund money to Cranford's fledgling company, AmeriWorks, using one of eight economic development districts in the state. Those were the type of grants controlled by individual lawmakers whose wishes were rubber-stamped by district boards, according to both testimony in Woods' case in federal court and an Oct. 5 ruling by the state Supreme Court. The Supreme Court declared this method of awarding grants unconstitutional.
Neal pleaded guilty to federal charges of accepting kickbacks in exchange for directing grants. Woods was convicted of similar charges in a federal court trial last month. All three former lawmakers are awaiting sentencing.
Cranford sits in a Springfield, Mo., jail, awaiting trial on federal bribery and corruption charges in that jurisdiction. He hasn't been charged in Arkansas. His next court appearance is set for Thursday in Springfield.
Unlike the grants in the Woods and Neal cases, the source of at least $245,065 in bribe-tainted grants supported by Wilkins was under the direct supervision of Human Services, according to his guilty plea.
Wilkins controlled a $345,000 share of Improvement Fund money put into the state's Drug Abuse Prevention and Treatment Fund in 2013, according to his plea. The Division of Behavioral Health Services of the state Department of Human Services administers the fund. The fund provides grants to nonprofit entities around the state to curb drug abuse. The fund accepts money from a variety of sources besides the improvement fund. Those sources include general revenue, federal block grants and money from charitable organizations, state records show.
Wilkins wrote letters of recommendation to the division that, in effect, told the state agency to approve grants in 2013 out of the Improvement Fund money he steered into the account, according to his plea documents.
"In regard to legislators' input and recommendations, there probably was a time where those carried quite a bit of weight during the process," the Human Services Department said in a statement. "As years passed, there were also requests for applications put out that had specific requirements and applicants could include letters of support from local, county, or state officials as a part of the overall application that DHS would take into account."
"Legislators' input"
State records obtained by the Northwest Arkansas Democrat-Gazette through the Freedom of Information Act show all three former Arkansas lawmakers convicted of taking bribes from Cranford -- Wilkins, Woods and Neal -- were among the 15 lawmakers who wrote letters to Behavioral Health Services in support of specific grants.
All but nine of the 24 letters of recommendation provided under FOIA were for facilities either managed by Cranford or represented by him as a lobbyist, as those entities are identified in Wilkins plea documents. Both of Woods' letters of support and the one such letter from Neal were for Cranford-related entities, their letters show.
Two letters from Wilkins also supported grants to Cranford-related entities, state records and his court documents show. Another letter of recommendation mentioned in Wilkins' plea documents is an Oct. 31, 2013, letter from Wilkins supporting a grant to United Family Services, a Pine Bluff-based nonprofit group.
Cranford is under federal indictment in Missouri but faces no criminal charges in Arkansas. His attorney, Nathan Garrett of Kansas City, Mo., declined comment on behalf of his client. Neal's attorney, Shane Wilkinson of Bentonville, said his client has cooperated fully with authorities and given all the information he has to investigators. Attorneys for Woods and Wilkins didn't reply to requests for comment.
The Northwest Arkansas Democrat-Gazette's FOI request asked for all letters of recommendation from lawmakers since 2007 on how money from the drug fund should be spent. That request produced electronic copies of 24 letters, with 15 different legislators who signed at least one. All 24 were dated within week of each other from Oct. 25 to Nov. 1, 2013.
General Improvement Fund money has been the source of all the bribe-tainted grants mentioned in the Wilkins, Woods and Neal cases as outlined in federal court documents, whatever channel the grants flowed through. The improvement fund consists mainly of unspent taxpayer money at the end of the state's two-year budget cycle. The fund also includes interest earned on state accounts. In effect, it is the remainder or residue of the state's budget.
The drug fund received $2.95 million in General Improvement Fund money from legislators in 2013 -- almost half of the $6.3 million total the fund received from that source between 2007 and 2017, state records show. Woods was the sole sponsor Act 791 of 2013, legislation that put $2 million of the $2.95 million in the drug account that year, legislative records show.
Woods and Neal, both of Springdale, await sentencing on federal charges. They accepted a kickback for steering $400,000 in grants to AmeriWorks. Those 2013 grants were administered by the Northwest Arkansas Economic Development District, based in Harrison.
The second path
Wilkins of Pine Bluff also awaits sentencing for accepting bribes for favoring legislation and grants supported by Cranford.
Wilkins' plea documents didn't name Cranford, but a March 16 court hearing in a related case did. Cranford faces one count of conspiracy and eight counts of accepting bribes brought by the U.S. Attorney's office in the Western District of Missouri. His payment of bribes to Wilkins came up in Cranford's bail hearing.
The plea documents describe three incidents in which Wilkins received payoffs in return for grants. Two involve Cranford and one did not, the plea documents say. All involved letters of recommendation written to Behavioral Health, the plea says.
Wilkins' letters sought grants for: Dayspring, a behavioral health services provider based in Bentonville with facilities around the state; the now-bankrupt South Arkansas Youth Services, a nonprofit program for delinquent and at-risk youth based in Magnolia; and United Family Services, a nonprofit corporation set up in 1991 to provide training, mental health services, substance abuse assessments and anger management for youth released from the Division of Youth Services of the Human Services Department.
Dayspring received $122,565 while $61,282 went to South Arkansas Youth Services from the drug prevention fund, Wilkins' plea documents show. United Family Services received $61,218.
Cranford was the Arkansas director of Dayspring's parent company at the time. He represented both Dayspring's parent company and South Arkansas Youth Services as a lobbyist at the time. Dayspring's parent company also oversees Decision Point, a Bentonville-based nonprofit group that provides treatment for drug and alcohol abuse.
Of the 24 letters of support from lawmakers sent recommending grants from the drug fund, six supported Decision Point, five supported South Arkansas Youth Services and four supported Dayspring. Woods and Neal wrote one letter each supporting Decision Point. Woods wrote one supporting South Arkansas Youth Services.
The Magnolia-based youth services group filed for bankruptcy in January, has ceased operations and is under FBI investigation, bankruptcy court filings show.
The Pine Bluff-based organization -- identified only as "Entity E" in Wilkins' plea documents -- "deposited $20,000 into the discretionary account controlled by Wilkins," those documents say. "Entity E" made its deposit on or about Oct. 1 of 2013, the plea document says.
"I cannot comment on that," Levi Thomas, executive director of United Family Services, said Thursday.
How Wilkins' share got to the drug fund
Wilkins was indirectly responsible for getting $365,000 of General Improvement Fund money into the drug fund and had control of who was awarded grants out of that sum, according to an email sent by Cranford to an executive at Dayspring's parent company. The email was quoted in Wilkins' plea documents.
Another legislator sponsored the bill sending the $365,000, but the sum was "Senator WILKINS money," the email said.
The legislator sponsoring Act 818 of 2013, the bill that authorized the money going into the drug fund, was Sen. Eddie Cheatham of Crossett. "What happened was that I filed an appropriation bill for the drug fund, and House members who wanted to earmark money for the fund would put money into it," Cheatham said Wednesday.
What Cheatham described is a regular legislative procedure. Appropriation bills legally authorize spending for a specific purpose if money is available. Budget bills decide which appropriation bills get taxpayer money into the accounts. In layman's terms, an appropriation bill opens an account. A budget bills put money into the account.
"Most of my money went to the University of Arkansas at Monticello," Cheatham said of his share of 2013's General Improvement Fund appropriation. House members put money into the drug fund, as authorized by Act 818, he said. Wilkins convinced a variety of legislators to contribute some part of their Improvement Fund money to the drug fund, Cheatham said.
Gov. Asa Hutchinson included no improvement money to be distributed by lawmakers in his 2017 budget proposal after Neal pleaded guilty. He has stated publicly he will oppose any such spending in the future.
"GIF money is history and is no longer and is not going to happen. Period," Hutchinson said in April.
Health care providers formerly administered in Arkansas by Cranford were put under increased scrutiny in February, according to the governor's office. Those entities, which are now part of Preferred Family Healthcare of Springfield, Mo., must provide data on both services rendered and administrators' finances on a monthly basis, the governor's office confirmed in March. Those facilities are also "subject to at least one unannounced visit each month to both the administrative sites and program services sites," the March statement said.
Preferred Family removed Cranford as an executive after Neal's plea and also stopped using him as a lobbyist, the company said shortly afterward that plea last year. It has cooperated fully with federal investigators and state regulators since the first graft allegations came to light and removed management members believed to be involved, the company said. On Friday, the company confirmed there was no relationship between Preferred Family and South Arkansas Youth Services.
NW News on 06/03/2018