Tom and Bontiea Goss conspired with then-state Sens. Jeremy Hutchinson of Little Rock and Jon Woods of Springdale in the bribery and kickback scheme that has led to convictions of four former Arkansas lawmakers so far, according to a federal grand jury indictment of the couple unsealed Thursday.
Mr. and Mrs. Goss along with Hutchinson were charged with a total of 32 counts including conspiracy, theft and bribery by a federal grand jury in Missouri in these latest allegations. These new counts say illegal campaign contributions went to lawmakers in both Arkansas and Missouri.
Hutchinson, who is the governor's nephew, already faces tax and improper campaign spending charges in federal court in Little Rock.
The Gosses diverted unspecified millions in taxpayer money from the nonprofit company Preferred Family Health, according to the 85-page indictment. Tom Goss was chief financial officer and Bontiea Goss was chief operating office at the time.
State and federal money intended to aid the addicted and others in need of counseling went instead to pay for bribes, kickbacks, and illegal lobbying and campaign contributions in both Arkansas and Missouri.
Money taken from Preferred Family also paid for warehouse space for a Goss-owned for-profit business; for interest-free loans to their businesses; for chartered airplane flights, luxury real estate and trips to major league baseball games; for housecleaning; and for someone to walk the Gosses' dogs, the indictment alleges.
The scheme continued for a dozen years, according to the indictment. Besides the money, the Gosses also orchestrated in-kind contributions to candidates such as organizing fundraisers and arranging catering for those events. Employees used company credit card for arranging such events, the indictment says.
The Gosses paid their bribes and made their illegal campaign donations largely through their company's lobbyist in Arkansas, Milton R. "Rusty" Cranford of Bentonville, according to court records. Cranford pleaded guilty in the matter June 7. That plea publicly implicated Hutchinson for the first time.
Others who have been convicted or pleaded guilty in the scheme include former Arkansas Sen. Jon Woods of Springdale, former state Rep. Micah Neal of Springdale, former state Rep. Eddie Cooper of Melbourne, and former state Sen. Henry "Hank" Wilkins of Pine Bluff.
The latest indictment charges the Gosses and Hutchinson with one count of conspiracy each. Bontiea Goss faces two counts of bribery, 13 counts of fraud and three counts of false tax returns. Tom Goss faces six counts of bribery, 12 counts of fraud and four counts of false returns. Hutchinson faces three counts of bribery and seven counts of fraud.
The indictment springs from a federal investigation active for two years in both Arkansas and Missouri, according to court records.
The corruption scheme began in 2005 and continued until November 2017 when the Gosses and co-conspirators in the company were fired by the company's board, according to an earlier statement by the nonprofit.
Tom Goss helped found Alternative Opportunities Inc. in 1991 after relatives struggled with drug and alcohol addictions, according to news reports and company history.
Alternative Opportunities took over Preferred Family Healthcare of Kirkland, Mo. in a 2015 merger and now goes by that name.
Under the Gosses, the company grew into the largest Medicaid recipient for behavioral health services in Arkansas, receiving at least $71 million in 2017. Between fiscal years 2011 and 2018, Arkansas paid the company more than $245 million for Medicaid mental health services.
Preferred Family lost its state contracts in the scandal in 2018 and sold its remaining Arkansas assets. The company is suing the Gosses for losses it suffered in the scheme.
Hutchinson helped the company get favorable legislation and Medicaid rules in his role as senator, the indictment says. He steered state grants to the nonprofit, according to the indictment.
In return, Bontiea Goss authorized the company to pay Hutchinson, who is a lawyer, a retainer for legal work he did not do, according to the indictment.
Preferred Family paid Hutchinson more than $350,000 from 2013 to 2017 for the legal work, fictitious or not, the indictment says.
The allegation Hutchinson didn't perform the work for which he was paid has been made in related cases. Hutchinson denies the allegation.
The Gosses encouraged employees to make political contributions to favored candidates and then reimbursed those employees through fake expense reports for training costs and other business-related expenses, the indictment says.
Federal law prohibits tax-exempt 501 (c)(3) companies like Preferred Family from making campaign contributions or taking part in significant lobbying activities.
More than 25,000 clients in Arkansas received mental and behavioral health services from Preferred Family in 2017, its last full year of operations here, according to the company.
An additional 3,300 clients received substance abuse treatment through the various programs offered by Preferred Family. The company had 187 residential treatment beds in Arkansas before selling its Arkansas assets to Quapaw House, a nonprofit company based in Hot Springs.
"The Senate commends Alternative Opportunities for its hard work and dedication," reads Senate Resolution 31 of 2013 -- sponsored by Hutchinson.
The April 3, 2013 resolution commends the business for starting the Alex Recovery High School in Bentonville. The school was established at Decision Point, a treatment center that was part of Alternative Opportunities at the time.
The Gosses' son, Alex Levin Goss, died of a drug overdose in 2011 at the age of 23, according to news accounts.
Federal investigators met with Preferred Family's lawyers and described their findings to them in October 2017, according to court records.
Both the Gosses, along with Preferred Family's then-CEO Marilyn Nolan of Springfield, were fired by the nonprofit's board shortly after being placed on administrative leave in November 2017, according to statements at the time from the company.
Nolan pleaded guilty in November of 2018 to one one count of conspiracy in federal court in Springfield.
Nolan admitted working with other company executives and political lobbyists to bribe Arkansas lawmakers to influence legislation and rule making for the state Medicaid program to boost company profits.
She also admitted she and those other executives, including company Chief Clinical Officer Keith Noble, stole millions from the nonprofit for illegal lobbying, campaign contributions and personal use.
Three other Preferred Family executives have pleaded guilty in the investigation.
Nolan's plea describes how, from 2008 until June 30, 2017, she conspired with Cranford, Noble and other company executives to "embezzle, steal, obtain by fraud, and without authority knowingly misapply and convert to their use" property belonging to the nonprofit.
Preferred Family used for-profit companies owned by the same top executives to buy, sell and rent the company's assets and generate millions in illegal profits, according to the indictment.
Those profits went to a group of company insiders, including Nolan, that were dubbed the "Resource Team," according to guilty pleas and the indictment. Federal information outlining Nolan's crimes said she alone received more than $4.1 million.
Preferred Family filed a lawsuit in September in Missouri against the four executives, for-profit companies they controlled and Cranford, accusing the defendants of "a series of fraudulent acts, embezzlements, and improper self-serving transactions" amounting to millions of dollars.
Federal offices and agencies involved in the investigation:
U.S. attorney for the Western District of Missouri
Public Integrity Section of the U.S. Department of Justice
U.S. attorney for the Western District of Arkansas
U.S. attorney for the Eastern District of Arkansas
IRS Criminal Investigation Division
Office of Inspector General of the U.S. Department of Justice
U.S. Department of Labor
U.S. Department of Veterans Affairs
The Federal Deposit Insurance Corp.
Source: U.S. Department of Justice
NW News on 04/12/2019