Former Arkansas state Sen. Jeremy Hutchinson and two former top executives of a Missouri behavioral health provider pleaded innocent Thursday in Springfield, Mo., to federal charges lodged in connection with a yearslong investigation into political corruption in Arkansas and Missouri.
Hutchinson, a Little Rock Republican, is charged with accepting bribes from Preferred Family Healthcare Inc. executives over a five-year period in exchange for influencing state legislation and regulations in the nonprofit's favor.
A former head of the state Senate Judiciary Committee, Hutchinson resigned last year after being indicted in a separate case in federal court in the Eastern District of Arkansas.
An 85-page indictment unsealed Thursday charges Hutchinson, 45, with 12 counts, including one count of conspiracy, one of receiving bribes, three counts of theft from a program receiving federal funds and seven counts of honest-services fraud.
Charged in the same indictment were Tom Goss and Bontiea Goss, both 63, a husband and wife who formerly held two of the most powerful jobs at the Springfield nonprofit. The firm collected $245 million from the Arkansas Medicaid program for outpatient mental health from 2011-18.
Tom Goss, formerly chief financial officer, and Bontiea Goss, former chief operating officer, are accused of conspiring with others, including Hutchinson at times, to embezzle and defraud the nonprofit and corrupt public officials.
Aside from conspiracy, Bontiea Goss was charged with 21 other crimes: three counts of theft from a program receiving federal funds, two counts of paying bribes, 11 counts of honest-services fraud, two counts of wire fraud and three counts of preparing and presenting false tax returns.
Tom Goss faces 23 other federal charges: three counts of theft from a program receiving federal funds, three counts of paying bribes, five counts of honest-services fraud, eight counts of wire fraud and four counts of preparing and presenting false tax returns.
The indictment also contains a forfeiture allegation that would require the Gosses and Hutchinson, if found guilty, to forfeit any property obtained from the alleged offenses.
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The federal investigation into former officials of Preferred Family and Hutchinson is part of a larger federal public corruption investigation in Arkansas and Missouri that has ensnared at least five former Arkansas lawmakers, a former private college president, and former Arkansas Capitol lobbyist and Preferred Family executive Milton "Rusty" Cranford.
Hutchinson, nephew of Gov. Asa Hutchinson and son of former U.S. Sen. Tim Hutchinson, is accused of accepting "cash, checks, wire transfers, retainers, attorney's fees and professional referrals" from Preferred Family executives from 2012 to 2017.
The indictment doesn't list total dollars allegedly paid to Hutchinson. It does say the nonprofit paid Hutchinson up to $9,000 per month over multiple years and funneled more payments to him through other channels.
[DOCUMENT: Read the indictment]
Hutchinson and the Gosses were part of a "multi-million-dollar public corruption scheme that involved embezzlement, bribes and illegal campaign contributions for elected public officials in Missouri and Arkansas," U.S. Attorney Tim Garrison of the Western District of Missouri said in a statement Thursday.
Jeremy Hutchinson, arraigned and released on his own recognizance Thursday in U.S. District Court in Springfield, "will be exonerated after trial," one of his lawyers, Marc Mukasey of New York, said Thursday.
Hutchinson was charged Aug. 30 in federal court in the Eastern District of Arkansas on 12 counts of wire and tax fraud, accusing him of misspending campaign donations and underreporting his income on federal tax forms.
He has pleaded innocent and has asked a federal judge to dismiss those charges because of governmental misconduct. A decision is pending.
Hutchinson's father released this statement: "I reaffirm my total belief in Jeremy's innocence. This case should never go to a jury, but I am confident that when a jury hears the facts, Jeremy will be exonerated. The government's motivation and good faith are called into question where they employ the tactic of charging Jeremy in a separate jurisdiction once their first case appears to be in jeopardy."
Attorneys representing Bontiea and Tom Goss released separate statements Thursday afternoon. Both said their clients did not "knowingly or intentionally" violate any law.
"We look forward to finally having an opportunity to bring to light additional information that will provide a much different narrative," said attorney Melanie Morgan of Kansas City, Mo., who represents Bontiea Goss.
Preferred Family Healthcare, known as Alternative Opportunities before 2015, first entered Arkansas with its late 2007 acquisition of Dayspring Behavioral Health, a for-profit network of outpatient clinics here and in Oklahoma.
JEREMY HUTCHINSON
The indictment says Hutchinson, who served more than 15 years in the Legislature as a representative and senator, stalled agency budgets, requested legislative audits, sponsored, filed, amended and voted on legislation favorable to Preferred Family and its executives.
Hutchinson also supported awarding state General Improvement Fund grants to the charity, Cranford clients and others, the indictment says.
Hutchinson was hired by the charity between January and March 2013, and Cranford met with Bontiea Goss to discuss the addition.
"Cranford and B. Goss specifically discussed hiring Hutchinson, in part, because of his status as an Arkansas Senator and because of the favorable legislative and official acts Hutchinson could perform on behalf of the charity," the indictment says.
About that time, the charity paid for hotel rooms for Hutchinson to attend Major League Baseball games.
The charity started in 2013 paying Hutchinson $7,500 per month, and beginning in May 2014 through 2017, raised that to $9,000 per month, the indictment says.
Cranford and another Preferred Family employee, described in the indictment as "Person 9," also set up an entity called Alliance Health Care Improvement and other, similar names, to funnel additional payments to Hutchinson, according to the indictment.
Though it doesn't name "Person 9," the indictment says that person registered Alliance for Health Improvement as a nonprofit with the Arkansas secretary of state on Dec. 29, 2017.
State records show the incorporator, organizer and registered agent was Robin Raveendran, a former Preferred Family employee and also a former employee of the Arkansas Department of Human Services.
Raveendran was arrested in June 2018 on two state felony counts of Medicaid fraud and pleaded innocent.
Investigators in Arkansas Attorney General Leslie Rutledge's office accused him of directing Preferred Family employees to file forged claims totaling $2.3 million between January 2015 and October 2017.
The state case against Raveendran, filed in Independence County Circuit Court, is pending, according to an employee in the clerk's office.
With Thursday's charges, Hutchinson, a lawyer himself, is faced with mounting legal defenses in U.S. District Court in Little Rock and in Springfield. Court documents show he has a three-lawyer team including Mukasey and Tim Dudley of Little Rock.
Gov. Asa Hutchinson's office urged the public to be patient as the cases play out in court.
"Today's indictment in Missouri is another sad day in Arkansas," the governor's statement said. "The allegations are very serious. As a public official, I am concerned with any allegations of wrongdoing by elected officials. As an Uncle, I continue to pray for Jeremy and know that he seeks his day in court. I am hopeful that everyone will let the criminal justice system work and wait to draw conclusions until such time as all the facts are known."
THE GOSSES
Many of the specific allegations against Bontiea and Tom Goss first surfaced in other cases related to the investigation, including guilty pleas last year entered by former Preferred Family chief executive Marilyn Nolan and former chief clinical officer Keith Noble.
But the new indictment also includes new details -- their dogs, named Daisy and Boo Boo, flown back and forth from a home in Colorado on nonprofit-funded charter flights, for example.
The indictment additionally quotes from previously unreleased text and email communication.
In October 2015, for instance, an unnamed Preferred Family employee told Tom Goss that the nonprofit's auditing firm wanted to send a letter to Jeremy Hutchinson to ask about any pending or potential litigation.
Hutchinson "doesn't work for us in a legal capacity though," Goss responded, according to the indictment. "He is a consultant. There is no need for the letter since he doesn't provide legal services."
Goss told the employee Cranford would answer the auditors' questions, according to the indictment.
Among the allegations against Bontiea and Tom Goss are that they used the nonprofit's money to:
• Excessively pay, prop up and provide interest-free loans to their for-profit companies.
• Pay marked-up vehicle leasing fees to their company, called White Dog Asset Holding, which had leased the vehicles from a third party. Over four years, the nonprofit paid $2 million to lease the vehicles from the Gosses' company, which had paid $1.1 million to the third party for the same vehicles.
• Spend more than $1 million on renting residential and recreational real estate owned by White Dog Asset Holding. The real estate, which included Arkansas properties referred to as "the Mountain House" and "the Lake House," were "unrelated" to the nonprofit's mission, the indictment says.
• Pay for chartered flights for themselves, family members and pets, as well as other personal services such as housekeeping, grocery delivery and shoveling snow.
• Improperly fund political campaigns, through direct contributions and in-kind fundraisers, in violation of laws limiting the political activity of nonprofits.
• Bribe Hutchinson for favorable legislative action and former Sen. Jon Woods for steering grant money to the nonprofit. Woods was convicted last year on fraud and money-laundering charges.
Tom Goss additionally participated in kickback schemes with the nonprofit's Arkansas lobbyist, Cranford, and national political consultant D.A. Jones, the indictment says, detailing that Cranford and Jones' firms paid Goss a cut of the money they received from Alternative Opportunities, the Gosses' predecessor company.
Cranford and Jones have separately pleaded guilty to federal bribery and conspiracy charges, respectively.
No current or former Missouri lawmakers have been charged.
Preferred Family/Alternative Opportunities through Cranford developed a leading voice on the state's mental health policies, successfully defeating proposals that would have cut into their business, the Arkansas Democrat-Gazette previously reported.
Alternative Opportunities drew vast wealth from a near-monopoly on Arkansas' Medicaid-funded outpatient mental health services, milking a program state regulators knew was flawed but were unable to fix, the newspaper found last year.
From fiscal 2011 to 2018, Alternative Opportunities/Preferred Family's $245 million in Medicaid payments from Arkansas were a third more than the state's second-largest provider over that span, according to state data.
Alternative Opportunities in 2014 acquired Health Resources of Arkansas, a community mental health center with a network of outpatient mental health clinics. One year later, it merged with Kirksville, Mo.-based Preferred Family Healthcare.
The Preferred Family name survived the transaction, but former Alternative Opportunities executives took on similar roles at the united nonprofit.
The firm at its peak in 2016 received $43.9 million from the Rehabilitative Services for Persons with Mental Illness program -- or one in every seven dollars Arkansas spent on outpatient mental health that year.
Preferred Family fired former Alternative Opportunities executives, including the Gosses, early last year and has sought to distance itself from the former executives. It filed suit against several former executives and workers on Sept. 28.
The company said in a statement Thursday that it has "cooperated fully" with the investigation.
Preferred Family sold its Arkansas properties to Hot Springs-based Quapaw House Inc. last year after the state suspended the Missouri nonprofit from participating in the Medicaid program.
The indictment unsealed Thursday is the most comprehensive so far in outlining alleged political corruption and other wrongdoing in Arkansas and Missouri.
Don Ledford, spokesman for the Missouri Western District U.S. attorney's office, said the investigation is ongoing.
Information for this article was contributed by Doug Thompson of the Northwest Arkansas Democrat-Gazette.
A Section on 04/12/2019