Filing: Nonprofit funds milked for lobbying

Almost $1 million was skimmed from a Missouri-based nonprofit by three company executives, two associates in Arkansas and a consultant from Philadelphia in a political influence-peddling scheme that reached all the way to Congress, according to a federal guilty plea entered Monday.

Alternative Opportunities, now known as Preferred Family Healthcare, of Springfield, Mo., is the nonprofit organization involved. The company is also connected to a federal kickback case in Arkansas involving former state Sen. Jon Woods of Springdale.

In a third case, it was the target of embezzlement by a former board member who in June pleaded guilty in Missouri to taking almost $2 million.

Donald Andrew “D.A.” Jones, 62, of New Jersey pleaded guilty Monday in U.S. District Court in Missouri to one count of conspiring with others to defraud the company now known as Preferred Family, which receives private donations along with

taxpayer money.

Money taken from the nonprofit organization was used to illegally lobby and make campaign contributions to get more federal and state support, the plea agreement says. Such lobbying and contributions are strictly forbidden to nonprofit corporations. The activity occurred as recently as January of this year, according to the plea agreement.

Jones was a political consultant based in Philadelphia, where he owned and operated D.A. Jones and Associates.

The company, then Alternative Opportunities, also was used to pass along kickbacks from Arkansas General Improvement Fund grants to AmeriWorks, a job-training firm, according to a federal indictment in Arkansas charging Woods with fraud. Woods is set for trial April 9 in that case.

In part, Woods is accused of arranging $400,000 from the state’s improvement fund for AmeriWorks, a Bentonville-based nonprofit that used the name, the address and the staff of an affiliate of Alternative Opportunities.

Former state Rep. Micah Neal, R-Springdale, pleaded guilty Jan. 4 to his part in the Arkansas scheme. The two also passed state grants to Ecclesia College in Springdale in return for kickbacks, according to the Arkansas indictment.

Milton “Rusty” Cranford, formerly of Rogers, signed the $400,000 Arkansas grant application on behalf of AmeriWorks in 2013. AmeriWorks got the grant for job training two months before it incorporated, secretary of state records show. In the Arkansas grant documents, Cranford identified himself as the director of Alternative Opportunities in Arkansas and the chief executive of AmeriWorks.

Woods and Neal’s grants came through the Northwest Arkansas Economic Development District in Harrison, grant records there show. The $400,000 in grants were returned after federal investigators started asking questions, according to federal court documents in Arkansas and grant records.

Preferred Family Healthcare Inc. merged with Alternative Opportunities on May 1, 2015. Alternative Opportunities acquired Preferred Family but assumed the Preferred Family name. The group oversees counseling, substance abuse treatment and other services throughout Arkansas and other states. Subsidiaries include Decision Point and Dayspring.

“It is important to note that PFH is not a target of the government’s investigation,” company spokesman Reginald McElhannon said in a statement Monday. “We take seriously the allegations that individuals associated with AO may have engaged in unlawful activity unbeknownst to the rest of the organization. PFH is working with the government to fully understand the allegations and take any additional steps, as appropriate.”

Jones conspired with at least four others to embezzle, steal, obtain by fraud or otherwise unlawfully obtain funds from the nonprofit totaling $973,807.28 from April 2011 until January of this year, his plea agreement states.

Three executives of the nonprofit and a lobbyist from Rogers used funds for political contributions and other unlawful lobbying and “political advocacy,” the plea agreement says. That influence was used to obtain more donations and taxpayer funds that could be skimmed, the plea says. The plea document does not name the three executives at the charity.

Preferred Family confirmed last month that its chief operating officer, its chief financial officer and another executive were placed on administrative leave, but it declined further comment. Those executives are: Bontiea Goss; Tom Goss, who is Bontiea’s husband; and Marilyn Nolan, a member of the senior management team.

A fourth person, whom Jones’ plea agreement refers to as “Person 4,” was a resident of Rogers who was a lobbyist and an employee of the charity.

Someone identified as “Person 7” in the plea is a resident of Melbourne who was an Arkansas legislator from 2006-11, the plea agreement states.

The Gosses and Nolan founded the Alternative Opportunities operation in Arkansas in 2006, secretary of state’s office incorporation records show. Also shown on those incorporation papers as a director is Eddie Cooper.

The state representative from Melbourne at the time the alleged scheme in Missouri began was Eddie Cooper. He served from 2005-11. He is currently director of Dayspring Behavioral Health Services and a consultant for the Cooper Cranford Agency, a lobbying firm, according to his professional profile. He was also a lobbyist for the Cranford Coalition, Cranford’s lobbying firm in Little Rock, according to records at the secretary of state’s office.

The guilty plea also lists “Entity E,” a Missouri-based corporation that “was in the business of re-packaging and selling indoor thermostats imported from China.” Those identified as Person 1 and Person 2 owned a combined 45.1086 percent share of Entity E, and a relative of Person 2 owned another 45.1086 percent.

Tom and Bontiea Goss are board members of Pro 1, a thermostat company in Springfield, according to corporate records posted earlier this year. Cranford represented the Gosses and Pro 1 in meetings with the Arkansas Economic Development Commission and local lawmakers in efforts to obtain support from the state agency, former Arkansas Economic Development Commission Director Grant Tennille said in an interview earlier this year.

Jane Duke of Little Rock, attorney for Tom Goss and formerly of AmeriWorks, did not reply to an email request for comment late Monday.

Under the Alternative Opportunities and Preferred Family names, the company received more than $620.5 million in state and federal taxpayer money through Medicaid reimbursements from Arkansas, Kansas, Missouri and Oklahoma from 2011-16, the plea document says. The companies also received another $53.4 million in federal taxpayer funds through various grants, contracts, loans and other means from 2010-15, according to the plea.

Additionally, Persons 1 through 4 “concealed, covered up and falsified evidence” to maintain the charity’s tax-exempt status, the document states. The money taken was listed as consulting or training costs.

Jones was one of the consultants to whom fees were passed through in the scheme, the plea states.

The consulting agreement with Jones was a “sham,” with Jones paying kickbacks to Persons 1 through 4 and keeping a portion for his firm, the plea reads. “Also, at the request of Person 4, Jones would and did make two payments to Person 7.”

Favors obtained by use of political influence improperly gained by the scheme included the calling-off of a 2010 IRS audit of Alternative Opportunities on overtime pay, the plea states. This was done through influence with unnamed U.S. senators and representatives, it says.

The charity used its political influence after the 2011 tornado in Joplin, Mo., to obtain federal money, the document reads. It tapped federal emergency relief funds not normally accessible to the counseling service, the plea says.

Jones hand-delivered political contribution checks to supportive congressmen, it says.

Jones also used the influence the charity paid for to help “Entity E regarding a shipment of thermostats from China that was being held by U.S. Customs in Kansas City, Mo.,” the plea reads.

In the third related federal case, David Carl Hayes earlier this year pleaded guilty in Missouri to charges including theft from Alternative Opportunities. Hayes was Alternative Opportunities’ coordinator of merger and acquisition activity from 2006-13, according to court documents.

“Doing business as Dayspring Behavioral Health Services, Alternative Opportunities operated dozens of clinics throughout the state of Arkansas. Hayes embezzled from Dayspring from Jan. 3, 2011 to March 31, 2014, by causing Dayspring to issue checks payable to himself or a person not identified in court documents, which Hayes deposited into his personal checking account,” according to court documents.

Hayes, who pleaded guilty June 12, was found dead at his Missouri farm in November in what authorities described as a suicide.