2019-11 November Newsletter - Kentucky
ETHICS REPORTER
November, 2019
Kentucky Legislative Ethics Commission
22 Mill Creek Park, Frankfort, Kentucky 40601-9230
Phone: (502) 573-2863
Fax (502) 573-2929
Two-year registration for lobbyists and employers opens on December 1, 2019
Employers’ and legislative agents’ registration with the Legislative Ethics Commission will expire on December 31, 2019. Check the Ethics Commission’s website for the Initial Registration Statement for the two-year period beginning January 1, 2020 and ending on December 31, 2021. For your convenience, we sent out an email mid-November with instructions and forms attached.
Beginning December 1, 2019, the Commission will accept completed registrations. Initial registration forms CANNOT be filed online.
A registration fee of $250 must be paid by the employer of one or more legislative agents. This fee may be paid by cash, check, Visa, MasterCard, American Express, or Discover. If the registration is mailed with a check, the check should be payable to Kentucky State Treasurer.
If paid by credit card, the registration may be faxed, or scanned and e-mailed, along with the completed credit card form. The Initial Registration Statement may be copied.
Please remember the employer must sign the registration form of each legislative agent. If more information is needed, please contact the Commission at (502) 573-2863, or e-mail Donnita.Crittenden@lrc.
Mandatory Current Issues Seminar for Legislators-January 8 & 9, 2020
All General Assembly members are required to attend the annual Current Issues Seminar on January 8 and 9, 2020, from 9 to 10:30 a.m., in the Capitol Annex. This 3 hour training will cover Kentucky’s legislative ethics law, real-life scenarios, and legal issues relating to ethics.
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New study shows decline in legislative civility
IDAHO- Idaho Press -By Betsy Z. Russell – November 19, 2019
Civility has declined at the Idaho Legislature, but not as much as in other states or in Washington, D.C., according to a new study released Tuesday at Boise State University.
BSU researchers joined those from 10 other universities around the nation in the study, which was led by Washington State University and funded by the National Institute for Civil Discourse and WSU. It surveyed more than 1,300 lobbyists who work in state legislatures in all 50 states, and followed up on a survey three years earlier of legislators themselves.
Boise State University political scientist emeritus Gary Moncrief, who participated in the study, said, “Everyone said, ‘Yeah, we’re better than D.C., and that’s because we have to do a budget every year, and it has to be balanced.’ … Most people don’t appreciate that.”
The survey showed Idaho isn’t immune to a national trend toward less civility, less compromise and more polarization in civic discourse, accompanied by declining trust in U.S. government institutions.
“There’s a broad feeling that something’s wrong, that something’s broken,” said Nicholas Lovich, the lead researcher and an emeritus professor at WSU, “that we used to do things in a way that wasn’t so nasty and wasn’t so horrible.”
The study explored whether the gridlock that’s emerged in Congress is beginning to infect state legislatures, and it found that, at least in the view of lobbyists, it has started to, but to a much lesser extent. The lobbyists who were surveyed represent a wide array of interests, from contract lobbyists for private business interests to those representing agencies, non-profits and public interest groups.
Asked to rate their state’s most recent legislative session on a scale of 1 to 10 for the general civility of legislators, Idaho came in at an average rating of 5.69, leaning slightly toward the “very civil” end of the spectrum, and slightly more so than the national average of 5.44.
However, Moncrief noted that the survey preceded Idaho’s most recent legislative session — and he said if the most recent session were included, Idaho likely would have fared worse.
“It was a very tough session almost from the get-go, where the stakes are really high,” he said, “because of the initiative thing, because of the Medicaid thing.”
This year’s Legislature passed legislation to sharply restrict future ballot initiatives, on the heels of Idaho voters successfully enacting Medicaid expansion by initiative, a move the Legislature had long resisted. Gov. Brad Little vetoed the anti-initiative legislation.
Among the comments from Idaho lobbyists who were surveyed:
“Because one party dominates all elected offices, there is less of a need to work in a bipartisan fashion.”
“Hyper-partisanship and a supermajority in the state Legislature make Idaho incredibly unfriendly to anyone not lobbying for business interests.”
“Our system is being challenged by those on the fringe more interested in causing trouble than solving problems. This takes on the look of hyper-partisanship.”
“The issue is a growing number of state legislators are influenced by out-of-state/national information and dark money sources, which are influencing legislators and their voting records.”
Lovich noted that polling by the National Institute for Civil Discourse shows that 75% of Americans believe incivility has risen to crisis levels, and 59% have quit paying attention to politics because of it. He said that figure is particularly troubling, and helped prompt the research.
North Dakota ethics study broaches ‘dark money’ in elections
NORTH DAKOTA- Bismarck Tribune -By Jack Dura – November 13, 2019
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North Dakota lawmakers heard examples Wednesday of so-called "dark money" at play in recent elections in the state.
The Legislature's interim Judiciary Committee heard testimony from two attorneys and a former Montana state representative about the effects of influential "dark money," or campaign contributions from organizations' undisclosed donors, criticized as secretive and pervasive.
The committee is undertaking a two-year study of provisions in a new constitutional amendment voters approved in 2018 mandating state government ethics, including the disclosure of "the ultimate and true source of funds spent" to influence state elections or actions, effective in 2021.
The 2019 Legislature passed a framework to implement provisions of the constitutional amendment. Greg Stites, an attorney representing the measure's sponsors, said many of those statutes "either hinder, restrict or impair what the constitutional provisions say."
"That's, I believe, not what you all want to do and what this study committee is all about, is to take a look at what was passed and is it really consistent with the constitution," Stites told the committee.
State ethics law narrows or restricts qualifications for disclosing the "ultimate and true source," according to Erin Chlopak, director of campaign finance strategy for the Campaign Legal Center. She gave examples of "dark money" in North Dakota as recent as spending in the state's 2018 U.S. Senate race, in opposition to the 2018 ethics measure and in support of the 2016 ballot measure that legalized medical marijuana.
"In both of those ballot measures, North Dakota voters were deprived of fundamental and essential information about the true sources of substantial amounts of money, often from out-of-state special interests, spent to influence their votes on matters directly affecting their lives," Chlopak said.
Some lawmakers questioned the reality of "dark money" in a state as small as North Dakota. "Myself personally, I got elected for $15,000, so I must be getting kind of a really good deal," said Rep. Steve Vetter.
"The whole problem with dark money is that it's not disclosed," said Chlopak, who urged lawmakers to enact effective transparency legislation that avoids loopholes for disclosure.
Rob Cook, a former state representative from Montana, spoke about Montana's grappling with "dark money" in elections, such as radio and mailed ads from groups with "lovely sounding names" such as "Mothers Against Child Predators."
"Dark money" isn't limited by large dollar amounts or small states, he added, posing how $60,000 could have affected Vetter's race. "You don't have to spend millions to win seats," Cook said. "You can spend a $100,000 or $200,000 investment to change the flavor of the Legislature."
The Judiciary Committee meets again Thursday to resume testimony in its ethics study. The 2021 Legislature could take up a resulting bill.
Feds allege state Rep. Luis Arroyo caught on undercover recording paying $2,500 bribe. ‘This is the jackpot.’
Illinois- Chicago Tribune -By Jason Meisner, Jamie Munks and Dan Petrella – October 29, 2019
State Rep. Luis Arroyo was supposed to be with his fellow lawmakers in Springfield on Monday for the first day of the busy fall veto session. Instead, he was ducking reporters as he left the Dirksen U.S. Courthouse in Chicago, where he was the latest elected official to be charged in what has become a sprawling federal public corruption investigation.
Arroyo, 65, an assistant majority leader who has been in office since 2006, was charged with one count of federal program bribery alleging he agreed to pay a state senator $2,500 a month in kickbacks in exchange for the senator’s support on legislation involving video gambling sweepstakes games that would benefit one of Arroyo’s lobbying clients.
The 13-page criminal complaint, made public Monday, revealed that the state senator allegedly targeted by Arroyo first began cooperating with the FBI in 2016 but was terminated as a confidential source after it was revealed he had filed false income tax returns. The senator later agreed to cooperate with the FBI again in the hopes of winning a break at sentencing on expected tax fraud charges, according to the complaint. The senator was not named in the complaint, but a source identified him as Terry Link, 72, a state senator from Vernon Hills since 1997.
Speaking to a reporter outside his Capitol office Monday, Link flatly denied he was “CW-1” — the cooperating witness mentioned in the complaint. When the Tribune confronted Link again later Monday and told him he’d been identified as the cooperator, he again denied involvement. “Anybody can tell you anything," Link said. "... I answered you.”
According to the charges, CW-1 was wearing a wire when Arroyo delivered the first of the promised $2,500 checks at a restaurant in Skokie on Aug. 22, the charges said. “This is, this is the jackpot,” the complaint quoted Arroyo as telling the senator as he handed over the check. Additional monthly $2,500 payments were expected to be made over the next six to 12 months, federal authorities alleged.
The charge against Arroyo marked the latest in a series of ongoing federal probes that have rocked political circles from Chicago to Springfield. Arroyo is the third elected official to be charged so far, joining longtime Chicago Ald. Edward Burke and state Sen. Thomas Cullerton. Records show the FBI is also investigating state Sen. Martin Sandoval, Cook County Commissioner and McCook Mayor Jeff Tobolski, Lyons Mayor Chris Getty, Chicago Ald. Carrie Austin and officials in the suburbs of Summit and Cicero.
A separate probe delving into the lobbying practices of utility giant Commonwealth Edison has led to FBI raids on current and former lawmakers and political operatives, including several who are close confidants of House Speaker Michael Madigan. None of those officials has been charged.
Arroyo, meanwhile, made his initial appearance in federal court Monday morning on one count of federal program bribery. Clad in a gray suit with his hands folded in front of him, Arroyo answered “Yes” in a low voice when U.S. Magistrate Judge Maria Valdez asked if he understood his constitutional rights.
Arroyo, who was released on his own recognizance, was ordered to have no contact with anyone involved in the charges, including the senator and an undisclosed business owner whom Arroyo was allegedly trying to assist in the scheme.
With a white cap on his head, Arroyo left the downtown courthouse without comment Monday afternoon, hurrying past reporters and cameramen into a waiting SUV that sped off down Dearborn Street. His lawyer, Michael Gillespie, also had no comment.
Arroyo’s court appearance came not long before the state House convened in Springfield for the first day of the fall veto session. Madigan and House leader Jim Durkin of Western Springs both called on Arroyo to step down or each vowed to begin the process to remove him from office under House rules. Madigan said he’d been told by Arroyo’s attorney that the legislator planned to resign as chair of the House Appropriations-Capital Committee.
“The actions today go to the heart of public trust in state government,” Durkin said. “Today begins the process of cleaning up this chamber.” Madigan issued a statement calling for the strengthening of state ethics and lobbying laws. As he left a meeting Monday, a reporter asked about federal investigators seeking information about Madigan in a subpoena and search warrant served on the City Club of Chicago as part of a probe into whether ComEd hired politically connected lobbyists to curry favor with lawmakers in exchange for favorable action at the Illinois Capitol. “I’m not a target of anything,” Madigan said.
According to the charges unveiled Monday, CW-1 told the FBI that Arroyo had approached him about "the passage of sweepstakes-related legislation” during the House’s spring session.
Arroyo is a manager of a lobbying firm called Spartacus 3 LLC, which includes as a client the owner of a company involved in video gambling sweepstakes machines, according to the complaint. Sweepstakes machines, sometimes called “gray machines,” allow customers to put in money, receive a coupon to redeem for merchandise online and then play electronic games like slot machines. Critics contend the largely unregulated devices, which operate in cities like Chicago that have banned video gambling, are designed to skirt the law.
In early August, Arroyo texted the senator asking to meet at a restaurant in Highland Park, according to the complaint. Also at the meeting was the company owner, identified only as Individual A, as well as one of the owner’s associates.
During the meeting, Arroyo said he was going to introduce a “trailer bill” in the veto session expanding the use of sweepstakes games and offered to make periodic payments to the senator in exchange for his support, according to the complaint. With others present for the discussion, Arroyo said he wouldn’t be able to enlist the senator’s support unless it was legal.
“I cannot work as a legislator with somebody if it’s illegal,” Arroyo was quoted as saying. “I just can’t. ... I cannot be part of something illegal. That’s just like being part of the mob or being part of a gang that’s selling drugs.” Arroyo then asked the senator to “carry the bill,” explaining that he had "nobody in the Senate.”
After the senator told Arroyo to send him some language for the proposed bill, the two politicians left the table to speak privately, carrying on their conversation outside the restaurant as FBI agents conducted surveillance, according to the complaint. “This is you and I talkin’ now. Nobody else," the senator said, according to the complaint. “Whatever you tell me stays between you and me,” Arroyo allegedly responded. “That’s my word.”
During their purportedly private talk, the senator told Arroyo he was “in the twilight” of his career and was “looking for something" to bolster his income. Arroyo said he would “make sure that you’re rewarded for what you do, for what we’re gonna do moving forward,” the complaint alleged. “Let’s be clear ... my word is my bond and my, my reputation,” Arroyo allegedly said.
Three weeks later, on Aug. 22, Arroyo and the senator met at the Skokie restaurant, the complaint alleged. Arroyo made the “jackpot” comment as he handed over the $2,500 check — written to a third party to disguise the purpose for the payoff, according to the charges. “I’m not too happy about doing this, but I’m doin’ it for ya," the senator said near the end of the conversation. “I know you’re not,” Arroyo allegedly replied.
Born in Puerto Rico in 1954, Arroyo migrated to New York with his family at age 5 and moved to Chicago as a teen, according to the biography on his district website. He began his career in public service as an employee with the city’s water department before being appointed to his House seat in 2006 and winning election two years later.
In recent years, Arroyo has fought Joe Berrios for political control on the city’s Northwest Side. Link, meanwhile, was one of the chief architects of the massive gambling expansion that the Illinois General Assembly passed in the spring.
In June, on what was his both wedding anniversary and the final day of the state legislature’s spring session, Link pleaded with his colleagues to vote in favor of the gaming expansion “for the sake of my marriage, for the sake of Illinois.”
Ex-lobbyist gets 7 years for role in Arkansas corruption scheme
ARKANSAS- Democrat-Gazette - by Doug Thompson, November 26, 2019
SPRINGFIELD, Mo. -- Former lobbyist Milton "Rusty" Cranford received a seven-year prison sentence Monday for his role in a bribery scandal that also led to the convictions of five Arkansas legislators. The investigation is not over, federal officials have said.
Cranford appeared before U.S. District Judge Brian Wimes in Springfield because that is where his former employer, Preferred Family Healthcare, is based.
Cranford spent almost $4 million making illegal campaign donations, kickbacks and other gifts to Arkansas lawmakers between 2011 and 2017 to ensure the nonprofit behavioral health provider received grants, favorable legislation and relief from scrutiny, according to his guilty plea. Company executives also committed Medicaid fraud to overcharge state taxpayers, according to guilty pleas and indictments in the case.
From fiscal 2011 to 2018, Preferred Family received $245 million from Arkansas in Medicaid payments, one-third more than the state's second-largest behavioral health provider during that time, according to state data. Cranford and other executives embezzled from the nonprofit, according to federal prosecutors.
Cranford alone is liable for returning $3.73 million in taxpayer money, Wimes ruled Monday. Wimes approved forfeiture of most of Cranford's remaining assets, but the total is likely a fraction of the $3.73 million, the judge was told during Monday's hearing. "I would like to say I'm sorry for anyone hurt by my bad choices," Cranford told the judge. He added that he was deeply sorry for the consequences of his choices on his three children, one of whom is a minor with autism and another who has serious behavioral health issues, according to previous court testimony.
Wimes agreed to Cranford's request to serve his sentence at the federal prison in Texarkana, Texas, so his children could visit him from where they live in Bodcaw in Nevada County. The judge noted that the sentence could have been longer. Cranford faced up to 10 years in prison.
"I hope this helps others to realize that they should help weed out not only corruption, but other crimes," Wimes said. "This is not a light sentence, but it is a heck of a lot lighter than it could have been." Wimes stressed to Cranford that he was getting a great deal of benefit for his cooperation after committing a serious crime.
"Bribery fosters the impression the government is up for sale to the highest bidder," the judge said. Therefore, it has severe consequences that extend beyond those directly affected, he said. Claiborne Ferguson, a Memphis-based federal criminal defense attorney who is not affiliated with the case, said the seven-year sentence is "pretty darn high" for a nonviolent crime.
"It's definitely going to send a message of deterrence," said Ferguson, who practices in Arkansas, Mississippi and Tennessee.
Cranford, 60, has been in the Greene County, Mo., jail in Springfield since his Feb. 21, 2018, arrest at his home in Bentonville. He was denied bail in March 2018 in part because he discussed having a co-conspirator killed before his arrest.
Wimes gave Cranford credit for the 22 months he has been in jail. He also sentenced him to three years of probation to begin after he serves his prison sentence. Cranford pleaded guilty to one count of federal program bribery on June 7.
He took orders from Tom and Bontiea Goss of Springfield, married, former executives at Preferred Family, according to court records. The couple is set to stand trial on related charges in April 2021. Preferred Family was a nonprofit health care company based in Kirksville, Mo., untouched by scandal before it merged with Alternative Opportunities in 2015. The company has used the name Preferred Family since.
Alternative Opportunities was founded by the Gosses. Tom Goss was chief financial officer, and Bontiea Goss was chief operating officer of Preferred Family before being dismissed by the company's board in November 2017, after U.S. Justice Department attorneys met with the company's board of directors and legal counsel to brief them on the investigation's findings to that date.
An attorney for Bontiea Goss did not respond to requests for comment. Springdale attorney Chris Plumlee, representing Tom Goss, said: "My client doesn't have anything to say at this time above and beyond comments previously provided."
Cranford became both a manager of and lobbyist for Alternative Opportunities in Arkansas in 2007. Cranford's contract with the nonprofit company was terminated on June 2, 2017, after news of the scandal broke with the indictment of Arkansas lawmakers earlier that year.
Preferred Family operated substance abuse and behavioral health treatment centers in five states, including Arkansas. It had 47 sites in Arkansas alone before having to sell them off after losing its Medicaid certification in the state during the federal public corruption probe.
Since his guilty plea, Cranford has appeared before federal grand juries three times, met with federal investigators 10 times and has also met with investigators for the state of Arkansas, federal prosecutors said at a hearing last month.
Cranford's cooperation was vital in obtaining indictments against almost everyone arrested so far in the fraud scheme, according to his defense attorney, Nathan Garrett of Kansas City, Mo.
Assistant U.S. Attorney Ben Wulff, who represented the government at Monday's sentencing, confirmed that Cranford's cooperation has been both extensive and valuable to investigators. That is why the government entered a joint motion with the defense recommending the seven-year sentence rather than the maximum, despite the severity of the crimes involved, Wulff told the judge.
Should Cranford testify at a trial in the future, prosecutors could go back to Wimes and ask that his sentence be reduced, Ferguson said. "He could still potentially be working towards further reductions in that sentence depending on what his role is in these future case," the Memphis-based attorney said, referring to Rule 35 of the Federal Rules of Criminal Procedure.
The rule allows the government to request a sentencing trim for specific reasons. One of those reasons is for information provided by a defendant that the government uses down the road. Wulff is assigned to the U.S. Department of Justice's Western District of Arkansas, but was representing the government by arrangement with the Western District of Missouri, where Cranford was charged.
Both the Eastern and Western districts of Arkansas have joined the Missouri district in the ongoing investigation. Marco Palmieri of the Public Integrity Section of the U.S. Department of Justice was also present during the sentencing.
LAWMAKERS IN SCHEME
Four of the five lawmakers convicted of conspiracy-related charges in the case were serving in the Legislature at the time of the bribes. The fifth joined Cranford's lobbying firm and took part in the scheme as a lobbyist after leaving office. Those are former Rep. Micah Neal and former Sen. Jon Woods; former Rep. Eddie Cooper, who joined Cranford's lobbying firm; former Rep. Henry "Hank" Wilkins IV; and former Sen. Jeremy Hutchinson.
Woods is serving an 18-year prison sentence for a kickback he took in return for a state grant he steered to a company Cranford controlled, along with other kickbacks taken from grants to Ecclesia College in Springdale. Cranford played no role in the Ecclesia kickbacks.
Now-former Ecclesia President Oren Paris III of Springdale, who pleaded guilty to conspiracy, is serving a three-year prison sentence. A private consultant for Ecclesia, Randell Shelton, is serving a six-year sentence for his part in that scheme. All three of those cases are on appeal.
Marilyn Nolan, former chief executive officer for Preferred Family, has also pleaded guilty in the federal investigation along with the company's former chief of clinical services, Keith Fraser Noble. Both those executives are from Springfield.
All of those charged who have pleaded guilty in the two-state federal probe await sentencing except Cranford. Woods was convicted at trial. Other former Preferred Family administrators in Arkansas also face state charges in Arkansas for Medicaid fraud.
Cranford's arrest came after a Missouri federal grand jury indicted him on one count of federal program bribery and eight counts of accepting bribes. The murder-for-hire allegation against Cranford never resulted in any charges. Cranford accomplice D.A. Jones, a lobbyist based in Philadelphia, informed Cranford in late 2017 he was going to confess and plead guilty in the federal investigation of the fraud scheme.
Cranford later approached a longtime acquaintance and told him Jones needed to "disappear," according to court documents. The supposed hit man has not been named publicly in federal court documents. Unbeknownst to Cranford, the man he approached had already agreed to be an FBI informant in another matter, federal prosecutors have said.
Cranford first registered as a lobbyist in Arkansas in 2005, secretary of state records show. His lobbying firms over the years include Cranford and Associates and the Cranford Coalition.
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