AT HEART OF CHARGES: Money to youth services agency influenced by bribery. Magnolia Reporter
Magnolia Reporter
AT HEART OF CHARGES: Money to youth services agency influenced by bribery.

Pleadings filed this week in federal court in El Dorado offer competing views on sentencing of Jerry Walsh, the former head of South Arkansas Youth Services in Magnolia, who’s pleaded guilty to paying kickbacks to ensure favorable legislation for the now-defunct agency.

Walsh’s sentencing has not been set, but he’s asking for a downward departure in sentencing for his acceptance of responsibility and in consideration of his military service and a variety of ailments, mental and physical. The government, in turn, though it is not arguing for the maximum five-year sentence (which a first-offender wouldn’t receive in any case), said some sentence enhancement is in order because of the nature of the crime, which included payments to lobbyist Rusty Cranford; payments to former legislator Hank Wilkins;  a do-nothing job for a Cranford relative and $120,000 in payments to “Senator C.” Said the government of that last:

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These payments, which were in fact payments to Arkansas Senator C for agreement to provide legislative acts, were never disclosed to the Board despite the amount paid to Arkansas Senator C for no actual legal work.

We’ve reported previously that Walsh has said he hired two former senators, Jeremy Hutchinson and Michael Lamoureux for legal work. Neither has been accused in this case. Hutchinson has been accused of taking sham legal fees from Preferred Family Healthcare and faces federal charges on that in Missouri. Cranford has pleaded guilty to arranging illegal campaign contributions and kickbacks for legislators facing a variety of charges and convictions.

Hutchinson’s attorney has denied a connection with the Walsh case. Lamoureux has said neither legal fees nor contributions had ever influenced his public actions. He was Senate president pro tem at the time relevant to Walsh’s activities.

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The government’s filing says Walsh’s activities played a role in other schemes:

… the payments the defendant funneled from SAYS further played a role in a related scheme Arkansas Senator C and Cranford arranged to facilitate the release of GIF funds; $2,000,000 from Act 791 obtained by Senator [Jon] Woods, and over $300,000 from Act 818 by Representative Wilkins Clearly, the defendant’s role in the execution of a complex scheme to safeguard his contracts, steer GIF funds, and influence state agencies was complex. The payments to Arkansas Senator C were themselves structured in a manner to be concealed from the Board of Directors and investigators but also facilitated a larger scheme to steer tax-payer funds from the state of Arkansas to local politicians. The payments to Cranford and Person #4 disguised unauthorized lobbying activity and also facilitated payments to Representative Wilkins, who then arranged for GIF funds for SAYS. The defendant’s role in the concealment of the scheme was calculated to shield it from detection internally, through the execution of the sham contracts, and externally, through the falsification of the IRS Form 990s.

The sophisticated scheme calls for an enhancement of the penalty, U.S. Attorney DAK Kees said.

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Here’s the government’s pleading for more time than recommended in the pre-sentence report from the probation office, which is under seal.

Here’s Walsh’s plea for a downward departure.

He says:

Defendant is now a broken, humbled old man in every sense of the word given his current physical, mental, emotional and financial condition. Defendant is very embarrassed and humiliated, very remorseful and regretful, by his criminal conduct herein. He absolutely and sincerely accepts responsibility for his crime and knows that he has consequences with which he must now deal. He recognizes that he will, forever, be a convicted felon and will have to live with that stigma the rest of his life.