Former Chief Administrative Deputy and Sheriff’s Uncle Also Plead Guilty
A former Rutherford County Sheriff, his former Chief Administrative Deputy, and his uncle have pleaded guilty for operating a private electronic cigarette company in the county jail for personal gain and the concealment and misrepresentation of their involvement with the business, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Acting U.S. Attorney Jack Smith of the Middle District of Tennessee.
Robert F. Arnold, 40, former Sheriff of Rutherford County, Tennessee, and his former Chief Administrative Deputy Joe L. Russell II, 50, also of Rutherford County, pleaded guilty to wire fraud, honest services fraud and extortion under color of official right on Jan. 18 and 20, respectively. Arnold’s uncle, John Vanderveer, 59, of Marietta, Georgia, pleaded guilty to attempted witness tampering on Jan. 30. The pleas were entered before Chief U.S. District Judge Kevin H. Sharp of the Middle District of Tennessee. Arnold is scheduled to be sentenced by Chief Judge Sharp on May 8, and Vanderveer and Russell are scheduled to be sentenced on May 12 and May 19, respectively. All three were indicted in May 2016 for their roles in the formation and operation of the electronic cigarette company, JailCigs LLC.
In connection with their pleas, Arnold and Russell admitted to forming JailCigs with Vanderveer in 2013; using Arnold’s official position as Sheriff of Rutherford County to benefit JailCigs by allowing the company’s electronic cigarettes to come into the Rutherford County jail as non-contraband and be distributed by county employees; taking steps to disguise their involvement in the company; and misrepresenting the benefits that Rutherford County was supposedly receiving from JailCigs.
Additionally, Arnold admitted that he personally received over $66,000 from JailCigs; and admitted that he lied about his income from, and knowledge of, the company when he was confronted by local media in April 2015. Russell admitted receiving over $52,000 in payments from JailCigs. Vanderveer, a private citizen and Arnold’s uncle, admitted to telling the company’s Tennessee sales representative to destroy her commission sheets so the company could provide fraudulent versions that would show the payments going to her, rather than Arnold. Under the terms of the plea agreement, each defendant agreed to pay restitution to Rutherford County in the amount of $52,500.
The FBI and the Tennessee Bureau of Investigation investigated the case. Trial Attorney Mark Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Cecil W. VanDevender of the Middle District of Tennessee are prosecuting the case.