The former CEO of a charity headquartered in Springfield,
Missouri has pleaded guilty to her role in a multi-million-dollar political
corruption scheme that involved bribes and campaign contributions for elected
public officials in Missouri and Arkansas, announced Assistant Attorney General
Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S.
Attorney Tim Garrison of the Western District of Missouri.
Marilyn Luann Nolan, 68, of Springfield, pleaded guilty
before U.S. Magistrate Judge David P. Rush on Friday, Nov. 9, to one count of
conspiracy to embezzle and misapply the funds of a charitable organization that
received federal funds.
By pleading guilty, Nolan admitted that she conspired with
others from 2008 to June 30, 2017, to misapply millions of dollars of the
charity’s funds for substantial, undisclosed payments to lobbying firms and
political advocates, monetary and in-kind contributions to the campaigns of
candidates for public office, and to bribe public officials. Nolan also admitted that she knew her
co-conspirators defrauded the charity in order to enrich themselves, and her.
Nolan began working at Alternative Opportunities Inc., in
1992. In 2015, that company merged with
Preferred Family Healthcare Inc., after which it continued to be known as
Preferred Family Healthcare. Nolan was
the chief executive officer and oversaw the charity’s lobbying and governmental
affairs activities.
Preferred Family Healthcare and its subsidiaries provided a
variety of services to individuals in Missouri, Arkansas, Kansas, Oklahoma and
Illinois, including mental and behavioral health treatment and counseling,
substance abuse treatment and counseling, employment assistance, aid to
individuals with developmental disabilities and medical services.
Political Advocacy, Campaign Contributions, Fund-Raising
Events
According to the plea agreement, Nolan and her conspirators
caused the charity to misapply its funds to pay for political advocacy,
including lobbying, that violated both IRS rules governing tax-exempt
organizations, and federal laws and regulations governing recipients of federal
grants and contracts. Nolan admitted
that she directed and assisted her co-conspirators to direct millions of
dollars to lobbyists, including Donald Andrew Jones and Milton Russell Cranford,
who previously entered pleas of guilty to federal crimes in related cases. Nolan also directly lobbied legislators.
Under her plea agreement, Nolan also admitted that she and
her conspirators:
Caused the charity
to contribute financially to the campaigns of candidates for public office through
“straw donors,” including the charity’s lobbyists, who were also reimbursed by
way of invoices that were falsely described as “training” and “consulting”
expenses;
Encouraged charity
employees to contribute to candidates for public office and caused the charity
to reimburse them for those contributions by providing funds falsely described
as reimbursement for travel or other expenses the employees had not actually
incurred; and
Caused the charity
to provide in-kind contributions to the campaigns of candidates for public
office, including in Missouri where they organized fundraisers for several
candidates running for seats in the Missouri State Senate, Missouri House of
Representatives, and the Greene County Commission and in Arkansas, where Nolan
and her conspirators organized fundraisers (often at hotels or restaurants) for
many candidates running for seats in the Arkansas State Senate and Arkansas
House of Representatives.
Nolan also admitted as part of her plea to directing an
employee to use the charity’s resources to arrange for catering, liquor,
decorations, and other food connected to political fundraisers. This employee used a charity-issued corporate
credit card for the purchases, with Nolan’s knowledge.
At all times relevant to Nolan’s plea, the charity was
absolutely prohibited from directly or indirectly participating in, or
intervening in, any political campaign on behalf of, or in opposition to, any
candidate for elective public office. Contributions
to political campaign funds violated this prohibition, and could have resulted
in denial or revocation of tax-exempt status and the imposition of certain
excise taxes.
Bribery of Elected Public Officials
According to the plea agreement, Nolan and her conspirators
misapplied some of the charity’s funds to bribe elected public officials in the
following manners:
They gave things
of value to numerous public officials, in exchange for their official actions
benefitting the charity and themselves personally, including cash, travel and
entertainment, premium tickets to sporting events, hotel accommodations, and
use of the charity’s luxury/recreational real estate;
They hired public
officials and the family members of public officials as charity employees; and
Nolan and the
conspirators disguised bribes as contract payments for things such as
consulting, training, and legal services.
The government believes the schemes Nolan pleaded guilty to
totaled approximately $6 million. The
parties reserved the right in the plea agreement to litigate the exact amount
of that loss, for the purpose of computing the federal sentencing guidelines.
Charity Embezzlement
As part of her plea agreement, Nolan also admitted that over
an approximately 12-year period from 2005 to 2017, certain charity executives
embezzled millions of dollars from the charity, from which Nolan profited. Nolan admitted that although she did not know
the full details of the many embezzlement and misapplication of funds schemes,
she knew at the time that the charity bore additional costs from many of those
transactions, and willfully blinded herself regarding the details of her
conspirators’ schemes and artifices to defraud the charity.
One example referenced in Nolan’s plea agreement consisted
of the formation of an LLC that was used as the management company for
Alternative Opportunities, identified in court documents as Entity A. In 2006, Entity A was sold to a
publicly-traded corporation identified in court documents as Company A, which
was also partly owned by Nolan. Nolan
admitted that this sale was perpetrated for the primary purpose of enriching
charity executives, including herself.
Nolan’s share of the proceeds from the sale of Entity A to Company A was
$3,769,536.
Nolan further admitted as part of her plea that she also
received $361,574 from two LLCs identified as Entity B and Entity C where,
immediately prior to the 2006 sale of Entity A to Company A, Entity B acquired
title to all real estate formerly held by Entity A and Entity C held the title
to the corporation’s headquarters building in Springfield, and duplex homes
located in Springfield.
Under the terms of Friday’s plea agreement, Nolan must pay
$4,131,111 in restitution to the government, less a credit for taxes she paid
on the funds received.
A sentencing hearing will be scheduled after the completion
of a presentence investigation by the U.S. Probation Office.
The case was investigated by IRS Criminal Investigation, the
FBI, and the Offices of the Inspectors General from the Departments of Justice,
Labor, Veterans Affairs, and the Federal Deposit Insurance Corporation
(FDIC). This is a combined investigation
with the Western District of Arkansas, the Eastern District of Arkansas and the
Public Integrity Section of the Department of Justice. This case is being prosecuted by Trial
Attorney Marco A. Palmieri of
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