Feds: Sen. Hutchinson stole campaign funds; spent money on cruises, jewelry and Netflix fees

A 15-page unsealed federal indictment against Sen. Jeremy Hutchinson, R-Little Rock, alleges that the Arkansas lawmaker who was first elected to the Arkansas senate in 2012 devised a scheme to steal thousands of dollars from campaign funds to spend on everything from cruises and travel expenses to utility bills and Netflix fees.

On Friday afternoon (Aug. 31), the office of U.S. Attorney Cody Hiland for the Eastern District of Arkansas announced that a federal grand jury had issued a 12-count indictment that charges Hutchinson with eight counts of wire fraud and four counts of filing false tax returns.

Those allegations later caused the Little Rock senator to issue a one-paragraph letter of resignation to his uncle, Gov. Asa Hutchinson, President Pro Tempore Jonathan Dismang and House Speaker Matthew Shepherd late Friday afternoon following a steady stream of statements from political foes, friends and party leaders asking him to step down.

“It has been a privilege to represent Senate District 33 in the Arkansas Senate and to serve the citizens of Arkansas in the Arkansas General Assembly,” Hutchinson wrote. “It has been the greatest honor of my life and I am so proud of the work we have done together during my tenure. Please accept this as notice of my resignation from the Arkansas Senate, effective immediately. Thank you for your service to our great state.”

According to the federal indictment describing Hutchinson’s alleged scheme, the senator solicited and accepted at least $350,000 in campaign contributions and donations from between 2010 and 2017 that he put into campaign and personal banking accounts. During this same period, Hutchinson “stole, misappropriate and converted” thousands of dollars from those funds, those filings said.

“It was a purpose of the schedule for (Hutchinson) … to conceal from donors, the public, the Arkansas Ethics Commission and law enforcement officials, that (he) was converting contributions … to his campaigns for Arkansas State Senate to his personal use, including, but not limited to taking the contributions and donations and spending them on personal luxuries and expenses,” the indictment states.

Among key details, federal investigators said Hutchinson on at least three occasions converted nearly $125,000 in campaign funds on items and things for his own personal use, including a Caribbean cruise, trips to New Orleans, hotel and other travel expenses, gym membership fees and school tuition payments. Hutchinson also used those funds to buy jewelry, clothes and make other retail purchases, and Netflix fees and utility bills at his personal residence, according to the indictment.

Federal investigators also allege Hutchinson withdrew nearly $71,000 in cash from his campaign account and cashed five checks totaling $6,400 given by donors intended as campaign contributions. To hide and conceal those stolen funds, Hutchinson falsified his campaign reports, in violation of state law, by misrepresenting and concealing the true amounts of contributions and donations he received, federal court filings state.

Altogether, Hutchinson received and underreported nearly $71,000 in campaign contributions and donations in his state campaign reports, the indictment said, as well as cashing checks that donors gave to him as campaign contributions or donations.

In addition to violations of Arkansas campaign finance laws, officials said Hutchinson also falsified his federal income tax returns from 2011 to 2014 by failing to report his total income, which included the campaign funds he converted to his personal use during that same period. In describing multiple fundraisers that Hutchinson concocted to induce potential donors to contribute to his political campaigns between 2010 and 2017, the indictment said the youngest member of the Hutchinson political clan falsely represented to those benefactors that their donations would be used in his political races instead of his personal use.

The indictment listed contributions from nine donors that gave the Little Rock lawmaker campaign gifts ranging from $200 to as much as $8,000. The contributor names were not revealed in the indictment, but were listed in order from “Donor A” to “Donor I.”

“From at least 2010 through 2017 – had individuals and entities who gave campaign contributions and donations to Hutchinson’s political campaigns for Arkansas State Senate, but not limited to Donors A, B, C, D, E, F, G, H and I, known Hutchinson was stealing, misappropriating and otherwise converting those (funds) for his own personal  use – they would not have contributed or donated funds to Hutchinson’s campaigns,” the indictment stated.

Altogether, Hutchinson allegedly accepted $366,219.95 in campaign contributions over the seven-year period. He falsely represented he had only received $294,420.50 in campaign finance reports to the Arkansas Secretary of State’s Office. During that same period, he withdrew nearly $78,000 in cash from his campaign accounts to fund various personal expenses.

Besides the eight violations of state campaign finance laws, Hutchinson also received nearly $900,000 in payments from various persons and entities to provide legal and consulting work from 2011 to 2014. More than $627,000 of those funds came from “Law Firm A,” and $163,5000 from “Charity A.” Another $47,000, $20,000 and $40,000 was given to Hutchinson from “Company A,” Company B, and Company C,” respectively, the indictment states.

During the four years, however, Hutchinson reported on his income tax returns only $378,190 in total income, well below the actual amounts he had been paid, the indictment states. Based on those tax returns, Hutchinson was indicted on one count of filing false tax returns for each year.

Hutchinson’s attorneys, Tim Dudley and Stephen Larson, said they vigorously dispute the accuracy of the federal indictment, saying “Every person charged with a crime is presumed innocent unless proven guilty in court. The allegations in today’s indictment are mere allegations.”

“For over five years Mr. Hutchinson cooperated fully with the government in this investigation. In light of that history, we all find it both frustrating and disappointing for him to be forced to face the inaccurate factual allegations contained in the indictment,” Dudley and Larson said in a statement. “It is therefore remarkable that he still finds himself defending these charges and under circumstances that will undoubtedly be explored soon in the litigation of this case, the government has irreparably impaired Mr. Hutchinson’s ability to defend himself by searching his computer without a warrant and then inexplicably destroying an image of his hard drive which possessed key exculpatory evidence.”

Hutchinson, who is the son of former U.S. Sen. Tim Hutchinson, R-Ark., is scheduled to appear before U.S. Magistrate Judge Patricia Harris on Sept. 18 at 10 a.m. Former U.S. Attorney Bud Cummins has agreed to serve as the trustee of a legal defense fund for Hutchinson’s defense.

“We rely on the right to a jury trial to provide balance and fairness to complex criminal prosecution, but in truth, the vast majority of those changes plead guilty and never get any trial at all,” Cummins said in a statement. “Many plead guilty simply because they lack the financial resources to bear the real cost of a modern criminal defense in a complex manner. At the request of friends, colleagues and family, I have agreed to serve as the trustee of a legal defense fund to receive contributions from those who want to ensure that Jeremy Hutchinson has the resources necessary to mount an adequate defense.”

When he was first elected to the Arkansas House in 2000 at 26 years old, Hutchinson was the youngest member in the lower chamber and was subsequently re-elected three times. In 2010, he was elected to the State Senate and re-elected again in 2012 to represent Senate District 33, which comprises portions of Pulaski and Saline counties.

Besides the federal indictement, Hutchinson was also hit earlier this summer with a civil lawsuit by Preferred Family Healthcare (PFH), the Springfield, Mo.-based nonprofit at the center of the ongoing federal bribery, corruption and kickback investigation involving convicted lobbyist Milton “Rusty” Cranford. In its federal lawsuit filed July 12 in a circuit court of Independence County, PFH is seeking to recover more than $380,000 from the Arkansas senator and Little Rock law firm Steel, Wright, Hutchinson and Gray related to alleged negligent legal representation of the Missouri nonprofit. Hutchinson no longer works for the local law firm, which now goes by the name of Steel, Wright and Gray.

In early July, the state Department of Human Services suspended PFH from the state’s Medicaid program after former company executive Robin Raveendran of Little Rock was arrested by the Attorney General’s Medicaid Fraud Control Unit. Since then, the Missouri healthcare group has announced plans to downsize its Arkansas operations amid its legal troubles and the ongoing federal probe into the company’s finances and operations.