Former Non Profit Director Sentenced for Diverting Charity Funds

A former executive director of the South Arkansas Youth Services (SAYS), an Arkansas based non-profit, was sentenced to 30 months in prison followed by three years of supervised release for unlawfully diverting more than $380,00 from the charity he operated to a state senator and the lobbying firm of a convicted lobbyist. The former executive director, Jerry Walsh, must also pay $515,631.56 in restitution.

According to the Department of Justice release, Walsh admitted in a plea deal that while serving as the executive director of SAYS he diverted funds to a convicted lobbyist Milton “Rusty” Cranford and an unnamed Arkansas state senator in exchange for the state senator’s influence in protecting the nonprofit’s state contracts with the Arkansas Department Health Services (DHS) and DHS’ Division of Youth Services (DYS).

Walsh provided a monthly “legal retainer” to the senator despite knowing the senator would not provide legal work. Instead, the senator helped the charity secure contracts with the state. Cranford, the lobbyist, negotiated the deal in which the senator was paid more than $120,000.

Walsh also paid the lobbying firm above market prices for their services and employed a relative of Cranford’s who had a “no-show” job within SAYS. Between payments to the relative and Cranford’s lobbying firm, Walsh illegally diverted $262,000 in charity funds to Cranford as part of the scheme.

Walsh pleaded guilty to one count of conspiracy to misapply the nonprofit’s funds without authority from the board of directors. 

The FBI investigated this case along with the assistance of the Magnolia Police Department and the 13th Judicial District of Arkansas Prosecuting Attorney’s Office.

“Jerry Walsh diverted hundreds of thousands of dollars intended to help vulnerable children in southern Arkansas as a part of a corrupt scheme to influence the award of state contracts,” said Assistant Attorney General Benczkowski when Walsh pleaded guilty. “Walsh’s actions ultimately risked destroying the non-profit he helped lead and undermining the public’s confidence in its elected officials.  The Criminal Division and our law enforcement partners are committed to protecting the integrity of charitable programs, rooting out corruption, and ensuring that individuals like Walsh are held accountable for their actions.”