What happens in Arkansas does not stay in Arkansas.  Or at least not when federal prosecutors from the Department of Justice’s Public Integrity Section get involved.

A recent sentencing from Arkansas highlights the many options in DOJ’s toolkit to pursue “state-level” misconduct involving public officials.  In the case of former state senator Jeremy Hutchinson, DOJ obtained a “global” guilty plea for misconduct charged in three separate district courts.  The court sentenced Hutchinson to 46 months incarceration. 

According to the Government’s sentencing memorandum, Hutchinson accepted over $157,500 from the owner of an orthodontic clinic in exchange for advancing favorable legislation to deregulate the state dental industry.  The bribes masqueraded as payment for legal retainers, according to the Plea Agreement.  In addition, Hutchinson:

commingled campaign contributions and donations with his own personal funds and misappropriated and converted campaign funds for his own personal use, including, but not limited to, using campaign funds for a vacation, hotel stay, travel expenses, groceries, a gym membership, and jewelry.

Then, having misappropriated nearly $67,000 of state campaign funds, Hutchinson “materially underreported his gross receipts on his tax returns” for several years.  For these offenses, Hutchinson pleaded guilty to conspiracy to commit bribery and willfully filing a false tax return. 

As these charges illustrate, even where a defendant’s wrongdoing occurs at the state-level, implicates state officials, or involves state campaign finance issues, federal prosecutors nevertheless possess several statutory options to aggressively pursue misconduct.  Although not a new trend, federal enforcement actions involving state or local wrongdoing present significant risks for entities and individuals involved in state-level campaign giving, lobbying, and other political activity.

Hutchinson’s conduct extended beyond the facts described above.  In another, separate case pending sentencing in the Western District of Missouri, Hutchinson pleaded guilty to participating in what DOJ has described as “a multimillion-dollar public corruption scheme that involved embezzlement, bribes, and illegal campaign contributions for elected public officials.”  As in the other case, this scheme apparently also involved bribes that Hutchinson and others disguised (unsuccessfully) as lawfully provided legal services.  Furthermore, the defendants used a state-registered nonprofit organization to engage in “lobbying and political advocacy, political campaign contributions, and offering and giving money and other things of value to public officials for unauthorized, unjustifiable, and wrongful purposes” in violation of state law.  DOJ has obtained guilty pleas from several defendants and a Non-Prosecution Agreement from a state nonprofit that agreed to pay $8 million in forfeiture and restitution to the federal government.

Both prosecutions exemplify how DOJ can and often will enter the scene even when state criminal charges are available to address corrupt conduct, where certain factors are present, such as unethical behavior involving public officials.  Although in Hutchinson’s case the government described his behavior as “egregious,” the unwitting and the unwary can easily be swept up in an investigation or prosecution.  For this reason, companies, organizations, and people engaging in politics at the state level should proceed with an understanding of applicable laws and regulations, and obtain legal advice for any questions that arise.