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Friends fight to recover money from Belmont businessman

Accused in $10 million theft

Elizabeth and Jerry Sutton of Missouri are trying to regain their savings.

ED ZURGA FOR THE BOSTON GLOBE

Elizabeth and Jerry Sutton of Missouri are trying to regain their savings.

Jack Cranney was once a respected figure in Belmont. The son of a prominent family, he ran a successful business, lived in a large home on a street dotted with mansions, and even rubbed elbows with the Romneys.

He made his money the same way his mother did, selling vitamins and nutritional supplements for the Shaklee Corp. Cranney became a top distributor for the San Francisco-area company, which peddles healthy living, and the chance to get rich by selling its wares and recruiting others into the system.

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But Cranney’s image of wealth and generosity began to crumble as he borrowed millions of dollars from friends, relatives, and employees and did not pay it back. Last summer, several alleged victims — including his own son — sued him. Brazilian housekeepers caring for Cranney’s ailing wife also sued him, and protested in the center of Belmont, waving signs that said he refused to pay them.

In July, Massachusetts securities regulators charged Cranney, 71, with stealing $10.4 million in an alleged Ponzi scheme, luring Shaklee associates to empty out retirement funds and mortgage their homes. Cranney has denied the allegations through his lawyer.

The scandal stunned Belmont, where Cranney’s mother, Naomi, lived until age 102 and was a pillar of the Mormon community.

Jack Cranney of Belmont.

Shaklee (pronounced “shack-lee”) quickly cut off payments to Cranney, and the FBI raided his house in November. And last month, facing a number of debts and lawsuits, Cranney filed for bankruptcy protection, leaving a trail of former friends and clients wondering if they will ever see the money they say he owes them.

“These people do not have the time to wait years for resolution of their claims,’’ said Andrea Goldman, a lawyer in Andover representing some of Cranney’s alleged victims. “They are mostly elderly and were dependent on the money they lost.’’

Elizabeth Sutton lost more to Jack Cranney than almost anyone. The Independence, Mo., resident, a longtime Shaklee distributor herself, has known Cranney for years. She used his marketing filmstrips to help sell products to her clients. They spoke on the phone frequently, and Cranney invited Sutton and her husband, Jerry, to visit at his $3.8 million Belmont home.

Sutton, a retired schoolteacher, trusted Cranney. So when he offered to invest her money, she listened. She had placed her Shaklee earnings into conservative municipal bonds for years, but as the bonds matured she needed a new way to earn a decent rate of return. Starting in 2006, she sent him most of her savings, on the promise of a 6 percent annual return. Over time, Sutton entrusted $2.8 million to Cranney, she said.

For five years, Sutton never asked for an interest payment. She said she figured Cranney was keeping track of her funds, as promised. He would send Sutton elaborate bouquets of flowers on her birthday; once he sent a computer, and another time, a GPS for her car.

When Sutton finally did ask for a chunk of her money — $500,000 for the Boy Scouts — Cranney suddenly stopped talking to her. Soon after, Massachusetts regulators filed the civil charges against Cranney. Officials said he had taken money from at least 36 people in 14 states. The count has since risen to 50 people.

“I would like to ask him how he could have done it,’’ said Sutton, now in her early 80s. “You don’t know whether he has any feelings or not.”

Cranney’s mother, Naomi, devoutly religious, was also a Shaklee pioneer in the Northeast. In her memoir, “Naomi Remembers,” she detailed her move from Utah to the East Coast in 1930 with her husband, so he could attend Harvard Business School. Years later, they would learn of Shaklee through its ecofriendly dish detergent. They met founder Dr. Forrest Shaklee , and opened a store in Cambridge, naming the business Belmont Industries.

In her book, Naomi Cranney recalls a spunky young Jack, the baby of the family who was mischievous compared with his older brother and sister. At the private Belmont Hill School, Cranney was baseball captain and a hockey player unafraid to throw a punch on the ice. He rebuilt an old coupe and drove it fast. At Brigham Young University, he played guitar and had a radio show; he joined the Utah National Guard after college.

Cranney got into the Shaklee business at his parents’ suggestion. He developed his own distributorship, quickly rising to “master coordinator’’ like his mother, a high rank in the Shaklee hierarchy.

Toward the end of her life, the family matriarch made plans to leave her part of the business to her grandson, David, according to court filings. But David Cranney, an Army veteran who served a tour in Iraq, alleges that his father seized control of the business. Jack Cranney kept David and his wife from receiving revenue from the company, at the same time he ran up $93,000 in charges on an American Express card in David’s name, according to court filings.

Shaklee suspended Cranney on July 24, the day the Massachusetts Securities Division filed its complaint against him. A company spokesman said Shaklee is holding the funds “pending a final order from a court” on how they should be paid.

Shaklee said it was flooded with calls from tearful associates after the news broke about Cranney. Alleged victims begged the company to withhold his Shaklee payments, estimated at $45,000 to $60,000 a month according to people with direct knowledge of his finances.

Cranney did not respond to several requests for interviews. A Hartford lawyer representing him in the securities case, Thomas Finn, said the case was not a Ponzi scheme, because Cranney had steady income from Shaklee that he had been using to repay his lenders.

“It is the intent of Mr. Cranney to repay all of the loans, and he has taken the next step of a voluntary bankruptcy, seeking reorganization to repay the lenders,’’ Finn said.

A creditors meeting is scheduled for Monday in Boston. And the list of people Cranney owes is long, from old friends and former employees to his landscaper, his sister, his Mercedes dealer, the IRS, and the electric company.

Authorities said Cranney’s alleged con goes back at least a decade. It was early 2002 when he persuaded Louise Bussieres, an employee who was helping care for Cranney’s mother, to hand over her life savings. She said she cashed out her $45,000 retirement plan and mortgaged her small Haverhill home for another $95,000, according to her lawsuit filed in Middlesex Superior Court last June against Cranney and his wife, Nevena.

Cranney offered 12 percent interest with a promissory note that seemed official, and he pledged to repay the entire sum by April 2007. When the IRS charged Bussieres $10,000 in taxes and penalties for cashing out her 401(k), she had to ask Cranney for the money. His check bounced.

In time, the $1,400 monthly checks that Cranney sent to Bussieres were cut in half. By February 2008, when the loan was overdue, the payments stopped, and Cranney tried to extend the due date.

Now 70, Bussieres is struggling to get by, said her lawyer, Andrea Goldman. So are many others, some of them retirees who must now sell their homes. Other alleged victims are too ashamed to file claims.

Dante Muzzioli is a Belmont landscaper who tended to Cranney’s lawn and flower beds, and plowed his long driveway in snowstorms. Owed thousands of dollars by Cranney, he said that money would come in handy when he pays his daughter’s college tuition bill.

Said Muzzioli, “Let’s just say I could use it.”

Beth Healy can be reached at bhealy@globe.com.
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