One of Jack Cranney’s creditors, an elegant blonde Texas woman, wept quietly under a withering round of questions Tuesday on the witness stand in US Bankruptcy Court.
Asked again and again why she loaned $215,000 to the Belmont man accused of running a Ponzi scheme, Susan Long said of Cranney and his wife, “Because I love them.”
Long was just one of Cranney’s close friends and colleagues from Shaklee Corp. to appear in court in Boston Tuesday. Each testified to a friendship established over decades and often gratitude for his help in building their businesses. They all came to support Cranney’s effort to reorganize his debts — and to fight a bankruptcy trustee’s effort to convert the case to a liquidation.
Long said she has a better chance of recouping money if Cranney is allowed to reorganize his debts and resume his Shaklee business. “It allows everyone to benefit from his vast experience in handling money and making money,’’ she said.
Cranney had been one of the most successful salesmen for Shaklee, a San Francisco-area company that sells nutrition supplements and eco-friendly products. But Shaklee stopped making monthly payments of about $50,0000 to Cranney in July, after Massachusetts securities regulators accused him of running a Ponzi scheme and selling promissory notes to investors without a license.
Cranney has denied the charges. He is facing numerous lawsuits filed by friends and associates who loaned him about $12 million from 2004 to 2011.
The FBI is also investigating.
The civil lawsuits against Cranney are on hold until the bankruptcy case is resolved.
With Cranney having about $6 million in assets and $20 million in liabilities, some creditors fear they will get little or no money back if Cranney is forced to liquidate.
But it’s unclear whether Shaklee will ever resume the payments to Cranney that could help him repay creditors over time. There is also a dispute between Cranney and his son over control of one of two Shaklee retail networks.
The creditors include a retired American Airlines pilot who gave Cranney a large chunk of his retirement assets, amounting to $434,000. One federal government employee, also a Shaklee distributor, handed him $184,000. And there was Elizabeth Sutton, of Independence, Mo., whose losses of $2.8 million were detailed last month in the Globe.
In each case, Cranney offered to pay an attractive rate of interest, sometimes as high as 12 percent. He did not send out monthly statements, and his friends said they did not ask for them. In court Tuesday, it also appeared the investors had little idea what Cranney was doing with their money.
Yet they did not appear angry, even with millions of dollars on the line. At least two of Cranney’s clients kissed his wife, who was seated in a wheelchair, on the way out.
Creditors were questioned by Eric Bradford, a lawyer for the US Trustee’s office, which is charged with recouping as much money as possible for the people owed money by Cranney. He grilled some about why they believed they would do better under a bankruptcy reorganization plan.
He asked some witnesses whether they had heard of the infamous financial con man Bernard Madoff, and if they knew how a Ponzi scheme worked —
One witness, a California doctor, said he believed he and Cranney’s other investors were relatively sophisticated.
“How sophisticated do you feel now?” Bradford asked.Beth Healy can be reached at firstname.lastname@example.org.