Belmont businessman pressed on funds in court
Jack Cranney says FBI seized records of losses
Jack Cranney heard the same question again and again in a US Bankruptcy Court hearing Monday: What did you do with the money?
Cranney, a Belmont businessman, soughtbankruptcy protection last month while under investigation by state and federal authorities and battling lawsuits filed by people who say he owes them money. Cranney estimated his total debts at $12 million in testimony at the Boston hearing with the bankruptcy court trustee, creditors, and their lawyers.
That is more than earlier estimates by authorities. But Cranney repeatedly refused to break down the details of losses or where the money went, saying FBI agents who raided his house in November seized all his documents.
“They took every record I had,’’ Cranney said. “I have no records.”
Cranney is under investigation by the Massachusetts Securities Division for running an alleged Ponzi scheme. He borrowed millions of dollars from his longtime friends and associates with the Shaklee Corp., a Pleasanton, Calif., company whose nutritional supplements and household products he sold and recruited thousands of others to sell.
Cranney, 71, lives in a $3.8 million home in Belmont. He enjoyed hosting friends and taking luxurious trips. But starting more than a decade ago, he took large sums from friends, promising them returns of 6 to 12 percent a year. He said many clients were looking to escape losses in the stock market. A handful of people received payments; others never asked for the interest, simply trusting that Cranney was keeping track of their money.
In reality, he either spent the money or paid it out to other people who had given him their savings, according to Cranney’s testimony Monday. The Bankruptcy Court trustee, Eric K. Bradford, repeatedly asked Cranney to explain how he used the funds. Irritated but cowed, Cranney described moving money among his various accounts and then using it to pay expenses incurred “in the normal course of business,’’ such as travel, food, and Shaklee meetings.
Bradford noted that Cranney seemed to have sharp recall in cases where he had repaid people — and yet claimed to remember almost nothing about what happened to the rest of the money. “It would seem to me that $12 million would have left some impression on you, sir,’’ he said.
Cranney, gray-haired and wearing a dark pin-striped suit, pushed his wife, Nevena, up to the hearing table in a wheelchair. He repeatedly blamed his financial woes on having been consumed with his wife’s care since 2007.
Cranney said he needs Shaklee to release his income stream of about $45,000 a month so that he can repay his creditors. Shaklee previously said it suspended Cranney last July, when state regulators filed civil charges against him. On Monday, Cranney said the company shut off his payments before then, in April 2012.
But Cranney faces another legal dispute, with his own son, over rights to those Shaklee payments. His son claims that part of the business is rightfully his, left to him by his grandmother.
Meanwhile, several lawyers for the creditors also pressed Cranney to sell his house as soon as possible, to raise more cash.
Cranney predicted that if he could get back to work, “I’ll make $10 million probably in the next 10 years.”