Ex-Belmont businessman arrested on fraud charges
Jack Cranney, a former Belmont resident and high-ranking distributor for the Shaklee Corp., has been arrested in El Paso on charges of stealing $6 million in investments from 15 of his clients.
A federal indictment was unsealed Monday in US District Court in Boston, charging Cranney, 73, with four counts of wire fraud, 16 counts of mail fraud, and three counts of money laundering. He was arrested the same day.
The government alleges that Cranney solicited money from friends and Shaklee business associates, promising to invest it for them at attractive rates of return. Instead, officials said, Cranney allegedly spent the money on himself and used it repay earlier investors in his alleged Ponzi scheme. He set up shell investment companies, the government alleged, to which investors were directed to send their funds.
The arrest comes two years after Cranney was charged with civil fraud by the Massachusetts Securities Division and the FBI raided his Belmont home for records. Cranney filed for bankruptcy protection in March 2013, as creditors and angry investors made demands for money.
Cranney’s bankruptcy lawyer, Jeffrey Hellman, declined to comment on the criminal indictment. In the past, Cranney has denied any wrongdoing.
The Cranney saga has been long and distressing for the former businessman’s friends and associates, many of whom are creditors in the bankruptcy case.
Elizabeth Sutton of Independence, Mo., had counted Cranney as a friend and said she lost $2.5 million she entrusted to him, not counting interest. She has been unable to follow through on a $500,000 gift she had promised to the Boy Scouts, because Cranney refused to return her money.
“I do think he should go to jail,” Sutton said. “I hate the time this has taken from my life. We all accepted him as a friend. He really hurt people.’’
Cranney faces a maximum of 20 years in prison for the fraud charges, plus three years supervised release and a $250,000 fine. The money laundering charges carry a 10-year maximum.
The sale of Cranney’s large house satisfied the claims of some of his alleged victims. Others are still owed millions and may get back about 15 cents on the dollar over time, lawyers said, from two Shaklee distributorships that Cranney had controlled. One of the entities was sold.
The other is still controlled by his wife’s daughter, who is not implicated in the alleged crimes. Cranney’s son is entitled to part of those earnings as well.
Shaklee is a Pleasanton, Calif., company that sells vitamins and nutritional supplements. It is organized in a pyramid structure, involving layers of people selling products and delivering the largest earnings to the people at the top.
Cranney was well-known within Shaklee for his own distributorship and another formerly owned by his late mother, Naomi Cranney, a prominent figure in the Belmont community.
The Massachusetts Securities Division in 2012 charged Cranney with stealing $10.4 million in an alleged Ponzi scheme, luring Shaklee associates to mortgage their homes and hand over their retirement accounts to Cranney to invest.