Rutherford County Sheriff Robert Arnold, his former administrative chief deputy Joe Russell and the sheriff’s uncle have been arrested on conspiracy and corruption charges.
A federal grand jury handed down a 14-count indictment on Thursday, all relating to the company JailCigs.
Russell and the sheriff’s uncle, John Vanderveer, own the company. It was selling electronic cigarettes to inmates at the Rutherford County jail and other jails while the sheriff and Russell made a profit.
Arnold and Russell arrived at the United States Federal Courthouse about 8 a.m. on Friday. Vanderveer also turned himself in to authorities Friday morning.
“The overwhelming majority of law enforcement officers in the Middle District of Tennessee and across this nation have a deep and abiding sense of duty to the people they serve,” said Acting U.S. Attorney Jack Smith in a news release. “We never want to allow the illegal and self-serving actions of a few to unfairly brand the unsung heroes who every day place the safety and security of their communities above their own needs. Today we thank those officers for their dedication and service and for this reason we will always pursue justice for those whose actions attempt to discredit the profession.”
All three will be arraigned on June 7 at 1:30 p.m.View the indictmentThe indictment said Arnold, Russell and Vanderveer defrauded Rutherford County out of tens of thousands of dollars of revenue and covered it up by destroying evidence. They were also charged with tampering with a witness.
Channel 4 News learned on Friday that Arnold was an initial investor in the company, putting up $3,000. JailCigs were put in the Rutherford County jail with no competitive bidding.
The indictment said JailCigs sold $156,000 worth of e-cigarettes to Rutherford County inmates.
The indictment said Arnold made $66,000 off the sale of JailCigs, Russell made $52,000 and Vanderveer made $49,000.
When Arnold was running for re-election in 2014, the indictment said Arnold deposited $22,000 in JailCigs money to his campaign fund.
The indictment said Arnold lied when questioned and said the arrangement had been approved by the county attorney.
The indictment mentioned an interview Arnold did with Channel 4 indicating he was unaware of Russell’s involvement with JailCigs and repeated that to the Comptroller’s Office.
The indictment also said the sheriff ordered an unnamed person to destroy commission tabulation sheets.
There are also wire fraud charges since the e-cigarettes were imported from China.
FBI and TBI agents executed search warrants at the homes of Arnold and Russell and their offices on May 21, 2015.
“It is a public corruption investigation,” Jeffery Peterson, FBI Assistant Special Agent in Charge, said at the time.
The investigation came after a series of Channel 4 News reports about questionable deals and conflicts of interests at the Rutherford County Sheriff’s Office.
In April 2015, Channel 4 exposed how Russell co-owned a company named JailCigs with Arnold’s relatives. They were selling electronic cigarettes to the jail’s inmates.
It was a secret deal with no county contracts, no bids.
When confronted by Channel 4, Arnold admitted he’s related to the company’s owners, John and Judy Vanderveer, his aunt and uncle, and a connection by marriage.
“My wife works part time answering phones for them,” Arnold said in an April 2015 interview.
At that time, he didn’t admit to knowing Russell’s role in the company.
“Joe Russell? I mean, I know who he is,” said Arnold in the interview.
After being shown documents that listed Russell as an owner of the company, the sheriff replied “No I didn’t. I’m kind of shocked about that. I guess I’m kind of taken back on that.”
Channel 4 News obtained internal emails showing that Russell was handling the distribution of JailCigs to Rutherford County inmates.
Russell was also trying to sell JailCigs to other institutions, like CCA. It wrote an emphatic no on the offer.
A citizens group called for an ethics investigation into the sheriff after the Channel 4 reports.
"It was no bid, his family is making money,” said Joe Liggett, one of the members of the group Tennesseans against Corruption that filed the complaint. “It’s very under the table.
“He thinks he’s above the law. I think he’s met his match.”
“The buck stops with him,” said Steve Lane, another member of Tennesseans Against Corruption. “That’s why we want to see him removed from office.”
Several county commissioners called for Arnold to resign. Commissioner Rhonda Allen has been a critic of Arnold not knowing about Russell’s connection with JailCigs.
“The sheriff saying he had no knowledge of that, as close as they are, was surprising,” Allen said in an interview last year. “Frankly it’s a little hard to believe.”
The Channel 4 I-Team uncovered more deals that had not been bid, purchases and contracts that had not been through the county’s required process.
Arnold signed a contract in 2014 with Telmate to put tablet computers in the jail. The inmates or their families paid a fee for access and the sheriff’s office got 25 percent in return instead of returning the money to the county.
“This is the first I’ve seen this,” said Rutherford County Mayor Ernest Burgess when showed documents.
Another company, Access Securepak, sold the sheriff’s department more than $15,000 of special equipment, including stun guns, without the sheriff’s office acquiring bids.
“We’re looking at holsters and lasers and Tasers,” said Burgess after being shown the invoice in April 2015. “This is the first I’ve seen of this. My first thoughts were ‘Oh no, here we go again.’”
In the midst of the Channel 4 investigation, Arnold placed Russell on administrative leave with pay, more than $70,000 a year. That infuriated Tennesseans Against Corruption, which is working to oust Arnold from office.
“It’s a slap in the face to the taxpayers of Rutherford County that they will continue to be paid while they are being investigated,” said Lane.
Det. Maj. Bill Sharp was also placed on administrative leave at that time pending the outcome of the investigation.
Sharp owned a side business that offered training to law enforcement officers. He was being investigated for allegations he was running the business on county time, using his sheriff’s office email.
“That’s taxpayer money,” said Lane. “They are getting paid to do, literally, nothing.”
What did Russell do while drawing his county salary? Channel 4 found him out promoting JailCigs at a sheriff’s conference in North Carolina.
“My first reaction is a work that keeps coming to mind through all of this is the audacity of it,” said Lane.
The Channel 4 investigation also found sheriff’s officials looking the other way while two of its deputies were buying and selling ammunition.
The deputies bought nearly $60,000 worth of ammo from law enforcement vendors, which they then resold for a profit, and did so on county time.
"When you create a climate and atmosphere where one person sees the other person doing it, they start doing it," said Lane in November. "And before you know it, all sorts of people are profiting from taxpayer time and money and equipment. And we're not going to tolerate it."
Arnold was warned that what he was doing was illegal, as early as August 2014, according to a lawsuit filed by Virgil Gammon, who was third in command before being fired in September.
The suit said Gammon “refused to overlook” unlawful activities and confronted the sheriff.
Arnold told Gammon, “Don’t you worry about it. Chief Russell has it figured out,” according to the suit.
The suit said the sheriff later admitted to Gammon that “I got greedy.”
Gammon went to the district attorney and others, according to the suit.
The county settled with Gammon for $340,000. Gammon has also announced he plans to run for sheriff in 2018.
Last April the FBI and TBI carried out its joint raid at the request of the district attorney’s office.
“It will take as long as it takes,” said Peterson at the time. “We are methodical.”
As the investigation intensified, Arnold told his staff “we have a rat” and created a “hit list” of people to be fired.
Gammon was a 38-year veteran with a spotless record. He served as chief deputy for Sheriff Truman Jones, who Arnold defeated for the office in 2010.
On May 22, 2015, Gammon received a subpoena to testify before a grand jury the day after agents raided Arnold and Russell’s homes and offices.
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