Trial starts in Arkansas feeding-fraud case

A government program designed to provide nutritious meals to underprivileged school-age children across the country was turned into a goldmine for a handful of savvy adults in Arkansas who used it to line their own pockets with millions of dollars, federal prosecutors say.

Over the next three weeks, prosecutors will present testimony and other evidence to try to persuade a federal jury seated Monday to convict Jacqueline Mills, 41, of Helena-West Helena and Anthony Leon Waits, 38, of England of conspiring to commit millions of dollars' worth of wire fraud. Mills is also charged with 25 individual counts of wire fraud, 10 counts of bribery and three counts of money laundering.

To put it simply, Assistant U.S. Attorney Allison Bragg told jurors Monday, "This case is about greed."

Mills claimed to have operated 34 state-approved feeding sites in low-income areas of Arkansas from 2011-14, though prosecutors say that in many cases the number of children served was greatly exaggerated and that in other cases the sites didn't even exist. Waits doesn't face any additional counts beyond the conspiracy charge because, Bragg said, he "kept his hands clean" by recruiting other people to do his dirty work and accepting only cash as kick-backs.

Bragg and her fellow prosecutors, Assistant U.S. Attorneys Jana Harris and Cameron McCree, say Waits was responsible for at least $1.6 million that was stolen from the U.S. Department of Agriculture through the conspiracy, while Mills was responsible for $2.7 million in theft.

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They say that, so far, about $20 million has been determined to have been stolen from the USDA in the overall conspiracy that, at last count, includes 13 other people and eight other indictments.

The USDA's Food and Nutrition Service administers child nutrition programs, including the Child and Adult Care Food Program and the Summer Feeding Service Program. The first has an at-risk, after-school component that funds after-school programs that serve a meal and/or a snack to children in low-income areas. The second is designed to ensure that children in low-income areas continue to receive nutritious meals during the summer, when school isn't in session.

In opening statements Monday, Bragg told the six men and six women on the jury that in Arkansas, the state Department of Human Services administers the feeding programs. That means that when someone applies to be a sponsor for a feeding program, DHS is supposed to investigate and approve both the sponsor and the proposed site, and oversee the ensuing claims for reimbursement that are filed after meals are provided. The USDA pays pre-approved reimbursement claims directly into an approved sponsor's bank account.

In the case of Mills, Waits and others who conspired with them, approved "sponsors" would feed maybe 10 children and then claim they had fed 100 children, seeking reimbursement for all 100 meals "provided," prosecutors say.

"They did that over and over and over until they had made millions of dollars off that feeding program," Bragg said.

She said jurors surely wondered, "How did DHS let that happen?"

The answer, she said, is that the conspirators "had two people on the inside, in DHS, to make sure all these people got paid."

The insiders were Waits' ex-wife, Gladys Elise Waits, also known as Gladys King, and Tonique Hatton, a DHS employee since 2000 who had gradually moved into higher positions of trust. Both have pleaded guilty to taking bribes to approve sponsors and sites that otherwise wouldn't qualify, and both are expected to testify at the trial in the Little Rock courtroom of U.S. District Judge James Moody Jr.

Mills' attorney, Bill James of Little Rock, scoffed at the allegations against his client, whom he described as a lifetime resident of the Delta who earned a degree in education, was a school administrator and even a principal for a time, and then "moved on" to own and direct a preschool.

Hatton, then a grants coordinator, testified in a pretrial hearing that she was inspecting the preschool when she met Mills and the two became fast friends.

James, who is representing Mills alongside attorney John Landis, told jurors that Mills began branching out by overseeing feeding programs. "Children were fed, and Jackie Mills fed them," he said, adding that the trial "is the beginning of the last battle she's had with DHS."

He said it will become clear when she testifies that she's the kind of person who "doesn't take a lot of guff, goes for what she wants and is not afraid to fight," which is why she hired an attorney and began requesting records under the Freedom of Information Act after the agency refused to pay her money she had earned.

"Her fighting," James said, "uncovered a cancer" consisting of King and Hatton.

"She just wants what's owed to her, and the government doesn't want to give it to her," he said, asserting that the government has taken $750,000 from her. He said checks she wrote to Hatton weren't bribes, but the return of funds that Hatton asked her to hold while Hatton was going through a divorce.

Attorney Willard Proctor Jr., who is representing Anthony Waits, told jurors that "this case is about the first law of nature -- self-preservation."

He said those who are testifying for the government are only trying to please prosecutors in order to serve less time in prison.

Comparing a conspiracy to a pound cake, he said prosecutors must prove that elements, or ingredients, existed to make up a conspiracy. But in Waits' case, Proctor said, "You're gonna have rotten eggs, spoiled milk and flour with some weevils in it."

Proctor said any money that prosecutors might show Gladys Waits paid to her ex-husband, Anthony Waits, was for other work he did. Proctor noted that Anthony Waits did construction work and operated an automotive shop.

Bragg told jurors they will see photographs to help them put things in perspective. For example, she said, they will see a picture of a tiny building where Mills claimed to have fed over 200 children a day.

"You'll be able to see if those hundreds of children could even fit into the tiny building," the prosecutor said.

She said Anthony Waits "recruited his friends and got them to set up feeding stations," so that when the USDA paid the friends by direct deposit, "they got in trouble first." But when they did, Bragg said, they pleaded guilty and agreed to testify against Waits.

"They will say that Anthony Waits would get their program up and running, and provide protection through his wife, Gladys," Bragg said. "He received up to 40 percent of the money that his friends got from those payments."

Although his name isn't on any of the wire transfers, she said, his voice was captured on a recording, made after he learned of the federal investigation. Bragg said jurors will listen to the recording and hear Waits say that when he finds out who is doing the talking, he will knock on their doors and "boom, boom, boom."

Metro on 03/28/2017

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