Woman testifies on role in USDA fraud

Ex-state employee describes destruction of falsified food-program records

Ahead of a trial beginning Monday, a former state employee said last week that she helped Jacqueline Mills fabricate “proof” that they legitimately operated government-funded feeding programs for low-income children and that she also helped Mills destroy records that would have incriminated them.

The testimony of Tonique Hatton, a former grants coordinator for the state Department of Human Services, was heard Wednesday by U.S. District Judge James Moody as he considered whether to allow jurors to view documents that Mills wants to introduce at her trial Monday.

Mills, 41, of Helena-West Helena, the accused leader of a scheme to defraud the federally funded feeding programs of millions of dollars, will be on trial alongside Anthony Leon Waits, 38, of England in Lonoke County. Both are charged with wire fraud conspiracy, while Mills also faces individual wirefraud counts.

Dortha Harper, 51, of England, a third person who was expected to be on trial with Mills and Waits, and who also goes by the name Dorothy Harper, unexpectedly pleaded guilty Friday afternoon to wire-fraud conspiracy, admitting she was responsible for between $500,000 and $1.5 million in stolen funds.

The trial for Mills and Waits is expected to last up to three weeks in Moody’s Little Rock courtroom.

Hatton, 39, of North Little Rock negotiated a guilty plea in September to charges of wire-fraud conspiracy and receipt of a bribe, agreeing to testify against her co-defendants. She was sentenced in January to nine years in

prison but hasn’t yet begun serving her sentence, which she acknowledged may be reduced in exchange for her cooperation.

Gladys Elise Waits, 37, of England, who also goes by the name Gladys King and is Anthony Waits’ ex-wife, pleaded guilty to the same charges a year ago and is awaiting sentencing.

Hatton and Gladys Waits both worked for the state, which administered the feeding programs funded by the U.S. Department of Agriculture.

Both women have admitted being the “gatekeepers” of a scheme that operated between early 2012 and August 2014. The USDA paid reimbursements to people or organizations that claimed to have operated after-school and summertime feeding programs for children in low-income neighborhoods.

Anthony Waits is accused of submitting false claims that he operated some of the feeding sites.

Prosecutors said the number of meals provided at some sites was greatly exaggerated, while at other sites, no meals were ever provided.

Mills, Hatton and Gladys Waits were the first to be indicted in December 2014, while Harper, Anthony Waits and Kattie Lannie Jordan, 51, of Dermott were later added to the indictment. Jordan has admitted to paying bribes to Hatton and Waits to obtain $3.6 million from the USDA and is serving a five-year sentence. She is also expected to testify.

Meanwhile, a federal grand jury has since handed up eight additional indictments, accusing nine other people — for a total of 15 people so far — of being part of the scheme. Some of those named in the other indictments, which will be tried separately, have pleaded guilty as well.

While the USDA, the Internal Revenue Service and the FBI are continuing to investigate, prosecutors say the fraud tally in the scheme has reached more than $11 million. All the money was earmarked to help “at-risk” children.

In Wednesday’s pretrial hearing, Hatton testified that both before and after the 2014 indictment, she enlisted the help of her son, her daughter and her niece to help Mills prepare false meal-count records to justify the government reimbursements. She said Mills also used names of children found in old school yearbooks to create false attendance reports.

After the women were indicted, Hatton said, Mills destroyed some of the false attendance records that had been used to generate reimbursements by pouring bleach on them and leaving them in a black plastic garbage bag placed inside a burning house, “so they could get that burnt smell on them.” Hatton testified that she was with Mills when the garbage bag was left in the burning house.

Assistant U.S. attorneys Jana Harris, Allison Bragg and Cameron McCree objected to defense attorney Bill James of Little Rock introducing mealcount and attendance records that Mills gave him after she was indicted and that she said are legitimate records from the 34 feeding sites across the state that she oversaw.

In an effort to show that there are too many questions about the authenticity of the records, the prosecutors took testimony from Hatton and seven other witnesses.

The witnesses included three people who operated or oversaw feeding sites, and who said the records were inaccurate in various ways. On some documents bearing their signatures, they said, the documents had been altered to increase the number of children that they had recorded as being fed. They said that on other documents they had never seen, their signatures were forged.

“I signed the form, but I didn’t check all those boxes,” said one man who operated a feeding site in Helena-West Helena.

While the forms indicated 150 kids had been fed at one time, the man said he had never served more than 50 to 60 kids at a time.

Another witness testified that the most children she had ever fed at two sites in Helena-West Helena were 15 to 20 at one location and 10 to 12 at another. She said forms purporting to have her signature and indicating that far more children were fed didn’t even spell her name correctly.

Moody agreed that the records — printed forms with handwritten notations — constituted inadmissible hearsay that he isn’t likely to allow James to show jurors to justify the $2.5 million in “reimbursements” Mills received. However, Moody didn’t prohibit prosecutors from presenting the records in an effort to show that Mills fabricated evidence.

Hatton testified that Mills paid her to prepare the false meal-count records and had her insert an occasional mistake in the documents so the government wouldn’t think the records were suspiciously perfect.

Mills testified briefly Wednesday, acknowledging that she had been “at the top of the hierarchy” of what she believed was a legitimately run operation to provide free meals or snacks provided through the USDA-funded Child and Adult Care Feeding Program.

She said she didn’t operate any feeding sites herself but kept all the records sent to her by the feeders and then submitted all the bills at once.

Mills acknowledged that one feeding site she oversaw was set on fire in the middle of the night and that she went there after being notified about the fire. But she said Hatton was lying when she said the women took a trash bag full of incriminating records into the burning house.

The USDA reimbursed providers for meals or snacks that feeding site operators reported had been given out at approved sites in low-income neighborhoods across the state, including Little Rock, Helena-West Helena, Dermott, Dumas, Eudora, Lake Village, England, Keo, Allport, Tucker, Toltec, Coy, Altheimer, Cotton Plant, DeValls Bluff, Osceola and Hazen.

Gladys Waits and Hatton have admitted using their positions with the state to approve sponsors who claimed to operate sites despite knowing the sponsors’ claims were false.