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Lawyer and Tax Preparer Helped Five Defendants with False Discrimination Claims
LITTLE ROCK—Five individuals and an attorney have been charged with defrauding the U.S. Department of Agriculture out of over $11.5 million that was intended to benefit farmers who had been discriminated against.
The indictment alleges that four sisters, one of their daughters, and a lawyer worked together to submit false claims concerning discrimination against farmers who are black, Hispanic, or female. The women also are alleged to have hired a tax preparer to falsify tax returns, resulting in failure to report over $4.6 million to the Internal Revenue Service.
Cody Hiland, U.S. Attorney for the Eastern District of Arkansas, Dax Roberson, Special Agent in Charge of the U.S. Department of Agriculture Office of Inspector General, and Tamera Cantu, Special Agent in Charge of the Internal Revenue Service, announced the indictment, which was handed down by a federal grand jury on Thursday afternoon and made public today.
The indictment alleges that from 2008 until 2017, five defendants solicited people to file false claims asserting they were discriminated against when they tried to get assistance from USDA for their farming operations. Four of the defendants—Lynda Charles, Rosie Bryant, Delois Bryant, and Brenda Sherpell—are sisters. A fifth defendant, Niki Charles, is the daughter of Lynda Charles. A sixth defendant, Everett Martindale, worked as an attorney and acted as the legal representative for most of the claimants that the five women recruited. A seventh defendant, Jerry Green, worked as a tax preparer, and the indictment alleges that he filed false tax returns for some of the claimants.
According to the indictment, claims were submitted under two programs: the Black Farmers Discrimination Litigation (BFDL) Settlement and the Hispanic and Women Farmers and Ranchers (HWFR) Litigation. The BFDL Settlement resulted from a class action lawsuit filed in 1997 in which a group of black farmers claimed they had been discriminated against when they applied for farm credit, credit servicing, or farm benefits from USDA. Similarly, the HWFR Litigation originated when groups of Hispanic and women farmers filed separate lawsuits against USDA, also alleging discrimination in their farm benefit programs.
Both BFDL and HWFR resulted in a claims process where farmers who could show they had applied for participation in a USDA benefit program and believed they had been discriminated against could make a claim for financial relief. A successful claim resulted in an award of $62,500. Of that, $50,000 would be made payable to the claimant, and $12,500 would be transferred directly to the Internal Revenue Service as a tax withholding. The indictment alleges that 192 claims were made, almost all of which were successful, resulting in a loss of over $11.5 million. The indictment alleges that the 192 claims were false because the claimants had not suffered discrimination and, in most cases, had not even attempted to farm.
The indictment alleges that Martindale would deposit claim checks into his law firm trust account, issue a check from that trust account to the claimant, and withhold his attorney fee. For both BFDL and HWFR, attorney fees were restricted to $1,500 per claimant. The indictment alleges that the four sisters entered an agreement with Martindale in which they would split the attorney fee. The sisters also demanded and received additional money from the claimants themselves.
The money received from a claim was income that should have been reported on the claimant’s tax return. The indictment alleges that the four sisters arranged for defendant Jerry Green to provide tax preparation services for the claimants they had recruited. The indictment further alleges that Green falsified the tax returns in order to create a tax refund. The conspiracy resulted in false tax items totaling $4,615,009.
According to the indictment, three of the sisters—Lynda Charles, Rosie Bryant, and Delois Bryant—filed false tax returns of their own and laundered money through purchases of numerous homes and properties, a Chevrolet van, and a Mercedes G550. The indictment also alleges that they laundered money through cashier’s checks and payments on a student loan for Charles’ daughter.
In October, the United States government filed a civil case to forfeit several properties that were purchased using money traceable to the crimes charged in this indictment.
The investigation is being conducted by USDA-OIG and IRS with assistance from the United States Marshals Service and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorneys Angela Jegley, Michael Johnson, Cameron McCree, and Bart Dickinson.
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
CHARGES AND STATUTORY SENTENCES
Mail fraud is punishable by not more than 20 years incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
Conspiracy to defraud the IRS is punishable by not more than 5 years in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
False tax returns are punishable by not more than 3 years incarceration in the Bureau of Prisons with a possible fine of up to $100,000, and not more than 1 year supervised release.
Tax evasion is punishable by not more than 5 years incarceration in the Bureau of Prisons with a possible fine of up to $100,000, and not more than 3 years supervised release.
Money laundering is punishable by not more than 10 years incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.