(A correction to this story has been made. See below.)
Kendra Davenport Cotton’s four aunts stand accused of defrauding the federal government of more than $11.5 million, but she says they’re not criminally minded.
“They just come from a ... rural area, very isolated,” said Cotton, who lives in Georgia. “I just know that about them. I doubt there was any criminal intent.”
A federal grand jury in Arkansas disagreed, charging the sisters — Lynda Charles, Rosie Bryant, Delois Bryant and Brenda Sherpell, who are all in their 70s — with cheating the U.S. Department of Agriculture out of millions of dollars intended for minority farmers who had suffered discrimination in USDA programs.
The sisters each received $2.2 million from a fraud scheme that lasted nearly a decade, the indictment said.
The sisters live in Arkansas and Texas but were all raised near Humnoke in Lonoke County, 40 miles southeast of Little Rock. They ran a business in North Little Rock called Jovi Women & Hispanic Litigation.
Also charged in the case were Lynda Charles’ daughter, Niki Charles, 46; Little Rock attorney Everett Martindale, 72; and Jerry Green, 39, a tax preparer who had an office in North Little Rock.
The defendants have pleaded pleaded not guilty. The four sisters and Niki Charles are accused of recruiting nearly 200 people to file fraudulent claims with the USDA for discrimination in farm lending programs in the 1980s and 1990s and collecting fees from the beneficiaries, most of whom were never even farmers, according to prosecutors.
A total of 115 counts were filed against the seven defendants, although not every count applies to each defendant. The charges include mail fraud, money laundering, tax evasion, false tax returns and conspiracy to defraud the IRS.
Although the indictment says the scheme lasted from mid-2008 to late 2017, the charges cover only criminal acts that began in 2012.
The sisters’ success in the alleged scheme surprised Rudy Arredondo, president of the National Latino Farmers & Ranchers Trade Association in Washington. “It was a very high bar” to get a claim approved, Arredondo said. “We had several of our farmers that have gone through the process, and it was extremely painful to relive those moments” of discrimination.
The sisters also had some claims denied. In 2015, they made an amateurish attempt to sue the government for denying claims, but it was quickly dismissed.
The sisters’ criminal attorney, Larry Jarrett of Garland, Texas, declined to comment on the pending criminal case.
The Arkansas Supreme Court Office of the Committee on Professional Conduct is monitoring the case as well. If convicted, Martindale would face a suspension of his law license or a referral to be disbarred, said Stark Ligon, executive director of the committee.
Neither Martindale nor his attorney, J. Blake Hendrix of Little Rock, returned calls seeking comment.
‘Kept to Themselves’
The first public sign of trouble for the sisters came in October. That’s when federal prosecutors filed a civil forfeiture action against properties traced to proceeds of the fraud, including two lots in the Rockwater Village subdivision in North Little Rock and a house in Colleyville, Texas.
The civil lawsuit, filed by the office of U.S. Attorney Cody Hiland of the Eastern District of Arkansas, alleged the sisters “and others were engaged in a scheme to defraud the United States Department of Agriculture of money that was intended to settle a lawsuit.”
The sisters are challenging the forfeiture, and that case is on hold until after the criminal case is over.
The civil complaint and the subsequent indictment give a peek into the sisters’ world: They were raised in Lonoke County as evangelical Christians, said Cotton, their niece.
After high school, Cotton said, the sisters most likely attended a historically black college or university in Arkansas, though she didn’t know specifics. They continued their education, with one receiving a master’s degree and the other three earning doctorates. Cotton said she thought her aunts’ degrees related to education.
“They just sort of kept to themselves,” Cotton said. “They don’t talk to people outside the family.”
Cotton said she was never close to her aunts, but their relationship took a turn for the worse in 2013, when the four sisters filed paperwork in the Probate Division of Pulaski County Circuit Court to become the legal guardian of another sister, Janis Bryant. Bryant, who is Cotton’s mother, was not charged and does not appear to have been involved in the alleged scheme.
The petition told the court that Cotton “has given her consent to this guardianship and feels it is in the best interest of her mother,” who had health problems.
Cotton said that statement was “a lie” and protested the guardianship petition.
In her response, Cotton said that “over many years” Delois Bryant and her siblings “have obstructed treatment alternatives that could have assisted the mental well-being of my mother Janis Bryant under the premise that ‘nothing is wrong with her’ and that my mother Janis Bryant is simply ‘stubborn’ and needs ‘prayer.’”
Cotton said she was concerned that her aunts wouldn’t get adequate medical care for her mother.
She added that her aunts “have a history of operating surreptitiously in all family matters, only communicating among themselves, and would be unwilling to communicate with me regarding my mother.”
After Cotton objected, Delois Bryant filed a motion to dismiss the case, saying she no longer wanted to obtain guardianship of her sister. The attorney who handled Delois Bryant’s petition was Everett Martindale.
Settlement Funds Targeted
The indictment said that in June 2008 the four sisters, along with Niki Charles and Martindale, “devised and participated in a scheme to defraud” the federal government.
The plan, according to the 40-page indictment, included finding people to file false claims of discrimination by the USDA. Successful claimants received a settlement from either the Black Farmers Discrimination Litigation Settlement program or the Hispanic and women farmers and ranchers settlement fund. Those funds resulted from class-action litigation against the federal government for systemic discrimination against minorities and women who were denied farm credit and other services by the USDA in the 1980s and 1990s.
To qualify for the settlement, claimants had to meet several requirements, including detailing the alleged discrimination and demonstrating that they attempted to farm during the period of the discrimination.
If a claim was approved, the claimant received $62,500, with $50,000 going to the claimant and $12,500 going to the IRS to cover the taxes on the award.
Arredondo, of the National Latino Farmers & Ranchers Trade Association, said advertisements had been placed encouraging people to apply for the settlements, “saying that it was kind of a giveaway program, which of course it wasn’t.”
Some farmers who were discriminated against became frustrated with the claims process and gave up, Arredondo said. Still other farmers had died or had lost their farms since the discrimination took place and didn’t bother filing claims.
“The documentation portion of the requirements was really, really high,” he said. “So how [the defendants] were able to generate that kind of documentation is beyond me.”
He said the required documentation included the original rejection or denial notice or an affidavit from people who were with the farmer when the denial occurred.
“It was not easy,” Arrendondo said.
Claims Called False
The indictment said that the sisters and Niki Charles looked for people to file claims for the refund money. They also paid others to act as recruiters to find more potential claimants, the indictment said.
The additional claimants were sought not only for the two existing settlement funds but for “future settlements and programs which the defendants believed might come available for claims,” the indictment said.
The “command center from which the subjects conducted their operation” was 105 E. F Ave. in North Little Rock, according to the civil complaint. That was the address of Jovi Women & Hispanic Litigation.
Martindale, who received his law license to practice in Arkansas nearly 46 years ago, purported to act as the legal representative for nearly all the claimants, the indictment said.
One or more of the sisters allegedly falsified the documents that Martindale then allegedly sent for the claim. Also, each affidavit was notarized by Niki Charles, who is a notary public, even though none of the affidavits was “actually signed in her presence by the witness purporting to verify the acts of discrimination referenced in the claim,” the indictment said.
Niki Charles allegedly received at least $90,000 from the fraud scheme.
Once a claim was approved, Martindale was entitled to a fee of up to $1,500 out of the claimant’s $50,000. Prosecutors allege that he received at least $51,000 from fraudulent claims, and he allegedly agreed to split his attorney’s fees with the sisters, who brought him the business.
The sisters also received money from the claimants they steered toward the settlement money. The “claimants paid one or more of the [sisters] a recruiter fee, claim writer fee, and attorney’s fee for preparing their false claims,” the civil lawsuit said. The fees collected from each claimant were typically between $10,000 and $25,000. Claimants were told to pay by cashier’s checks, money orders or cash, the indictment said.
Rosie Bryant deposited cash into bank accounts in amounts less than $10,000, so she wouldn’t trigger reports to the U.S. Department of the Treasury that financial institutions are required to file, according to the indictment.
Between Feb. 25, 2012, and Oct. 22, 2013, 192 claims were filed. Almost all of them succeeeded, resulting in a fraud of $11.5 million, according to a news release from Hiland, the U.S. attorney for the Eastern District of Arkansas. The claims, though, were false because “the claimants had not suffered discrimination and, in most cases, had not even attempted to farm” the news release said.
The civil forfeiture lawsuit said investigators have statements from more than 170 claimants who “have acknowledged that their claims or estate claims were false as to material matters.”
But apparently some claims failed. The four sisters decided to represent themselves and hundreds of others in a lawsuit against the USDA and the claims administrator for the Hispanic and women farmers and ranchers. In 2015, the sisters filed a lawsuit seeking unspecified damages in U.S. District Court in Little Rock over claims that “were summarily denied.”
The lawsuit had “numerous critical deficiencies,” an attorney for the USDA said in response.
The women, who aren’t lawyers, could legally represent only themselves, not others. And they failed to list the correct legal entity to be sued. The case collapsed after they didn’t respond to a motion to dismiss.
Other alleged crimes surfaced after the settlement money was received. The claim award was income that should have been reported on the claimants’ tax returns, according to the news release from the U.S. attorney’s office. Instead, the sisters are accused of arranging for Jerry Green to handle the tax returns for the claimants they recruited. The conspiracy resulted in tax returns that contained false information that allowed the claimant to receive as a refund most, if not all, of the $12,500 paid to the IRS as income tax withholding, the indictment said. The false tax returns filed totaled $4.6 million, the indictment said.
One or more of the defendants would receive a slice of the claimants’ tax refund by either having the money electronically deposited to an account she controlled or having the taxpayer pay her a portion, according to the news release.
Spending Spree
With the money they received, some of the sisters began buying property, according to the civil lawsuit.
In 2014, Rosie Bryant bought a 3,278-SF, three-bedroom, $610,000 home in Colleyville, Texas, with the proceeds from the fraud, the civil suit said.
Also that year, Bryant and her daughter, April Bell, who hasn’t been charged, bought a 3,143-SF, five-bedroom home for $380,000 in Euless, Texas.
In 2015, Lynda Charles and Delois Bryant bought adjoining lots in the Rockwater Village development in North Little Rock. One lot cost $97,400 and the other $87,400.
In 2016, Charles bought a nearly $60,000 Chevrolet Express van.
That same year, Delois Bryant bought a 1,614-SF, $120,000 home in southwest Little Rock with money stemming from the fraudulent claims, according to the civil suit. She also purchased a $113,000 Mercedes-Benz with money from the alleged fraud.
The spending spree appears to have ended in September 2017, when the sisters learned that the federal government was investigating them. They hired civil rights attorney John Walker of Little Rock to represent them.
After Walker’s death on Oct. 28, the sisters later hired Larry Jarrett of Texas to represent them both in the forfeiture civil suit and on the criminal charges.
All defendants have a Jan. 25, 2021, trial date in front of U.S. District Chief Judge D.P. Marshall Jr.
(Correction: The four sisters and Niki Charles were accused of recruiting nearly 200 people to file fraudulent claims with the USDA. The original article misstated the number of defendants.)
