Marianna Man Pleads Guilty in Scheme to Steal USDA Funds Intended to Feed Hungry Children

LITTLE ROCK— Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced Friday that James E. Franklin, Jr., 34, of Marianna, pleaded guilty to an information charging him with conspiracy to commit wire fraud. Franklin conspired to steal money intended to feed children in low income areas during the school year.

Friday’s plea hearing took place in Little Rock before United States District Judge D.P. Marshall, Jr., who will sentence Franklin at a later date.

The United States Department of Agriculture (USDA) funds the Child and Adult Care Feeding Program, which includes an at-risk, after school component. In Arkansas, the feeding programs are administered by the Arkansas Department of Human Services (DHS). Sponsors who want to participate in the feeding programs must submit an application to DHS for approval. After they are approved, they can provide meals as part of the feeding program, and they are reimbursed for the eligible meals they serve.

At Friday’s hearing Franklin admitted that in the summer of 2013, he and Anthony Waits drove to meet a lady named Dorothy Harper at a bank. Harper lived in England and was a sponsor who participated in the feeding program. Waits got out of the vehicle, approached Harper’s vehicle and then returned with a stack of cash. Franklin estimated that it was around $12,000. Harper and Waits have been indicted on similar charges in Case No. 4:14CR00250-JM.

Prior to the trip, Franklin had limited knowledge of the feeding program from Waits. But after Franklin saw the large amount of cash, Waits explained the fraud to him in more detail. Franklin admitted that he agreed to participate with Waits in a fraudulent scheme to obtain money from the feeding program. Gladys Waits, Anthony Waits’ estranged wife, was also indicted on similar charges in Case No. 4:14CR00250-JM. Gladys Waits pleaded guilty to those charges on March 30, 2016.

Franklin was a sponsor for a feeding program through an organization called "JL&N Outreach." In the 2013 and 2014 contract years, Franklin submitted approximately 12 inflated claims for feeding sites in Brinkley, Ark., and Hughes, Ark. In Brinkley, Franklin falsely claimed they served from 217 to 287 children per day. In Hughes, Franklin falsely claimed they served from 184 to 244 children per day. According to witnesses, no more than 10 children per day were fed in Brinkley and no more than 15 children per day were fed in Hughes.

Because of the inflated claims, Franklin received a total of approximately $380,055.36 from DHS. Franklin withdrew in cash approximately $252,000 of the money he received. Franklin paid Anthony Waits approximately 40% of the total amount of money he received.

Franklin is the tenth person to plead guilty concerning the theft of USDA feeding program funds for children. Previous charges filed in this investigation detail alleged fraud involving over $10 million in USDA feeding program funds.

The statutory penalty for conspiracy to commit mail fraud is not more than 20 years’ imprisonment, not more than a $250,000 fine, or both, and not more than three years supervised release.

The investigation is ongoing and is being conducted by the USDA–Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service–Criminal Investigations, and United States Marshals Service. The case is being prosecuted by Assistant United States Attorneys Jana Harris, Allison W. Bragg and Cameron McCree.

If you are aware of any fraudulent activity regarding these feeding programs, please email that information to USAARE.FeedingProgramFraud@usdoj.gov.