FBI agents arrest Pulaski County sheriff's employee accused in fraud case

A 25-year veteran of the Pulaski County sheriff's office was arrested Wednesday by FBI agents when he showed up for work.

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Later in the day, U.S. Attorney Chris Thyer announced that Sgt. Kelvin Hendrix, 47, had been arrested on a mail-fraud charge, and that Jennifer Gann of Sherwood, 35, an employee of Cruse Uniforms and Equipment, was arrested "for her involvement in the mail-fraud scheme."

"Sergeant Hendrix was using his position with the Sheriff's Office to purchase firearms, which were ultimately paid for by Pulaski County," Thyer said. "As soon as Sergeant Hendrix's scheme was discovered, Sheriff Doc Holladay immediately notified the FBI and turned much of the investigation over to them."

Thyer said the FBI discovered that Hendrix and Gann stole funds allocated to the sheriff's office for the purchase of employee uniforms, and used those funds to buy firearms from the uniform company. He said that between July of last year and April, they purchased at least 25 guns through the scheme.

Capt. Carl Minden, spokesman for the sheriff's office, said Hendrix was on leave without pay as a result of the arrest. He said the sheriff's office didn't want to comment beyond a statement Holladay made in a news release Thyer issued. In the release, Holladay said, "The initial allegation was brought to my attention," and that he turned the information over to the FBI "due to the nature of the investigation."

Hendrix and Gann appeared Wednesday afternoon before U.S. Magistrate Judge Jerome Kearney, who released them on their own recognizance after prosecutors didn't ask that they be detained.

The pair were charged through a criminal complaint, which is issued by a judge if there is enough probable cause to establish that a crime was likely committed. A federal grand jury will consider indicting the pair at its next regular session, the date of which isn't made public. A mail fraud conviction is punishable by up to 20 years in prison and a fine of up to $250,000.

According to an FBI affidavit attached to the complaint, which was filed Monday and unsealed after Hendrix's and Gann's arrests Wednesday, Hendrix isn't a law enforcement officer, but is the quartermaster for the Pulaski County jail. It's a job that requires him to purchase and distribute uniforms for all jail employees through Cruse, a retail store that sells uniforms, firearms and other equipment through its two locations in Little Rock and Springdale.

In the complaint, FBI Agent Justin Woodruff noted that jail employees with at least one year of service have a $400 annual uniform allowance that allows them to obtain approved items from Cruse. It says Hendrix is responsible for submitting uniform orders to the business, and maintains a "sizable" inventory of items that have been returned by former employees. Hendrix isn't authorized to order guns for sheriff's office employees.

Despite not being a law enforcement officer, Hendrix has had special authorization to carry a "duty weapon" while performing certain duties such as transporting prisoners or teaching others how to use firearms, Woodruff said. He noted that Hendrix has an office inside the jail, and that jail employees aren't allowed to carry firearms inside the facility.

Gann, the inside sales manager for Cruse and a 16-year employee, is responsible for supervising employees, balancing and closing the business's books, and keeping track of pickup orders.

The affidavit alleges that from last July through this month, Hendrix provided Gann with the names of jail employees who weren't eligible for a uniform allowance, who he knew hadn't used the allowance or who had been provided used uniforms from his inventory. It says Gann used the names to create purchase invoices indicating those employees had ordered items from Cruse, and then faxed the invoices to the sheriff's office for payment. A check for the invoices was then sent to Cruse by mail from Pulaski County Treasurer Debra Buckner.

Meanwhile, the agent wrote, Gann also created another invoice in connection with each transaction, to indicate that the items listed on the purchase invoices had been returned, and then credited the value of the returned items in the form of a "store credit" to Hendrix or a third party, rather than a sheriff's office account. Woodruff noted that Gann has a unique computer log-in number, "6," that was automatically printed on all invoices and work orders she generated.

The affidavit alleges that Hendrix and Gann used the store credits generated by the scheme to purchase at least 25 firearms. It says they "typically met after hours at Cruse, sometimes several hours after all other Cruse employees had departed, to avoid detection."

The affidavit details two examples of the alleged fraud scheme. The first occurred Dec. 2, when it says Gann created a purchase invoice for the purported purchase of 42 sheriff's office T-shirts, for which the sheriff's office was charged $526.47. It says Gann then created a merchandise-return invoice claiming that the 42 shirts had been returned, and issued $526.47 in "store credit" to Hendrix personally.

That same day, the agent said, Gann generated a purchase invoice for the sale of a Glock Model 43 handgun and a used Glock Model 30, to Hendrix for $553.72. The amount owed by Hendrix was partially paid using the "store credit," leaving a balance of $27.25 due to Cruse, which wasn't paid.

The affidavit noted that the guns aren't standard-issue for sheriff's office employees.

The second example alleges that on April 4, Gann used the names of four sheriff's office employees to charge the sheriff's office $1,538.67, even though the named employees weren't yet eligible for a uniform allowance, and then issued a "store credit" in the same amount to Hendrix, who used it to obtain a Smith and Wesson M&P 10 rifle for $1,096, a Smith & Wesson magazine for $49.10 and ammunition for $133.21, for a total of $1,393.36, including sales tax. The transaction left Hendrix with store credit of $145.31, the affidavit says.

The document notes that surveillance video captured Hendrix and Gann carrying a rifle box, ammunition and rifle magazines out of the showroom at 6:53 p.m. April 4, after the business closed at 4:30 p.m.

The affidavit also was submitted in support of a search warrant for Hendrix's home in Bauxite, which Kearney signed, leading to a search after his arrest Wednesday. Court records don't indicate what was seized.

"While it is disheartening to learn that a 25-year veteran of the sheriff's office would violate the public's trust in such a manner, it is reassuring to know that Sheriff Holladay and the other good men and women of the Pulaski County sheriff's office will treat one of their own in the same manner they would treat any other person alleged to be involved in criminal activity," Thyer said in a news release.

Metro on 04/28/2016

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