Connecting the dots: the MDHS embezzlement scandal

The cast of characters, villains and heroes, in the Mississippi Department of Human Resources (MDHS) case seems to grow by the hour. Here’s an attempt to connect the players and what little is known thus far of the plot in this shameful drama:

Mississippi state auditor’s officials were to meet Monday with FBI agents to brief the Feds on the unfolding Mississippi Department of Human Services (MDHS) embezzlement scandal.

State Auditor Shad White said in a statement released Sunday, “Tomorrow morning I am heading to FBI offices where my agents and I will brief them on the DHS scheme and make all the evidence we have gathered available.

“We moved quickly and quietly in the auditor’s office to put a stop to the DHS scheme before any more money was taken, and now is the time to use every investigative resource available to uncover all the fraud that remains.”

The story about the MDHS scandal first broke late Wednesday afternoon, Feb. 5, 2020. The announcement came from the office of Mississippi State Auditor, Shadrach Tucker White. White’s statement said John Davis, former head of the Mississippi Department of Human Services, had been arrested and charged “in connection with a multi-million-dollar embezzlement scheme.”

Also arrested were Brett DiBiase, a former professional wrestler; Nancy New, owner and director of the Mississippi Community Education Center (MCEC) and New Learning, Inc.; New’s son, Zach New, assistant director of MCEC; Anne McGrew, identified as an accountant for MCEC, and Gregory Latimer Smith, a former employee of MDHS.

Although the total amount of money embezzled has not been determined, Auditor White characterized it as the “largest public embezzlement case in state history.”

Among other things, it is charged that state money was diverted to pay for drug rehabilitation treatment for former wrestler DiBiase at an exclusive drug rehab clinic in Malibu, California. It is also charged that DiBiase was paid state money for drug education work that he did not perform.

The first announcement of the arrests was apparently made on the website of the (Brookhaven, MS) Daily Leader at 4:51 p.m. Wednesday, Feb. 5. Brookhaven is in Lincoln County in the southwest quadrant of Mississippi.

Mike Hurst, the U.S. Attorney for the Southern District of Mississippi, complained on Thursday, Feb. 6, the day after the arrests, that his office had not been notified in advance by the state auditor’s office. Hurst said, “…neither the FBI nor the United States Attorney’s Office was contacted by the State Auditor or the Hinds County District Attorney about this investigation, although millions of federal dollars are alleged to have been stolen.”

Hurst said federal law enforcement was not aware of the MDHS investigation until they read about it in media reports.

Former MDHS Director, John Davis, is from Brookhaven, Lincoln County, and worked for MDHS in that county before his rise to the top of the state MDHS organization. Davis was appointed executive director of the Mississippi Department of Human Resources by then-Governor Phil Bryant in January, 2016.

Davis resigned as head of MDHS in July, 2019.

Nancy New is a long-time political ally and financial supporter of Mississippi’s new Governor, Tate Reeves. A little less than four months ago – October 2019 – it was reported that Nancy Drew and her son Zach had donated $5,000 to the Reeve’s campaign on behalf of their privately owned New Summit School in Jackson. A major part of Reeves’s education agenda has been to funnel state tax money to New Summit and other private schools in the state, including another one owned by New and son.

Two days after the State Auditor arrested the News, Davis, DiBiase, et al, Governor Reeves made a statement in which he said, “I can tell you right now, anything they (the News) gave to the campaign is going to be moved to a separate untouched bank account.”

Reeves said he did not know how much of the money his campaign received was stolen from taxpayers. He added that, “Anything they gave to the campaign will be there waiting to return to the taxpayers and help the people it was intended for. If that doesn’t happen, that money will go to a deserving charity.”

A relative newcomer to Mississippi politics, Shadrach “Shad” Tucker White is 34 years old and was born in Sandersville in Jones County, MS. He attended public schools there and then obtained an undergraduate degree from the University of Mississippi. A top scholar, he won a Rhodes Scholarship and earned a Master of Science degree from Rhodes College in England. He then earned a Doctor of Laws degree from Harvard University.

White was appointed State Auditor by then-Governor Phil Bryant in 2018, when State Auditor Stacy Pickering resigned.

Earlier news reports indicated that the initial inquiry into the MDHS scandal may have been kicked off by Governor Bryant himself. Rumor was that some MDHS employees brought the matter to Bryant’s attention in June, and that Governor Bryant pointed White to the problem.

White confirmed in an interview earlier today that Governor Bryant, himself a former state auditor, was indeed the “whistleblower” who brought the case to the state auditor’s office in June.

White has called for a “full forensic audit” of MDHS.

Much more remains to be revealed, including questions such as:
• What is the relationship between John Davis and former wrestler and drug abuser Brett DiBiase?
• What is the relationship between Davis and the News?
• What is the extent of the relationship between Tate Reeves and the News, mother and son?
• Is there more to be revealed about the diversion of tax money to private schools?