Mississippi’s Department of Human Services (MDHS) is suing former non-profit head Nancy New and others involved in the embezzlement of millions in federal welfare funds. The suit hopes to recover some some the misspent funds. Defense attorneys for New are attempting to halt the civil case until the criminal probe into the case is complete. MDHS says the motion is a ploy by New and the other defendants to “avoid, or at least delay, liability for their actions”.
In July, Gov. Tate Reeves advocated for the criminal case preceding the civil case. This was part of his justification for the abrupt firing of Brad Pigott, the state’s lead attorney in the case, who was probing high-profile players in the case. Pigott and independent reporting says Tate’s firing of him was to head off Pigott’s probe of former Gov. Phil Bryant and former NFL quarterback Brett Favre and their involvement in the case.
Nonprofit founder Nancy New and former welfare director John Davis, defendants in the state’s civil litigation over the misspending of millions of federal grant funds, have asked the court to stay the case until the criminal investigation concludes.
Mississippi Department of Human Services, the agency that administers welfare programs and is bringing the suit, is objecting against the stay, arguing that defendants are attempting to “avoid, or at least delay, liability for their actions.”
Now, the attorney representing New and her son Zach New is questioning the motives of the state agency, which was responsible for managing the funds in question, especially since it omitted at least one key recipient of improper welfare payments from the defendant list.
“Of course, MDHS would love nothing more than to rush this case through discovery with the cloud of criminal prosecution looming large, thereby muzzling witnesses who would reveal the depth of its wrongdoing,” wrote the News’ attorney Gerry Bufkin.
Both New and Davis have pleaded guilty to charges related to the welfare scheme and have agreed to aid officials in prosecuting other individuals “up the ladder,” Hinds County District Attorney Jody Owens said after Davis’ plea hearing in September. They have not been sentenced.
Under the leadership of Davis and the politician who appointed him, former Gov. Phil Bryant, officials stole or wasted at least $77 million in federal grant funds, many of which flowed through Nancy New’s nonprofit Mississippi Community Education Center to the pet projects of celebrities and politically connected figures. Some of the purchases were criminal while others simply violated federal spending regulations. Communication obtained by Mississippi Today reveals Bryant’s involvement in many conversations about the projects.
In its Oct. 11 response to the News’ motion to stay, MDHS shot back a fiery response to the defendants’ claims that the welfare agency is also responsible for the misspending.
“The New Defendants nevertheless seek to have the Court and the public absolve them of liability by pointing the finger back at MDHS, despite the fact that the New Defendants admit that they bribed MDHS’s Executive Director,” the filing reads. “But no public official or employee can approve fraudulent payments or waive statutory requirements. This strategy may generate media attention, but it is no legal defense to civil liability.”
Bufkin has argued his clients have already taken responsibility for their actions. But in response to the state Tuesday, he said the threat of an ongoing criminal investigation hinders the News from providing testimony in the civil case.
“The civil suit is the best opportunity the New Defendants have had in years to tell their story. The evidence will show that politicians, MDHS bureaucrats, and well-connected powerbrokers funneled tens of millions in welfare funds to pet projects in a series of sad and disturbing examples of TANF-flexibility gone wild,” Bufkin wrote. “The New Defendants look forward to telling their story, but unfortunately the opportunity is premature.”
In the civil case — filed more than two years after the state auditor’s initial findings — the state is attempting to recoup roughly $24 million from 38 individuals or companies that misspent or received improper welfare payments.
Bufkin argued delaying the civil litigation until the criminal cases have concluded is necessary “to ensure the thorough, complete and efficient discovery of one of the most sprawling and complex cases in Mississippi history.”
The single largest purchase within the misspending scandal is the $5 million in welfare money that Mississippi Community Education Center paid the University of Southern Mississippi Athletic Foundation to build a volleyball stadium at the university on behalf of former NFL quarterback Brett Favre. MCEC also paid Favre’s company an additional $1.1 million, which texts indicate was also intended for the volleyball project, bringing the possible total to $6.1 million. Reeves’ office and the welfare agency chose not to include the athletic foundation as a defendant when it filed the complaint in May.
MDHS then terminated the private attorney it had contracted, former U.S. Attorney Brad Pigott, who spent a year crafting the case, after Pigott filed a subpoena on the athletic foundation in July. Pigott was attempting to examine the events surrounding the volleyball stadium project, including Bryant’s involvement.
“Not only has MDHS refused to pursue recovery of this $6.1 million in welfare funds, but it has actively thwarted its former counsel’s efforts to uncover facts related to the expenditure of these funds,” Bufkin wrote.
If the purpose of the state’s civil suit is to recover as much welfare money as possible, Bufkin questions why it would not pursue the single largest purchase, which has already resulted in a criminal conviction. Zach New pleaded guilty in April to defrauding the government by paying for the volleyball stadium construction under a sham lease agreement.
“MDHS argues it ‘aims’ to recover money damages, and, therefore, Defendants should not be concerned with allegations of criminality in the Complaint. Whatever motives lurk beneath the civil suit, in the post-termination of former counsel Brad Pigott era, the efficient recovery of welfare money is not one of them,” Bufkin wrote.
Current MDHS Director Bob Anderson answered questions about Pigott’s firing Tuesday during the Mississippi Legislative Democratic Caucus hearing on the scandal. He told lawmakers that the agency terminated Pigott because the attorney subpoenaed the athletic foundation without discussing the filing with him first and while he was out of town. Pigott did email a copy of the subpoena to a MDHS attorney before filing it, but Anderson said that was not sufficient notice as he was not copied on the email. Anderson also said that the agency felt that Pigott did not have the capacity to handle the breadth of the case, which includes hundreds of thousands of pages of discovery documents.
Bufkin also represents the nonprofit, Mississippi Community Education Center, that Nancy New founded and ran alongside Zach New.
Bufkin stated in his Tuesday response that even though MDHS filed the complaint in May, it did not request discovery from the nonprofit until October. He also said MDHS has not produced documents that MCEC requested through discovery in August. The court will address several motions and filings in the case, including multiple subpoenas on Bryant, at a hearing in early 2023.
https://i0.wp.com/nemiss.news/wp-content/uploads/2020/05/BrettFavrePhilandTate-771x578-1.jpg?fit=500%2C375&ssl=1375500NEMiss.Newshttps://nemiss.news/wp-content/uploads/2023/02/nemiss-full-logo-300x77.jpgNEMiss.News2022-10-21 15:45:092022-10-21 15:45:09Welfare embezzlement case: Nancy New, other defendants try to stall state suit to recoup funds
NEMiss.News Editor: The shenanigans of former Mississippi Governor Phil Bryant and others in illegally diverting $77-million in federal welfare money to their cronies are getting national attention. The case first broke in 2020 when State Auditor Shadrack White crowed about the arrests of former DHS Director John Davis, Nancy New, a promoter of private schools, and several others. White, a Bryan protege’, claimed at the time that Bryant was the “whistle blower” in the case, an assertion that came unraveled when it came out that Bryant and his wife Deborah were themselves involved in misdirecting the federal money. Retired NFL quarterback Brett Favre, a former football hero at the University of Southern Mississippi and a buddy of Bryant and current Governor Tate Reeves, was the beneficiary of several millions, a portion of which he paid back when the scandal came to light.
The case caught a special new wrinkle a few days ago when former U.S. Attorney Brad Pigott, who had been hired by DHS to “claw back” some of the millions, was fired by Reeves after Pigott subpoenaed additional information about the dirty deeds. Reeves himself got donations from New, which he said he “donated to charity” after the case broke 30 months ago. The New York Times, NBC News and several other national news organizations jumped on the story during the weekend just ended. Read on…
Mississippi fires lawyer who was investigating Brett Favre’s potential connection to $5 million payment to Southern Mississippi
Posted by Mike Florio on July 24, 2022, 12:06 PM EDT
The massive, multi-million-dollar welfare scam in Mississippi is an onion with many lawyers and levels. Some have been explored. Some haven’t been. Now, some may be stopping others from the effort to keep peeling.
As reported by Mississippi Today, the state’s welfare department has fired attorney Brad Pigott, who was hired to get to the bottom of the scandal. The firing happened roughly a week after he sent a subpoena to the University of Southern Mississippi aimed at exploring why and how the school received $5 million in welfare funds to build a volleyball stadium.
“All I did, and I believe all that caused me to be terminated from representing the department or having anything to do with the litigation, was to try to get the truth about all of that,” Pigott told Mississippi Today on Friday. “People are going to go to jail over this, at least the state should be willing to find out the truth of what happened.”
Pigott, in seeking more information about the $5 million payment to USM, was exploring the involvement of former NFL quarterback Brett Favre and former Mississippi governor Phil Bryant, among others. Favre played college football at USM an his daughter played volleyball at the school in 2017 and 2018.
The New York Times pushes the ball a little farther, after separately speaking to Pigott. The lawyer told the Times that Favre had promised to give $5 million to the construction of the volleyball stadium. Pigott claims that Favre, instead of writing the check, asked the Mississippi Community Education Center to fund the project. And the Mississippi Community Education Center was at the heart of the distribution of federal welfare money in a way that has created a major controversy in one of the nation’s poorest states.
Pigott told the Times that the center paid the $5 million, and then “disguised it as a payment for use of university facilities that did not occur.”
“I’m a born and raised Mississippian, and this particular kind of fraud was just an especially offensive failure to use money to serve what [federal] law calls ‘needy families,’ of which we have an excess supply in Mississippi, and do have great, great needs,” Pigott told the Times. “I found it especially offensive that they so cavalierly spent so many millions of dollars intended to remove poverty in this state, and instead spend it on each other and celebrity figures and corporations and their favorite institutions.”
A spokesperson for current Mississippi governor Tate Reeves told the Times as to the firing of Pigott that there are “many capable lawyers who can handle the work necessary to recover stolen [federal] funds” and that “it was decided that a semiretired solo practitioner was not the right person to sign on for more work.”
Pigott seems to believe he wasn’t the right person because he wasn’t the “right” person. The former U.S. Attorney who was appointed by Bill Clinton apparently thinks the firing happened because the work was coming too close to possibly exposing new depths of Favre’s and Bryant’s involvement, and because certain political forces intervened.
“I am sure they can find a loyal Republican lawyer to do the work,” Pigott told Mississippi Today.
Favre was first connected to the scandal via reporting that he received $1.1 million in welfare funds for no-show public appearances and other work. He denied getting paid not to perform services, but he nevertheless paid back the money. Mississippi has since sued him for unpaid interest on the funds.
NEMiss.News 3 part series on MDHS embezzlement scandal (May, June 2020):Part I(Charges & Evidence), Part II (Key Players), Part III (How to get money back?)
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The role of former NFL quarterback Brett Favre in embezzling millions in federal funds is explained in this article by mississippitoday.org.
Favre used his friendship with then Governor Phil Bryant and others to divert millions of federal welfare dollars into a volleyball facility at his alma mater. Millions more in TANF funds were diverted to investment in an experimental drug in which Favre had a financial interest.
Favre is no stranger to controversy.
During his long career as a durable and successful professional quarterback, Favre famously had problems with abusing Vicodin and alcohol. Favre’s wife Deanna described him as “loud, rough, and hateful” during his various bouts with chemical abuse. It is claimed that Favre stopped using alcohol after undergoing rehabilitation treatment for the second time in 1999.
Then in 2010, the NFL investigated Favre for “sexting” and leaving inappropriate voice messages for Jenn Sterger, a female sportscaster. He was also accused of sending Sterger a photograph of his penis. Favre admitted the “sexting” and voicemails, but denied sending the photo.
Although the photo came from the same telephone as the texts, NFL investigators said they could not find “forensic evidence” he had sent the photograph. Favre reportedly made a tearful apology to his Minnesota Viking teammates. Ultimately, the NFL found Favre not to be in violation with its personal conduct rules, but did fine him $50,000 for failure to cooperate with its investigation. Favre ended his pro football career at the end of the 2010 season.
https://i0.wp.com/nemiss.news/wp-content/uploads/2022/04/Favre-Reeves-Bryant-all-smiles.jpg?fit=1200%2C500&ssl=15001200NEMiss.Newshttps://nemiss.news/wp-content/uploads/2023/02/nemiss-full-logo-300x77.jpgNEMiss.News2022-04-07 17:07:502022-04-07 17:34:54Brett Favre’s role in DHS embezzlement scandal
Former Governor Dewey Phillip Bryant could be headed for an encounter with a Federal Grand Jury – if a U.S. Attorney will follow up on facts published today.
MississippiToday.Org, the only news organization that still makes a credible attempt to cover statewide news, published some of those facts today. The first installment today of a series about Bryant and his personal involvement with the Department of Human Services scandal.
The article is packed full of details about what Bryant got and what he expected to get from his part in misdirecting more than $70-million in federal money intended for the poorest of the poor in Mississippi.
Dates, times, contents of text messages, a meeting at a drive-in restaurant a short drive north of the Governor’s Mansion on East Capitol Street – this article is loaded with details. NEMiss.News will direct the attention of its readers to the additional installments of this gripping story as they are published.
https://i0.wp.com/nemiss.news/wp-content/uploads/2022/04/Walkers-drive-in-Jackson-MS.jpg?fit=1044%2C642&ssl=16421044NEMiss.Newshttps://nemiss.news/wp-content/uploads/2023/02/nemiss-full-logo-300x77.jpgNEMiss.News2022-04-04 19:30:262022-04-04 19:36:21Mississippi Today publishes detailed information on Phil Bryant’s role in welfare embezzlement scandal
https://i0.wp.com/nemiss.news/wp-content/uploads/2022/04/Former-gov.-Phil-Bryant.jpg?fit=1200%2C600&ssl=16001200NEMiss.Newshttps://nemiss.news/wp-content/uploads/2023/02/nemiss-full-logo-300x77.jpgNEMiss.News2022-04-04 13:13:062022-04-04 13:13:06Closing in on former Governor Phil Bryant in the DHS embezzlement scandal
Editor’s note: This is the third and final article in NEMISS.NEWS’s series on the MDHS scandal. We continue with information about some of the players in the drama and how the people of Mississippi may be made whole.
Who is Brett Favre?
Brett Lorenzo Favre was born in Gulfport, October 10, 1969. His parents were schoolteachers. His father, Irvin Ernest Favre, was also the head football coach at Hancock North Central High School in Kiln, Mississippi. Brett Favre grew up in Kiln, an unincorporated area in Hancock County. The population then was about 1,000.
That part of Hancock County had been the center of a thriving lumber industry before they loggers ran out of trees to harvest. Most of the sawmills had closed decades before Favre was born.
Historians say that, during its heyday Hancock County had 50 or more productive whiskey stills. A few hard-working craftsmen may have still been practicing that oldest of the manufacturing trades when Favre grew up there.
Brett Favre played several positions for the North Central Hancock Hawks. His father knew Favre had an uncommonly good throwing arm, but the Hawks mainly ran a running offense. However, young Brett did occasionally get to throw a pass, and that drew attention. Mark McHale, an assistant football coach for the University of Southern Mississippi (USM), saw Favre throw one pass that “had smoke of flames coming off it.”
McHale recruited Favre to play for the USM Golden Eagles. Legend has it that he was offered a football scholarship by no other NCAA Division 1 school.
Favre began his freshman year as the seventh-string USM quarterback. He secured the starting quarterback slot in the third game of his freshman year. Despite admittedly suffering from a hangover and vomiting during warm-ups, Favre threw two touchdown passes and led USM to a come-from-behind victory over Tulane.
The summer before his senior year at Southern, Favre wrecked his car and was critically injured in an accident near his family’s home. Surgeons removed 2-1/2 feet of his small intestine.
However, six-weeks later he led the Golden Eagles to a stunning victory over the University of Alabama. Alabama Coach Gene Stallings said, “You can call it a miracle or a legend or whatever you want to. I just know that on that day, Brett Favre was larger than life.”
Brett Favre was and remains today the all-time USM football hero.
He played football in the NFL for 20 seasons and four different teams, retiring once and coming back again as a successful starting quarterback.
Favre had a fabled NFL career marred by a couple of problems, including drug addiction, for which he went through rehab in 1995. He had become addicted to Vicodin while being treated for injuries. The NFL investigated. Favre confessed to the addiction, went through 46 days of rehabilitation and thus avoided a $900-thousand NFL fine.
However, he returned to lead Green Bay to their best season in 30 years in 1996.
There was also a problem at one point during his NFL career associated with Favre’s consumption of alcohol.
All that said, Brett Favre had one of the all time great careers as a professional football quarterback. He is a member of the NFL Hall of Fame. He held a league record of 297 consecutive starts, 321 including the playoffs.
He retired in Hattiesburg near his alma mater.
Favre has complained of memory loss blamed on too many concussions while an active player.
Favre’s name became associated with the MDHS scandal when State Auditor Shad White charged that:
Nancy New’s Mississippi Community Education Center (MCEC) had paid Favre $1.1-million in TANF money for personal appearances he never made. Favre returned half-a-million dollars to the state and has promised to repay the other $600-thousand. (Audit page 18)
Favre’s name has also been mentioned in connection with a $1.7 million personal investment New and her son Zack made with Prevacus amd its affilliate PreSolMD, allegedly with TANF funds. Prevacus is a pharmaceutical company developing a new treatment for concussions. Original MCEC records showed the investment made with TANF funds, but were changed to another source after the auditor questioned use of TANF money. (audit page 53)
Favre’s name has also been mentioned in connection with the questioned $5-million in TANF funds New invested in a volleyball facility at USM. Favre’s daughter, Breleigh, is a star player on the USM volleyball squad. (Audit page 31)
Brett Favre has not been accused of a crime.
He has denied knowing that the 1.1-million he received came from TANF funds.
It has not clear why Favre thought he got the $1.1-million or what he thought he had done or was supposed to do to earn the money.
Who is Shad White
The elected official at the center of the Mississippi Department of Human Resources scandal is State Auditor Shad White.
MS Auditor Shad White
Shadrack Tucker White was born September 22, 1985, in Sandersville, Jones County, Mississippi. His father Charles Robert White was an oilfield pumper and his mother Emily Morgan White taught art in public schools.
Shad White attended the public schools of Jones County and enrolled at the University of Mississippi after graduating from Northeast Jones High School in 2004. He enrolled at Ole Miss and completed an undergraduate degree there in political science and economics.
A top student and athlete throughout his early life, he was selected a Rhodes Scholar in 2008. He earned a master’s degree at St. John’s College, Oxford, and rowed crew.
Upon returning from England he enrolled in Harvard University’s law school, earning a juris doctor degree. He was president of the Harvard Federalist Society while a senior in law school.
Coming back to Mississippi, White was hired by then Lieutenant-Governor Phil Bryant as Director of Policy. He continued his association with Bryant while working as a litigator for the Butler, Snow law firm in Ridgeland, Mississippi.
White was campaign manager for Bryant when he ran for re-election as Mississippi Governor in 2015.
Bryant appointed White State Auditor of Mississippi on July 6, 2018, when elected Auditor Stacey Pickering resigned to accept another job.
White was elected to a four year term as State Auditor in November, 2019.
Shadrack White’s office conducted the audit of the MDHS that occurred when John Davis resigned as head of that agency last July. His office led the investigation that culminated in the arrest of Davis, Nancy New, and four others on Feb. 5, 2020, in what White has characterized as the “largest public embezzlement case in state history.”
White has said he has turned all evidence in the case over to Mike Hurst, the U.S. Attorney for the Southern District of Mississippi.
White has claimed that former Governor Bryant was the whistleblower that spurred his investigation of MDHS.
Who is Mike Hurst?
US Attorney Mike Hurst
David Michael Hurst, Jr., age 44, grew up in Hickory, Newton County, Mississippi. He is a Republican.
He attended East Central Community College in Decatur, Mississippi, and graduated from Millsaps College in Jackson. He graduated from George Washington University Law School in Washington, D.C.
Hurst served as legislative director for former Mississippi Third District Congressman Chip Pickering. He worked as an assistant U.S. Attorney for the Southern District of Mississippi and as general counsel for the Mississippi Center for Public Policy.
He ran as the Republican candidate against incumbent Democrat Mississippi Attorney-General Jim Hood in 2015. He received 44.7 percent of the vote in the general election, and Hood won 55.3 percent.
President Trump appointed him U.S. Attorney for the Southern District. As with all such appointments, it was supported by the state Republican Party leadership. He was confirmed by the Senate and assumed the office on Oct. 10, 2017.
Hurst was criticized last year for prosecuting illegal immigrants, but not pursuing charges against the companies that illegally hired the immigrants.
Hurst has indicated he will bring federal charges against persons involved in the embezzlement of TANF funds by employees and contractors of the Mississippi Department of Human Services.
Who are the DiBiases?
WWE Superstar Ted DiBiase Jr., left, with brother Brett DiBiase, right, induct their father “Million Dollar Man” Ted DiBiase into the 2010 WWE Hall of Fame, March 2010
Brett DiBiase was one of the six individuals arrested by State Auditor Shad White and charged with embezzling money from TANF funds. By many accounts, DiBiase and former MDHS Director John Davis were personally close. White said John Davis hired DiBiase at a high salary at MDHS. There were doubts about whether DiBiase was qualified by education or experience for the work at MDHS. (Audit page 61)
Brett DIBiase: The auditor said John Davis had Nancy New paid from TANF funds for Opoid training sessions never completed and expensive drug rehabilitation treatment for Dibiase at an exclusive California rehab facility. (audit page 28-29)
A variety of vague contracts and payments inadequately documented as to requirements of services, fulfillment of services, etd.
Ted DiBiase, Jr., Priceless Ventures owner had multiple vague contracts with MCEC, FRC and MDHS, as directed by John Davis. (audit page 23)
Ted DiBiase, Heart of David Ministries (audit page 24)
DiBiase is of a family of professional wrestlers, promoters and a variety of Christian evangelists. For more about the DiBiase clan, see this article posted by NEMISS.NEWS on February 15, 2020.
What is Family Resource Center of North Mississippi (FRCNM)?
The Family Resource Center of North Mississippi (FRCNM) is based in Tupelo. It is one of the two organizations that State Auditor Shad White says received millions of dollars in welfare funds and failed to properly account for the money.
The other organization cited by White, the one that has received most media attention so far in the embezzlement story, is Mississippi Community Education Center (MCEC).
Christi Webb Exec Director Family Resources Center (FRC), Tupelo MS
Besides former Director John Davis, the people arrested in February were all connected with MCEC.
About half the money White says was illegally distributed – nearly $46-million – was distributed to and by the Tupelo organization. As far as we know, nobody associated with Family Resource Center of Tupelo has thus far been arrested and charged.
However, Auditor White’s 104-page report of April 22, 2020, says that FRCNM of Tupelo illegally received $45,684,835 in TANF, SNAP, CCDF, SSBG and “other unaudited federal grants in 2017, 2018 and 2019.
What’s more, the audit report questions more than a million dollars the Tupelo organization paid to John Davis’s brother-in-law and John Davis’s nephew the same years. The exact amount the auditor claims FRCNM of Tupelo paid to these two individuals is $1,101,149. (Audit page 12)
FRCNM supports services in North Mississippi, including children’s advocacy, parenting organizations and support groups, and various workshops.
The Executive Director of Family Resource Center of North Mississippi is Christi Webb.
FRCNM, like all tax exempt 501(c)3 organizations is required to file IRS Form 990 every year, accounting for its income, its expenditures, salaries of its officers, etc.
The last Form 990 NEMISS.NEWS could find for FRCNM is for the year 2018. The Tupelo organization told the Internal Revenue Service it paid Christi Webb total compensation of $161,106 for that year.
The 2018 IRS Form 990 shows that FRCNM paid $139,045 to a Debbie Underwood as “financial officer” for the organization.
In preparing this series NEMISS.NEWS made over 20 unsuccessful attempts to contact Christi Webb at the organization’s listed telephone numbers.
The organization’s website lists the names and contact information of 11 members of the FRCNM board of directors, all of them from northeast Mississippi.
We did not attempt to contact each of the 11 board members.We did try to contact three of them.
One of them, a man known to us for several years, said he was no longer a member of the board. He said he served less than a full term on the FRCNM board and had resigned because his business interests out of state made it impossible for him to serve. That former board member said that when he first went on the board it met monthly and then started meeting only quarterly.
The former board member did volunteer the opinion: “I don’t think Christi Webb would do anything wrong.”
We made two attempts to contact a currently serving board member who is the former president of FRCNM. We left messages for the former president, but did not receive a return call from him.
We were able to contact Joyce Johnston of Tupelo, who is listed on the organization’s website as a “Lifetime Member.” Mrs. Johnston, a former school teacher, said she had been a member of the board for “about 40 years.”
She said, “About 40 years ago they had failed to fill out a form. I went to work there and helped them straighten that out. I think this will be something about like that.”
Johnston said Christi Webb had been executive director of FRCNM for about seven years. She asked if we had talked with Christi Webb, and we described to her the many unsuccessful attempts to contact Webb. She indicated she would pass on to Webb our desire to speak with her. That was 10 days ago. Thus far, we have not been contacted by Webb.
“I have never known her [Christi Webb] to do anything wrong,” said Joyce Johnston.
NEMISS.NEWS asked Joyce Johnston what she could tell us about Nancy New, who claimed in a 2018 interview a connection with the Tupelo organization. “I didn’t know her [New],” was her response.
Our conversations with the former and current board members gave the impression that the roll of the FRCNM board was more to “support” Webb’s work as executive director than to supervise or critique it.
Again, we are aware of nobody connected with FRCNM who has been accused of a crime.
Conclusions and Unanswered Questions
The Mississippi Department of Human Services mess is a convoluted and far reaching one involving many millions of dollars, dozens of organizations and an, as yet, unknown number of individuals.
Six individuals thus far are charged with criminal acts.
Auditor White’s report suggests than a great many people have failed to follow accepted accounting practices, failed to document their work and have violated a great many federal regulations. Thus, there is no way yet to know how many people and organizations may face civil penalties and lawsuits.
What about the elected officials and state employees who have neglected to assure good performance and lawful practices? Some of these may not face criminal prosecution, but how will they be held accountable for allowing this to happen?
Three Republican officials, two elected and one appointed, have the duty to sort out this huge, gnarly problem that occurred under the nose of a popular Republican former governor.
Elected Republican Auditor White has a duty to try to recover the money owed to the people of Mississippi. How does he do that without anything reflecting badly on the former governor who gave him his start in state politics, the governor who originally appointed him to the job he must now do?
MS Attorney General Lynn Fitch
Elected Republican Attorney-General Lynn Fitch is the first woman to ever hold that job and the first Republican elected AG in 120 years. Auditor White is likely to ask Fitch to do her duty of issuing legal demands to many individuals and organizations for the return of money received and spent without proper authority. How will she go about that?
Brett Favre has already returned a good portion of the money he should never have received. How many more will Fitch have to press to pay back what they shouldn’t have? We will not venture a guess.
U.S. Attorney for the Southern District of Mississippi Mike Hurst is a Republican. He was appointed by a Republican President with the support of Mississippi Republican elected officials. To Hurst will fall the duty of prosecuting criminal violations of federal laws.
White, Fitch and Hurst – three smart ambitious Republican politicians are called on to do some heavy lifting, to deliver justice and equity to the people of Mississippi, who have made this essentially a one party state.
We must believe White, Fitch and Hurst will do their duty.
If we can’t believe that, we can’t believe there is any hope for integrity in Mississippi government.
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Edited 6-2 to include full audit report PDF and page citations in body of post:
New Albany, MS – There’s an old story about the wino accused of smoking in bed and thus setting fire to the cheap flophouse where he dwelled. Charged and dragged into court, the wino spoke powerfully in his own defense: “Judge,” he pleaded. “That damned bed was on fire when I got in it!”
Tate Reeves, Mississippi’s 65th governor, might make a similar plea.
Reeves was sworn in, Tuesday, January 15, 2020, knowing he was not the first choice of most Mississippians.
Although he had been accumulating money and running for governor for more than a decade, Reeves failed to win a majority when he faced two less known and underfinanced challengers in the Republican primary.He won a narrow victory in the runoff. Then in the November general election his margin over a Democrat with little money and no statewide ground game was even slimmer.
Reeves settled into the big chair in the governor’s office with considerably less than a clear mandate.
Imagine his distress a mere 22 days later when one of his most prominent political supporters, a major contributor of money, was arrested on felony charges of stealing millions of dollars in public money.
“A multi-million-dollar embezzlement scheme”
On Wednesday, Feb. 5, agents for Mississippi State Auditor Shad White arrested six individuals and charged them with stealing Mississippi Department of Human Services (MDHS) funds. The money stolen was from the federal Temporary Assistance for Needy Families (TANF) program, money intended for the poorest of the poor in Mississippi.
Auditor White said the six had been arrested and charged “in connection with a multi-million-dollar embezzlement scheme.”
Those arrested included John Davis, former head of MDHS; Brett DiBiase, a former professional wrestler and close friend of Davis; 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.White called it “the largest public embezzlement case in state history.”
Most directly embarrassing for Reeves were the charges against Nancy New. She was known as a strong supporter of Reeves, having given substantial money to his campaigns and having been conspicuously associated with the fledgling governor. Reeves, known not to be a strong supporter of public education, had openly advocated programs that would divert public funds to private schools. Among his favored projects were private schools owned and operated by New. A television commercial for the Reeves gubernatorial campaign, in which he touted his plan to improve the pay of Mississippi public school teachers, was even filmed at one of New’s privately owned schools.
Reeves tried to distance himself from New, promising to return her campaign donations or to donate the money he’d received from her to an unspecified charity.
Astonishing charges brought against MDHS employees
The charges against New were among the most shocking:
They included the allegations that she had acquired three different $50,000 motor vehicles for the personal use of herself and her sons using TANF money, dispensed to her by Davis. (audit pg 40)
The auditor charged that an organization controlled by New had spent millions of dollars of TANF money on a variety of personal, business and “philanthropic” projects, in violation of the federal guidelines directing that the money should be spent for needy Mississippians.
Included in the misspent money was over a million dollars New’s organization had paid to former NFL football player Brett Favre for public appearances he never made. (audit pg 18)
John Davis, a veteran employee of MDHS, had been appointed head of the department by Governor Phil Bryant, Reeves’s immediate predecessor.
White charged that Davis had spent hundreds of thousands of TANF dollars on big salaries for his friends and relatives. (audit pg 12)
One such expenditure was over a hundred thousand dollars in TANF money spent at an exclusive California drug rehabilitation treatment clinic Brett Dibiase, a close friend of Davis, whom he had also hired at a high salary at MDHS. (audit pg 28)
Many millions in TANF money, said the auditor, had gone in payments to hundreds of individuals and organizations for purposes not allowed by the federal guidelines on how TANF money was to be spent to help poor people.
White promised a “full forensic audit” of MDHS. U.S. Attorney Mike Hurst pledged a vigorous federal investigation of the misspent money. White delivered his evidence to the FBI.
Public attention fades as coronavirus dominates the news
Public outrage swept the state. It was the principle topic of statewide news for the next month. What Auditor White called “the largest public embezzlement case in state history” dominated conversations in offices and factory lunchrooms and beauty salons and at church gatherings.
People were angry and eager to know how elected officials could have allowed such an outrageous abuse of public money – especially money intended for the neediest people in Mississippi.
Then the coronavirus pandemic struck Mississippi, and all other stories seemed to fall out of the news for two months. There were no angry conversations in offices, factories, beauty salon and church gatherings about money stolen from the poor. All those places were closed while people huddled in their homes trying to avoid the deadly new virus.
However, the state auditor’s investigators and accountants continued their work and did a comprehensive audit of how money had been spent at MDHS during John Davis’s time as director of the department.
The auditor completed and published his MDHS audit about a month ago. The results revealed even more theft and malfeasance than most people imagined when those first few arrests were made in February.
NEMISS.NEWS published last Thursday the entire 104-page audit. The details of it will shock those who take the time to read it carefully, or even skim the highlights included in the post. (http://newalbanyunionco.com/mdhs-embezzlement-part-1-charges-and-evidence/) It leaves no doubt that White was justified in calling it the worst embezzlement of public money in Mississippi history.
Who are the key figures in this sordid tale?
How on earth did Mississippi’s elected officials allow this colossal abuse of public money – money intended for the poorest Mississippians?
Who else should be indicted and jailed?
We are likely to wait months, even years, for the answers to those questions. It will be up to prosecutors, judges and juries to determine who is guilty and what punishment will be meted out.
However, it is not too early to learn a little more about who were the players on the stage when the crimes were committed. Who were the public officials in charge when this unprecedented corruption was thriving? What people are known to have been involved, directly or indirectly? Who must be held accountable for allowing this to happen?
NEMISS.NEWS has assembled information, mostly from the public record, about the cast of characters:
Who is Phil Bryant?
Phil Bryant, Mississippi’s 64th governor, had held statewide elective office for 23 years when Tate Reeves succeeded him four months ago. That included 11 years as state auditor, four as lieutenant-governor and eight years as governor. This is not to say Phil Bryant is guilty of any crime. He has not been charged with any crime.
It is simply to observe that Bryant held positions of financial oversight responsibility in state government when the fraud was carried out and for a long time before. And Bryant moved the key player into the position from which he began the scheme.
Dewey Phillip Bryant was born in Moorhead in Sunflower County on Thursday, December 9, 1954. Moorhead is at the intersection of the Southern and Yazoo Delta (“Yellow Dog”) railroads of blues fame. Moorhead had 1,750 residents when Phil Bryant was born and has grown to about 2,400 today. About 82 percent of its population are black and 16 percent are white.
Phil Bryant was not to the manor born. His parents were Dewey C. Bryant, a diesel engine mechanic and Estelle R. Bryant, a housewife. He grew up with two brothers.
He has spoken movingly about being poor and the anxiety in his childhood home when his father lost a job. He has been candid about having had to repeat the third grade because he couldn’t read. He has referred to the problem as dyslexia.
Bryant’s family left Sunflower County and moved to Jackson during his childhood. His father took a job as a mechanic with a Hinds County Mack truck dealership and later became its service manager.
The family became prosperous enough in Jackson that Bryant attended private Council McCluer High School at 4060 South Siwell Road in Jackson, his junior and senior years. Council McCluer was founded in 1970 and is now known as Hillcrest Christian School. It was a private, racially segregated school, one of dozens founded around Mississippi, after the federal courts ordered public schools integrated. Council McCleur was one of 12 Jackson area schools founded and run by the White Citizens Council.
Forver MS Governor, Phil Bryant.
Phil Bryant worked his way through college at a variety of jobs. He attended Hinds Community College for two years. He then attended and graduated from The University of Southern Mississippi (USM) in Hattiesburg. He later completed a master’s degree at Mississippi College.
Bryant takes up politics
He worked as a parts man in a motor vehicle dealership, as a Hinds County deputy sheriff and as an insurance investigator. In 1991, about a month before his 37th birthday, Bryant was elected to his first political office, a seat in the Mississippi House of Representatives. He served about five years in the legislature.
Then in 1996 Democrat State Auditor Steve Patterson was forced to resign as auditor after pleading guilty to the misdemeanor charge of filing a false affidavit to keep from paying county taxes through the purchase of a car tag.
Governor Kirk Fordice appointed Phil Bryant as Patterson’s replacement in November of 1996. He served a little more than three years remaining of the term to which Patterson had been re-elected in 1995. Bryant was elected in his own right as state auditor in 1999 and re-elected to another four-year term in 2003.
During the 2007 election cycle, two-term Lieutenant-Governor Amy Tuck was term limited and could not run again.
Phil Bryant, having been state auditor for 11 years, was the most senior Republican in the line-up of statewide office holders. He ran for lieutenant-governor winning 57% of the vote in the Republican Primary and then easily won the general election with a 17 percentage point margin over the Democratic nominee, Jamie Franks, Jr.
Haley Barbour finished his second-term as governor in 2007 and was term-limited from seeking the office again. Phil Bryant had by then had held statewide elective office for 15 years, 11 as auditor and four as lieutenant-governor. Few can recall any major accomplishments in his long service as a Republican office holder, except one: he had made no enemies.
Bryant had embraced the Tea Party, then a major fad in American politics, and made it clear his politics were considerable to the right of Barbour, who was considered more a Republican centrist.
He filed for the Republican nomination for Mississippi governor. He had faced no strong, well-financed challengers the three times he’d sought statewide office, nor did he draw a strong opponent when he ran for governor.
Bryant faced four unknown Republicans, none of whom had any real money, in the 2011 Republican primary. He won 59.46 percent of the vote in the primary. The runner up got 26 percent. In the 2011 gubernatorial general election, Bryant defeated Democrat Johnny DuPree, the first African-American mayor of Hattiesburg, by a margin of 61 percent to 39 percent in the general election.
Bryant easily won re-election in 2015 with 92% of the vote in the Republican primary. In the general election he coasted to victory over Democratic candidate Robert Gray, a truck driver, and Reform candidate Shawn O’Hara, a perennially unsuccessful office seeker for over three decades.
Dismantling health insurance and rejecting Medicaid expansion
A poor boy from Sunflower County, who had never faced a strong election opponent, had reached the top of the heap in Mississippi politics. He was sworn in as governor on January 10, 2011. The Tea Party hailed Bryant as its first Tea Party governor, and he gladly embraced the accolade.
During Governor Barbour’s second term, he became interested in what was then considered a conservative approach to making health insurance available to more Americans. It was then known as “Romneycare,” because Republican Massachusetts Governor Mitt Romney had signed it into law in that state on April 12, 2006.
Barbour, a politician who always preferred practicality over ideology, asked Mississippi Insurance Commissioner Mike Chaney to take steps to set up a similar health insurance plan for uninsured Mississippians. Barbour saw it as an economic development opportunity, since it would assist small businesses and support the state’s healthcare industry.
The Tea Party’s foremost Mississippi apostle for several years before and during Bryant’s governorship was Chris McDaniel, a lawyer, conservative radio orator and state senator from Jones County. While Bryant lacked McDaniel’s rhetorical skills, he embraced most of the Ellisville legislator’s views, including opposition to welfare and a visceral dislike for then U.S. Senator Barak Obama, of Illinois.
Meanwhile, the U.S. Congress passed the Affordable Care Act (ACA), a variation of Romneycare, during President Barak Obama’s first administration.
Early in 2011, Barbour wrote to Kathleen Sebelius, Obama’s Secretary of Health and Human Services, designating Chaney and the Mississippi Insurance Department as the proper authority build an Affordable Care Act exchange for Mississippi. Chaney got to work and had it ready to go. By late 2011, however, what had been originally known as “Romneycare” was rebranded as “Obamacare,” making it a red flag for Tea Party ultraconservatives like McDaniel – and Phil Bryant.
In an interview in the October 29, 2014, edition of the Kaiser Foundation’s “Kaiser Health News,” Mike Chaney, still today the Republican Insurance Commissioner of Mississippi, described how Phil Bryant, during his first year as governor, killed the plan for implementing the Affordable Care Act in Mississippi. Chaney said that before Bryant became governor, “We had no elected officials who were against what we were doing.”
As a result of Bryant killing the ready-to-go Affordable Care Act plan for Mississippi, fewer Mississippians ended up with health insurance than before ACA became available to most other Americans.
Likewise, Bryant also vigorously opposed expanding Medicaid coverage for Mississippians. Although a Mississippi economist predicted that expanding Medicaid in the state would bring Mississippi $1.2 billion in federal funding and 9,000 new jobs, at a cost to the state of $159 million, by 2025, Bryant said no.
Knowledgeable Mississippians, including many Republicans, believe that Bryant’s opposition to Obamacare and Medicaid expansion arose from his Tea Party ideology and not from a practical analysis of the economic facts.
He evidenced little consideration for the impact that those refusals would have on the lives of poor people, including low income working people, in Mississippi. The rejection of Barbour’s plan to enable the Affordable Care Act was also a blow to small entrepreneurs. Both refusals were catastrophic for the healthcare industry in Mississippi.
“Imaginative” thinking about how to help the poor backfires bigtime
Since Bryant refused federal funds for Medicaid expansion in 2013, five rural hospitals in the state have closed and many more are considered likely to fail financially.
Phil Bryant’s ideological opposition to providing health care for poor Mississippians was an early clue to his hostility toward programs to assist the needy.
Bryant encouraged the kind of “imaginative” thinking about how to help the poor that directly influenced the MDHS policies and practices, leading to the massive fraud revealed by the arrests made in February. The full audit of MDHS shows the embezzlement to be of far greater magnitude that was known when the first arrests were made.
Governor Phil Bryant appointed John Davis as head of the Mississippi Department of Human Services. Bryant was Davis’s direct supervisor during the time the corruption described in Auditor White’s investigation occurred.
Based on his public utterances and actions and on the opinions of those who know him well, Phil Bryant clearly sees himself as a poor boy who “pulled himself up by his bootstraps” and did well. He seems to believe every other poor person should be able to do as well. He received his college education at a taxpayer subsidized community college and his degree from the University of Southern Mississippi, an institution supported by tax money.
“He saw it as an opportunity to build a kingdom over there” –State Auditor Shad White RE: John Davis
Phil Bryant is a true believer in his own righteousness and proof positive that good hair, white skin, hard work, an amiable personality and a nearly-free public education can put an average fellow on top of the heap.
Another Mississippian named Jim Buck Ross, himself a graduate of a publicly subsidized state university, also did well in Mississippi politics. He served as mayor of Pelahatchie, as a state senator and as Mississippi’s Commissioner of Agriculture for 28 years. Ross had a realistic view of how a man becomes successful. Among Jim Buck’s several colorful aphorisms was this one: “If you see a terrapin sitting on top of a fence post, he didn’t get there by himself.”
One wonders if that bit of irrefutable wisdom ever passed through the head under all of Phil Bryant’s nice hair.
Who is John Davis?
Johnny Gerald (John) Davis was born on Saturday, March 2, 1968. He was raised in Brookhaven in Lincoln County and graduated from high school there.
Davis enrolled at the University of Southern Mississippi in Hattiesburg and completed an undergraduate degree there. He earned a master’s degree from Belhaven University. He became a social worker.
In 1998 Governor Kirk Fordice appointed Davis the Director of Human Services in his home county, Lincoln County.
He advanced through the ranks of MDHS serving as a deputy administrator for programs, office director for the division of economic assistance, and direct of the division of aging and adult services.
Davis reached the top rung of his career on January 11, 2016. when Phil Bryant appointed him Executive Director of the Mississippi Department of Human Services. Among Phil Bryant’s first acts of his second term as Governor was John Davis’s appointment as Executive Director of the Mississippi Department of Human Services. He began serving Feb. 1st,2016.
Of course, Bryant’s appointment of Davis as Executive Director had to be confirmed by the State Senate. Two and a half months later, Lieutenant-Governor Tate Reeves, the presiding officer of the senate, assigned Bryant’s appointment of Davis to the Senate’s Public Health and Welfare Committee on April 14, 2020. A longtime member of the Public Health Committee told NEMISS.NEWS that the committee’s inquiry into Davis’s fitness for service consisted of a check of his record at MDHS and a casual background check. “I don’t recall that we did any more than that,” he said.
What? Leaving so soon?
John Davis had worked for the Mississippi Department of Human Services (MDHS) for 28 years when he suddenly “retired” as MDHS Executive Director on July 8, 2019.
John Davis, former MDHS Exec. Director
story the next day in Davis’s hometown newspaper, the Brookhaven Daily Leader, made it sound like a happy event: a public employee joyfully retiring after decades of noble service to the grateful people of Mississippi.
It quoted then Governor Phil Bryant, Davis’s immediate superior, who praised the retiree. “I appreciate John Davis’s 28 years of service to the Department of Human Services,” Bryant said. “John has dedicated his life to serving others and has been a tremendous advocate for Mississippi’s children and families. We will begin a search for a new executive director immediately.”
And Davis was equally fulsome in his praise for his boss. “I have served under many leaders and Governor Phil Bryant has been the greatest. He knows the importance of MDHS and will continue to ensure it stays the course,” said Davis.
His hometown paper portrayed Davis as a happy guy, eager to enjoy his family and do even more for Mississippians. “I am looking forward to spending time with my family and pursuing a new career outside of state government to do even more for the great people of Mississippi,” he was quoted.
Bryant blew oversight responsibilities, then blew the whistle
However, all was not sweetness and light at the Mississippi Department of Human Services. While making nice and saying such sweet things about John Davis, Phil Bryant knew it was a mess. In fact, Auditor White said earlier this year that Bryant was the “whistleblower” (White’s word) who had first called the major fraud perpetrated under Davis’s leadership at MDHS to the auditor’s attention.
If Bryant was, indeed, the whistleblower, is there not therein a mountain of irony? Of all the incredible details that have been thus far revealed about this shameful case, the thought of Phil Bryant as the whistleblower is the corker. Bryant himself had appointed Davis and had been Davis’s direct supervisor for the entire 32 months Davis had operated his criminal enterprise.
Less than ten days before Davis’s retirement officially took effect on July 31, 2019, the state auditor had already issued preliminary findings that were damning to Davis’s reign at MDHS. The auditor published his initial report about skullduggery at MDHS on July 22, 2019
Bryant quickly appointed Christopher Freeze, a retired FBI agent, to succeed Davis as head of the MDHS.
Carol Burnett, formerly the administrator of the Child Care Development Fund for MDHS, said when Davis left the agency that, while state leaders had tried to give the impression that the Department of Human Services works independently of the governor’s office, “That is not the case,” Burnett said. “The Department of Human Services works as an arm of the governor’s office.”
Still a few missing audit details
Auditor White’s April 22, 2020, audit report ran to 104 pages. He said in an interview it could easily have run to a thousand pages if his investigators and auditors had included all the details.
One detail conspicuously absent is any mention of the name Phil Bryant, the Governor of Mississippi, who was directly responsible for the supervision and oversight of MDHS.
Back in early 2016, It had taken Lt. Governor Tate Reeves 2 1/2 months to send Bryant’s appointment of Davis’s to the Senate for approval. Once they got the appointment, it took the Mississippi State Senate six days to unanimously approved Bryant’s appointment of Davis as the head of MDHS on April 20, 2016. Nothing NEMISS.NEWS has found in the public record indicates whether Davis waited for Senate confirmation before he started the wheeling and dealing which has brought him and the state infamy.
Nothing indicates Davis was bashful about it. “He saw it as an opportunity to build a kingdom over there,” State Auditor Shad White has said.
Also, nothing thus far on the record hints at the true nature of John Davis’s personal relationships with the DiBiases, the family of professional “ras’slers” turned self-ordained preachers, on whom he spent so lavishly from tax money intended for the poor. The state’s largesse for the DiBiases is among the more intriguing facets of this sordid drama.
Nancy New has jeopardized not just herself, but them (the children), too. Why would she do that?”–Tim Kalich Editor, The Greenwood Commonwealth
Who is Nancy New?
Nancy Whitten New was born in July, 1952, in Greenwood, Leflore County, Mississippi. Upon graduation from high school she enrolled at the University of Southern Mississippi (USM), where her sister had previously been a student.
Nancy Whitten graduated from USM with a bachelor’s degree in English education in 1974. She began her career as a teacher returned to USM to earn both a master’s degree and a doctorate.
She has remained an active supporter of USM and has served on university boards and committees including athletics, education and psychology. She served on the USM Athletic Foundation Board.
Her son, Jesse Steven New, graduated from USM in 2003, and her other son. Zachery Whitten New. graduated from USM in 2007.
She told a USM journalist in 2016 that she, her, sons, their wives and her grandchildren never miss the home games of the USM football and baseball Golden Eagles. “I never miss a home game,” New said, “unless it’s for a family emergency.”
Auditor version: The New family had a lot of skin in the game
Nancy New, age 67, along with her son, Zachary, now age 37, were among the six individuals arrested by agents of Mississippi State Auditor Shad White on Feb. 5, 2020. They were charged with embezzling millions of dollars from federal Temporary Assistance for Needy Families (TANF) funds that had been allocated to help needy families in Mississippi.
Organizations directly or indirectly controlled by New, which the auditor said were involved in the misappropriation of money, included the Mississippi Community Education Center (MCEC), Families First for Mississippi (FFM) and the Family Resource Center of North Mississippi (FRCNM) of Tupelo.
Those thefts and misallocations of as much as 90-million were detailed in the state auditor’s report published by NEMISS.NEWS last Friday, May 29.
They included purchase of three motor vehicles with a total value of about $150-thousand for the use of Nancy New and her two sons. (auadit pg 40)
New’s son Zack New borrowed against his pension and repaid it with TANF funds. (Audit pg 55)
The New family leased real estate which they owned to MCEC at excessive prices and leased buildings for MCEC use that were actually occupied by businesses connected to New. All the leases were paid with TANF funds. (Audit pg 56-57)
MCEC, in a very convoluted alleged scheme, basically provided an $800,000 plus home home for former football player Marcus Dupree with TANF funds, in addition to entering into a $300,000 contract with him for an “equine therapy” program and paying him a high salary as an MCEC employee.(Audit pg 38)
Nancy New, founder of New Learning Resources
In October 2018, 16 months before her arrest earlier this year, Nancy New gave an interview to MississippiToday.org, in which she generally described the scope of the work these organizations were doing.
Nancy New’s version: only the highest aspirationse
“I’ve been part of Families First Resource Centers for 25 years,” New said,“from its inception. Actually when the federal money first flowed down to the states across the nation, Mississippi was one of them to receive monies to actually set up Family First Resource Centers to serve families, so I was fortunate then to have a small grant and to get services started in the Delta.
“So the whole concept of Families First for Mississippi and the services is to enhance and empower families through getting them stabilized through education, through services and so forth. It is also to reach the whole family. That’s called the Gen+ model.
“Where we have concentrated on helping that individual and perhaps the individual’s child or vice versa, what we want to do is learn about the whole family. Let’s reach every individual in the family. Let’s start changing families lives, instead of just one person in that family, because if we can impact the whole family, that’s going to be much more powerful and beneficial than just one individual.
“It hasn’t changed in the last 25 years. What’s happened is that it’s grown and where we were concentrated in just a few areas across the state, according to resources, financial and other resources, we were able to expand that through this greater effort now.
“You ask about the two organizations [MCEC and FRC], that’s just a matter of logistics. We divided the state so we could manage it better,” New said
Those words, claiming a noble purpose and describing a far-reaching philanthropic enterprise, were spoken by New while she was allegedly at the very center of what Auditor White calls the largest embezzlement of public money in the history of Mississippi.
Bryant, New and Favre and USM volly ball
New developed what was apparently a close relationship with Governor and Mrs. Bryant, who were frequently with her. Bryant appeared regularly at events at New’s schools and worked to raise private donations for them.
Governor Bryant was directly involved with New and former USM and NFL quarterback Brett Favre in the project that resulted in $5-million in welfare money going into a volley ball facility at their mutual alma mater, the University of Southern Mississippi.
There is no shortage of victims
Tim Kalich of the Greenwood Commonwealth newspaper said in a May 14th column: “The Greenwood native [New] had been somewhat of a savior for families with special needs children. She started New Summit School in Jackson to provide a learning environment to help kids thrive who don’t fit in regular schools, either because they have learning difficulties or social anxieties.
“She expanded that concept, creating a handful of similar schools, including North New Summit in Greenwood. It’s been a great story here, not only because of its growth and success, but because it was created by someone who was giving back to the place where she grew up.”
Editor Kalich expressed the concern of parents who fear that the schools may not open back up to serve the children with special needs. He said, “…that would be sad for all those children and their families who found what they needed at New Summit, North New Summit and the others. Nancy New has jeopardized not just herself, but them, too. Why would she do that?”
Kalich’s question rings throughout Mississippi. Why indeed?
Was it always only about money, nothing but money?
Last Friday NEMISS.NEWS published the first of three articles in a series about the massive embezzlement of money from the Mississippi Department of Human Services. It was something over 94 million dollars, according to a comprehensive audit.
The Friday article included a summary of the audit itself and a link to the entire 104-page audit report by State Auditor Shad White. Tomorrow, Monday June 1, we will publish the second article in that series, which includes background material about those who were most prominently associated with the criminal scheme.
The third and final article in the series, to be published on Tuesday, will include information about others associated with the crime and those public officials whose duty it is to indict and prosecute the guilty.
The coronavirus pandemic’s arrival on the scene shortly after this story broke largely pushed this MDHS embezzlement scandal from the news. We at NEMISS.NEWS believe that Mississippians remain very interested in knowing how such a disgraceful chapter in state government unfolded. To that end, we have spent many hours gathering, studying and putting context to the available information.
We encourage readers interested in this historic criminal scheme to look at the highlights of the audit, or at the complete audit report to become familiar with the convoluted events. Both the highlights and the entire audit report may be found here: MDHS Embezzlement Part I: Charges and Evidence
https://i0.wp.com/nemiss.news/wp-content/uploads/2020/02/DHS-arrests.jpg?fit=1200%2C600&ssl=16001200NEMiss.Newshttps://nemiss.news/wp-content/uploads/2023/02/nemiss-full-logo-300x77.jpgNEMiss.News2020-05-31 17:47:182020-05-31 17:47:18NEMiss.News MDHS embezzlement series to continue
Editor’s Note: This is Part 1 of a three part series NEMISS.NEWS will publish regarding the matter the state auditor has called the biggest embezzlement of public funds in Mississippi history. Several people were arrested and charged on Feb. 5, 2020. The money was stolen from TANF funds, federal money entrusted to the state for needs of the poor. Because of the magnitude of the theft and the fact that it was tantamount to stealing from the poor box, the story became the source of considerable public outrage. Then the coronavirus pandemic knocked the embezzlement story out of the news. With the state “opening up” the case is again becoming a focus of concern. Part 1 of the series covers the comprehensive audit of the Mississippi Department of Human Services, which State Auditor Shad White’s staff completed while most attention was on the COVID-10 epidemic, Parts 2 and 3, to be published Monday and Tuesday, June 1 and 2, will give background on the state officials and others touched by the scandal and the implications for the taxpayers of Mississippi.
In yet another black eye for Mississippi, the State Auditor has revealed a far-reaching and complicated story of astonishing proportion and audacity. The April 22, 2020, auditor’s report of Mississippi’s Department of Human Services (MDHS) amounts to a 104-page guide on how to misuse 94 million dollars of federal funds.
The list of victims in this embezzlement scheme is long. First, there are United States taxpayers from all 50 states, who provided the funds to Mississippi. Second, there’s the hoodwinked Mississippi voters who elected and/or paid those responsible for actually spending the funds or for vouchsafing their proper use. Third, and most importantly, are the money’s intended beneficiaries, Mississippi’s “welfare” recipients -the nation’s most needy people, by most any standard you care to name.
MDHS officials, claiming to be trailblazers in “re-imagining” the effective use of federal funds, did, indeed, show off their formidable talents. Auditors believe over 94 million dollars were stolen, diverted or grossly mismanaged.
Very little of the money is likely to be recovered. The federal government has already said that Mississippi will be required to replace the misspent funds with its “own” money. Heads-up, taxpayers…this means YOU!
MS State Auditor, Shadrack White
What is included in this post
This post includes:
a key to the abbreviations used in the auditor’s report
a section by section breakdown and summary of the report, which includes the corresponding page number for the beginning of each section in the PDF. Readers interested in the detailed findings can scroll down the PDF to the spedified page.
an attached PDF document which contains:
the auditor’s cover letter, then the Audit Findings, including:
Pages 11-70, individual audit sections, which begin with a detailed listing of laws and regulations applicable to that section, then list detailed exceptions found and their questioned costs
Summary findings of abuse in individual federal funding channels (SNAP, Community College Board, CCDF, etc) as to individual federal codes and regulations violated. Including cause of problem, effect of problem. responsible officials, etc. Also recommendations of changes necessary to prevent abuse of federal money.
KEY TO ABBREVIATIONS
BD: Brett DiBiase
CCDF: Child Care Development Fund
CF: Christopher Freeze
FRC: Family Resources Center
HOD: Heart of David Ministries
JB: Jacob Black
JD: John Davis
JN: Jess New
MCCB: MS Community College Board
MCEC: MS Community Education Center
MD: Marcus Dupree
MDHS: MS Department of Human Services
NLR: New Learning Resources, Inc.
NN: Nancy New
NSA: New Summit Academy
NSS: New Summit School
PV: Priceless Ventures, LLC
SNAP: Supplemental Nutrition Assistance Program
SSBG: Social Services Block Grant
TANF: Temporary Assistance for Needy Families
TD: Ted DiBiase
ZN: Zack New
Pg 11 Personal Benefit Contracts/Related party Contracts
MCEC awarded contracts for services to members of Executive Director John Davis’s immediate family, including a company owned by his brother-in-law and his nephew.
FRC awarded contracts and employed the same individuals as MCEC above.
John Davis, former MDHS Executive Director, arrested and charged.
Total amount paid to JD’s brother-in-law – $608,650 Total amount paid to JD’s nephew – $492,499 Total amount questioned in 2017 – $50,173 Total amount questioned in 2018 – $233,452 Total amount questioned in 2019 – $723,924 Total amount questioned in 2019 – $93,600 (CCDF)
Page 14 Government Relations/Lobbyists
MCEC entered into multiple contractual agreements with consulting firms in order to maintain governmental revenue streams or to lobby on behalf of their organization, the Families First Initiative, or MDHS.
MCEC entered multiple contracts with AvanteGarde strategies, Inside Capital, Lucas Compton, in which auditors were able to determine the following unallowable lobbying contracts:
FRC contracted with Lucas Compton
Total amount questioned in 2017 – $14,000 Total amount questioned in 2018 – $270,325 Total amount questioned in 2019 – $211,000
Pages 15 Consulting
MCEC entered into multiple contractual agreements with consulting firms on behalf of their organization, the Families First Initiative, or MDHS. These consulting contracts were often for duplicative services for overlapping time periods and were for large sums of money.
Stephen Group, Consultant 1, Consultant 2, NCC Ventures, Institute of Project Management
FRC entered into contractual agreements with the same consulting organizations as MCEC, and with CG Consulting.
MDHS also entered into a consulting contract with NCC Ventures.
July 2019: Brett Favre, Tate Reeves and Phil Bryant in a photo Reeves posted on Facebook
Total amount questioned in 2018 – $407,718 Total amount questioned in 2019 – $299,476
Pages 17 Payments for Sports/Coaches/Sporting Celebrities
MCEC expended federal grant monies to fund multiple sports programs. MCEC could not provide any Documentation supporting the correlation of these sports programs to any of the four tenets of TANF:
Favre Enterprises was contracted to appear at several events, record promotions, and provide autographs for marketing materials from July 1, 2017 through July 31, 2018. the entire payment of $1,100,000 paid in FY 2018 is questioned.
Rick Rigsby Communications was paid $52,100 for motivational speaking in April 2019.
Diamond Design and Construction was paid $42,750 in FY 2019 to convert and line Field 8 for the North Jackson Youth Baseball League. The field is located next to New Summit School, the school owned and operated by the Director of MCEC (NN). According to inquiry, Field 8 was often utilized as a baseball field for New Summit Academy.
North Jackson Youth Baseball was paid $65,000 in FY 2017 to rent baseball fields. The spouse of one of the principals at MCEC (JN) is currently on the Board of Directors of the baseball organization.
P360 Performance Sports was contracted to allow four Jackson schools to use the baseball fields for practice and training. However, based on inquiry with the vendor, these amounts also allowed for a specialty, private team (Mississippi Bombers) to use the field, thereby making at least a portion of the payments unallowable, due to lack of ability to verify that the payments were for needy individuals.
Overtime Sports was paid 37,500 for a sponsorship of a college tournament in FY 2019.
Christi Webb Exec Director Family Resources Center (FRC), Tupelo MS
FRC expended federal grant monies to fund multiple sports programs. FRC could not provide any documentation supporting the correlation of these sports programs to any of the four tenets of TANF:
Metro Area Community Empowerment Foundation (MACE) was contracted for $75,000
Bigger than Ball Foundation, Inc. was contracted to produce “Bigger than Ball Moments”
Retired Pro Football Players Charitable Foundation, Inc. was contracted for $75,000 to hold three (3) football camps for youth.
Northeast Mississippi Football Coaches Association (NEMFCA) was paid $30,000 in FY 2019 for a sponsorship of the NEMFCA All-Star game.
Total amount questioned in 2017 – $65,000 Total amount questioned in 2018 – $1,233,975 Total amount questioned in 2019 – $313,539
Pages 21 Payments Directed by Former Executive Director
Ted DiBiase Jr.
Both MCEC and FRC often utilized the same contractors and awarded grants to common subgrantees. In some instances, joint contracts were issued under the “Families First” name, and in other instances, contracts were issued by both entities for the same scope and time period. Based on inquiry with the subgrantees and a review of documentation at MDHS, auditors determined that former Executive Director John Davis often directed MCEC and FRC to award contracts and grants to certain people or organizations.
Priceless Ventures, LLC and Familiae Orientem, LLC (Ted DiBiase, JR is an owner of both)– contract included Priceless Ventures, LLC and its owner serving as “Leadership Outreach Coordinator” for the Families First Initiative cofounded by MCEC, FRC and MDHS.
MCEC awarded additional contracts to Priceless Ventures, LLC and its owner for leadership development and the administration of a selfhelp program called “Law of 16.”
FRC also awarded contracts to PV from May 15, 2018 to September 30, 2018 in the amount of $500,000.
FRC also contracted with Familiae Orientem, LLC to conduct strategic development on the “Rise” program.
Ted DiBiase, Heart of David Ministries
Heart of David Ministries (HOD) (founded by Ted DiBiase)– MCEC donated $25,000 to HOD in two separate transactions. These payments were coded as a “sponsorship” and “contribution.”
Lobaki Foundation – A joint contract between MCEC, FRC and the Lobaki Foundation (Lobaki) was structured under the name of “Families First of Mississippi” from September 1, 2018 through August 30, 2019. When members of FRC staff noted they had questions about the project, JD told FRC that he had spoken with Lobaki, and that there was no need to discuss the contract further. Additionally, auditors were presented with an email from Executive Director JD informing Lobaki that he would instruct “Families First” to wire transfer money to the Lobaki account, and apologized the payments had been stalled.
Micah’s Mission School, Inc. – A joint contract between MCEC, FRC
Victory Sports Foundation – MCEC entered into a contract with Victory Sports Foundation
Fitness Program – FRC entered into a contract with an individual.
SBGI, LLC – SBGI was contracted by FRC
Restore2/Recover2 – MDHS entered into a contract with Recover2, LLC, which was owned by Brett DiBiase. The contract amount was for $48,000 and included 24 “sessions” of opioid training over the six-month period.
The principal of Restore2, Brett DiBiase, who supposedly conducted the trainings was in a luxury rehabilitation facility in Malibu, CA at the time of the contract.
The Executive Director John Davis – who visited the rehabilitation facility during the contract period, was aware the trainings did not take place, and was involved in a conspiracy to circumvent controls regarding these payments.ts are questioned due to the direct involvement of MDHS.
Other MDHS employees reported suspicions about this individual’s contract to those charged with governance, who then alerted OSA to the possibility of fraud.
Brett DiBiase, arrested and charged in MDHS embezzlement, allegedly had drug rehab paid by tax dollars.
Rise in Malibu – Rise in Malibu (Rise) is a luxury rehabilitation clinic
located in Malibu, CA.
The owner of Restore2 (BD), who was a former employee of MDHS, and Executive Director John Davis conspired to send Brett DiBiase to the facility for a four- month treatment due to his addiction to narcotics.
While there, Brett DiBiase was under contract to conduct opioid addiction training classes to MDHS staff, as well as employed by MCEC.
Total amount questioned in 2018 – $2,858,820 Total amount questioned in 2019 – $3,005,427
page 29 Curriculum
ActiveEd, Inc. – A joint Memorandum of Understanding (MOU) between MCEC, FRC and ActiveEd was structured under the name of “Families First of Mississippi”
Houghton Mifflin Harcourt – MCEC purchased $117,703 of “curriculum” from Houghton Mifflin Harcourt during fiscal year 2019. The funds were coded to “Curriculum Expense” in the general ledger.
review of actual invoices indicated that the curriculum purchased was used for the private school associated with MCEC, and not for the community at large.
Edmentum, Inc. – MCEC purchased $133,016 of “curriculum” from Edmentum during fiscal year 2019.
Auditor could not verify that purchases were made for curriculum for the community at large and not the private school associated with MCEC.
Total amount questioned in 2019 – $500,719
Page 31 Donations/Gifts/Sponsorships
University of Southern Mississippi Athletic Foundation – In October 2017, MCEC signed a “sublease” with the University of Southern Mississippi Athletic Foundation for $5,000,000 as “lease prepayments” for rental of a multi-purpose wellness center on the University’s campus.
When the lease from USM Athletic Foundation was viewed under scrutiny, auditors determined that the substance of the $5,000,000 payment to USM is a donation to the USM Athletic Foundation for the construction of the Wellness Center and not a lease of the property.
American Heart Association – MCEC funded various programs
The Library Foundation of Madison – MCEC donated $35,000 for a bookmobile/digital lab project
MCEC contracted and paid Fannin Fabrication Company $28,186 to build a “Rollover Simulator,” which was donated to the MS Highway Patrol.
Mississippi Military Family Relief Fund – MCEC donated $10,000 to the fund in FY 2019.
MCEC paid $38,737 in small donations/sponsorships to various Booster Clubs, races, foundations, student activity clubs, etc. during FY 2019.
FRC paid $16,680 in small donations/sponsorships to various Booster Clubs, pageants, student activity clubs during FY 2019
Total amount questioned in 2017 – $35,000 Total amount questioned in 2018 – $5,085,593 Total amount questioned in 2019 – $106,510
Page 35 Publications
Bay View Funding/M&W Publishing (Bay View) MCEC entered into a four-year commitment with Bay View to purchase copies of the book “Professional Grammar Simplified” in order to market and sell the book to organizations to whom MCEC was affiliated.
After a legal dispute, unsold copies were returned.
Due to the unreasonable nature of the expenditure, the intent to profit from the sale of the book in violation of Program Income regulations, and the lack of any direct correlation to TANF, $905,000 is questioned
Legal fees for dispute are also questioned.
Eli’s Christmas – MCEC purchased 2,600 copies of the children’s book in January 2019 using funds from the Mississippi CommunityCollege Board (MCCB) grant.
The author of the children’s book, B. J. May, is also related to the principal and owner of Restore2, LLC, Brett DiBiase.
Scope of the projects does not include providing books to children, nor do the agreements make any correlation to the eligibility requirements of CCDF.
Marcus Dupree, whose home was allegedly bought with tax dollars.
Total amount questioned in 2019 – $960,176
Page 36 Purchases of Real Property/Construction/Assets
Marcus Dupree (MD) Foundation – MCEC entered into an agreement with MD
Foundation for a sum of $371,000 on January 1, 2018 for “Equine
Assisted Learning” and “Equine Assisted Activities”.
On February 26, 2018, the owner of MD Foundation was paid $171,000. The transaction is classified as “Rent” in the underlying accounting records. MCEC paid an additional $200,000 directly to the bank that holds the note on the residence. MCEC also guaranteed the residence through the bank with a six-year lease from April 1, 2018 through March 31, 2024 that essentially paid the mortgage.
The agreement does not have an expiration date and does not specify who the services will benefit.
Marcus Dupree was also employed by MCEC from July 17, 2017 until September 30, 2019 at an ending annual salary of $130,000.
According to the Guaranty, which was signed by Nancy New, the MCEC Board of Directors approved the Guaranty at a Board Meeting held on April 13, 2018. There was no record found of the board meeting and MCEC later confirmed that therre had been no meeting.
There were indications that MCEC edited the general ledgers before supplying them to auditors, indications that TANF money paid a $171,000 downpayment on an $855,000 home in Flora, MS.
Both MCEC and FRC purchased items that meet the thresholds in the MDHS Subgrantee Manual for inclusion on the “Physical Property Inventory” and did not report these items to MDHS, as required by subgrant requirements. These items included cell phones, televisions, equipment, etc.
MCEC purchased three vehicles using MDHS grants funds. Also, maintenance contracts, repairs, and other costs associated with the vehicles.
These vehicles were treated as the primary vehicles for the Director of MCEC (Nancy New), the Assistant Executive Director of MCEC (Zack New) and the son of the Director of MCEC (Jess New).
Additional items were purchased with TANF funds, though there was no proper documentation/cost allocaton.
FRC purchased two vehicles for a total of over $78,000. TANF funds paid the complete cost; though vehicles were not used exclusively for TANF purposes.
Additional items were purchased with TANF funds, though there was no proper documentation/cost allocaton.
Total amount questioned in 2018 – $433,940 Total amount questioned in 2019 – $401,768
Page 42 Faith-Based Initiatives/Concerts
Both MCEC and FRC funded concerts of a faith-based, evangelical worship singer in FY 2018 and FY 2019. Payments were made to the singer individually and the organization “Through The Fire Ministries.” The singer performed at rallies and performed concerts in churches in Mississippi. Auditors did not have a copy of the contracts associated with the payments.
MCEC contracted with Sonshine Leadership, LLC to develop faith-based coalitions. One of the stated activities of the agreement was to “develop a prayer team for Mayors”
Total amount questioned in 2018 – $1,050 Total amount questioned in 2019 – $245,959
Under the “Families First” initiative, MCEC and MDHS were provided branding, public relations, print media and advertising from the Cirlot Agency.
The Auditor was not provided a contract for these services, but was provided a “Families First for Mississippi Financial Update” from November 2019 that detailed the scope of work performed for MDHS, Family First Initiative and Families First Mississippi.
Complete with billing errors and math errors the “update” stated that Cirlot Agency stated had billed hat $1,199,310 for services.
These transactions included a verbal “promise to pay” from Executive Director JD. MDHS. Under the subsequent Executive Director (Christopher Freeze), the reimbursement request was denied. However, MCEC still used TANF funds to pay for the services.
MCEC entered into contractual agreements to advertise and sponsor NCAA college sporting events at Mississippi State University.
Advertisements were at college football, basketball, and baseball games. In addition, advertising was also done for NCAA Final Four Championships and Bowl Games held out of state.
MCEC and FRC entered into contractual agreements to advertise with radio stations owned by Telesouth Communications.
Both MCEC and FRC utilized iPromoteU to provide promotional gifts and “swag” for conferences, booths, etc.
Costs were generally questioned due to the unreasonable cost of the advertising, lack of adherence to stipulations in the grant agreement, inability to allocate costs of allowable and
unallowable payments, and the lack of any correlation to how the advertising benefited the programmatic nature of the TANF program.
Total amount questioned in 2017 – $327,336 Total amount questioned in 2018 – $774,194 Total amount questioned in 2019 – $1,774,489
Page 47 Second Tier Subrecipients/Programmatic Subgrants
Both MCEC and FRC awarded subgrants to “second tier subrecipients” during the grant period.
The majority of subgrantees of MCEC and FRC were not appropriately monitored,
Most of the subgrant “packets” examined did not contain any type of correlation to the federal award objectives, nor did they contain client attendance records or documentation of the services provided.
Many of the projects funded with appropriate scopes appeared to have performed work; however, documentation supporting that work was not sufficient for auditor to determine if it met the requirements to be allowable under the federal award.
Grants went to Bellhaven University, Delta State University, Meridian Community College, Mississippi Gulf Coast Community College, Pearl River Community College, Picayune School District
Juanita Sims Doty Foundation – Granted $1,000,000 over a two year period. Scope unknown. Actual payments in FY 2018 totaled $688,864; and $368,291 in FY 2019.
About a dozen other community, civic and religious organizations.
FRC Subgrantee agreements did contain scopes and/or project descriptions; however, some items in project scopes did not comply with allowable cost provisions.
Questioned grants went to:
Baldwyn School District, Mississippi State University, Nettleton School District,
Autism Center of North Mississippi, Children’s Advocacy Center, Regional Rehabilitation Center, Southeast Mississippi Children’s Advocacy Center
Kelly Williams Ministries, Prentiss County Library, Reviving Network, Robinson Resource Center
Total amount questioned in 2018 – $3,161,248 Total amount questioned in 2019 – $3,319,311
Page 51 Personal Benefit/Conversion to Private Use
During the course of the audit, auditors became aware that MCEC was under investigation for the misuse of state and federal monies. Auditor noted the following instances of alleged conversion of assets to personal use:
Nancy New and her son Zack New were arrested and charged in MDHS embezzlement scheme
Alleged personal use of the News:
From a period of January 1, 2016 to June 30, 2019, MCEC transferred/paid a total of $6,513,393 in monies directly to the private business New Learning Resources, Inc. (NLR) which is owned and operated by the
Director (NN) and Assistant Executive Director (ZN) of MCEC.
Funds traveled between the two entities via a variety of accounting transactions. allegedly to conceal money transfers to NLR. For example, in one instance the financial records show a payment to NLR on 01/08/2019 for $1,125 forcatering of Highway Patrol meals; however, the same entry on the general ledger provided to auditors shows the payee of this transaction to be “Robert’s Catering.” In fact, any payments to NLR other than a $700,000 grant payment had been artificially removed from the general ledger provided to auditors.
After analyzing the transfers and transactions in the ledger, auditor questioned the payments to NLR that were not offset by credits.
MCEC’s Director and Assistant Executive Director entered into a contract, in their personal capacities, for
$1,700,000 with the medical company, Prevacus, to purchase an investment in Prevacus and its affiliate PreSolMD.
Original entries in the general ledger show that the payments were made with TANF funds; however, after State Auditor Investigators questioned the use of TANF funds in July 2019, the funding source was changed to “Bingo” in the accounting software. [ A bingo operation was a source of fundraising for MCEC.]
MCEC paid Magnolia Strategies, LLC, a company owned by the Director of MCEC’s son (Jess New) $250,000 in “consulting” fees.
MCEC used TANF funds to purchase kitchen equipment and for the cafeteria of NSS, as well as for computers.
Via contracts with University of Southern Mississippi (USM) for “externships,” which were, in fact, completed at NSS, MCEC used TANF funds to provide temporary workers for their personal business.
Assistant Executive Director of MCEC (ZN) borrowed $28,898 against the balance of his 403(b) pension plan and allegedly used TANF funds to repay the loan.
A variety of deliberate mislabeling of coding and incorrect billing procedures were utilized to conceal these various unallowable transactions.
Total amount questioned in 2017 – $1,489 Total amount questioned in 2018 – $1,256,148 Total amount questioned in 2019 – $2,518,640
Page 55 Related Party Rent and Idle Facilities
MCEC is owned and operated by the Director, and her son, the Assistant Executive Director. Together, they also own Avalon Holdings,LLC (Avalon). The Director’s other son owns and operates 204 Key, LLC (Key). Both Avalon and Key own properties that are utilized by MCEC as places of business. Avalon owns three separate buildings that are utilized by MCEC; Key owns one.
For space that is deemed to have a rental value of $12,460 per month, MCEC paid $27,166 monthly to Avalon, a family owned real estate business.
Rent was paid by MCEC for a building near the MCEC headquarters. The building was said to be rented for the use of Families First. However, it was actually utilized by the 4th grade classes at NSS, and is the location of the “Spectrum Academy” location inside NSS. Both NSS and Spectrum Academy are privately owned by the Director of MCEC and her family.
MCEC overpaid by $73,086 per year for property in Greenwood, MS utilized as a “Families First Resource Center.”
MCEC paid monthly rental payments of $3,500 to Key for property located in Madison, MS, supposedly for another “Families First Resource Center.” Mississippi Dyslexia Center, owned by the New family, was the only actual occupant of the building.
MCEC paid $20,274 per month with TANF funds to rent property in Jackson, MS said to be for a “virtual reality school” run by the Lobaki Foundation, although the school contract had ended. Auditors question $669,237 for this rental.
Total amount questioned in 2019 –$1,126,408
page 58 Travel for Specific Individuals
Priceless Ventures, LLC travel – The owner and operator of Priceless
Ventures (TD) was reimbursed for travel from MCEC. The contracts with
MCEC state that the contract price is all inclusive and do not detail policies
for travel reimbursement. For fiscal year 2019, MCEC reimbursed $12,872 to TD for travel.
BD travel – Aside from being the owner and operator of Restore2, LLC, BD was also employed by MCEC from July 1, 2018 to June 30, 2019. Travel for him and his wife are questioned.
Total amount questioned in 2019 –$46,294
Page 59 Salaries
At MCEC, auditors requested a list of employees and their salaries. MCEC provided a list; however, the list did not contain job descriptions. Auditors then requested for the job descriptions to be added to the list. When auditors received the revised list with job descriptions, auditors compared the two lists and found that five employees on
the first list were not on the second list, and some of the salary amounts changed.
Two of the employees that were no longer listed were the daughters-in-law of the Director of MCEC (NN) – the Assistant Executive Director’s (ZN) wife, and the wife of NN’s other son, JN. Two of the other employees that were no longer listed were attorneys who also are employees at FRC, one of which was previously the Deputy Executive Director of MDHS under Executive Director JD and the other is the niece of the Executive Director of FRC.
Auditors determined that there were several employees on MCEC’s payroll who were also listed as staff of New Summit School (NSS – owned by NN), Mississippi Dyslexia Center (owned by JN and ZN), and Spectrum Academy (owned by JN). The salaries of the employees identified were approximately $339,000 in FY 2017, $860,000 in FY 2018, and $944,000 in FY 2019.
Brett DiBiase’s job description, as listed by MCEC, was “Trainer.” The average salary of all of the other employees with the “Trainer” job description was approximately $28,000. However, BD was receiving an annual salary of $250,000.
Total amount questioned in 2017 – $5,840,046 Total amount questioned in 2018 – $13,202,040 Total amount questioned in 2019 – $15,296,505
page 62 All Other Costs from MCEC Sampled
Auditors sampled and tested all other expense classes at MCEC for adherence to Uniform Grant Guidance allowability regulations. MCEC did not have an appropriate or auditable underlying methodology for allocating shared costs among multiple grants. Findings included:
Awards, Banquets, and Events : Questioned Cost for fiscal year 2019 – $69,136
Contract Labor: Questioned Cost for fiscal year 2019 – $71,718
Curriculum: Questioned Cost for fiscal year 2019 – $15,750
Telephones: Questioned Cost for fiscal year 2019 – $61,389
Telephone – While reviewing invoices, auditors noted the following:
MCEC is paying a portion of each employees’ phone bill; The fringe benefit is applied to all employees regardless of need in regards to TANF purposes. Additionally, it was noted that MCEC is also paying 100 percent of the phone bill for employees who are either not employed by MCEC, do not work full time for MCEC, or work for New Summit School or New Learning Resource center parttime.
iPhones and iPad devices for NN (iPhone, iPad, and data for each), ZN (iPhone, two iPads, and data
for each), ZN’s wife (iPhone and data), JN (iPhone and data), and JN’s wife (iPhone and data). MCEC was also paying monthly installments on two phones and for the iPhone data for the owner of Priceless Ventures, TD.
Invoices also show that some employees’ are having their spouses and children’s phones, service, and iPhone data paid for usingTANF funds – including the IT Director of MCEC’s (BB) own phone and data, his son’s data, and his daughter’s phone and data.
Many other sampled categories found unacceptable accounting and/or procedures
Total amount questioned in 2019 –$329,427
Page 68 All Other Costs from FRC Sampled
[Generally the same type items looked at as MCEC above]
Auditors sampled and tested all other expense classes at FRC for adherence to Uniform Grant Guidance allowability regulations. During testing, auditors noted that FRC did not have an appropriate or auditable underlying methodology for allocating shared costs among multiple grants
Total amount questioned in 2019 –$133,015
SUMMATION OF FINDINGS AND QUESTIONED CHARGES
Due to the widespread fraud, waste, and abuse uncovered during the audit, and the lack of any appropriate underlying methodology for the allocation of shared costs in both MCEC and FRC, the overall lack of documentation to establish reasonableness and necessity of costs, the lack of integrity in documents obtained from MCEC due to known instances of forgery, misdirection, document modification, etc., the direct involvement of MDHS personnel in the fraud, waste, and abuse, and the likelihood of additional fraud, waste, and abuse existing in the actions of these subrecipients, auditor cannot state, with reasonable assurances, the amount of grant costs for the TANF grant were used appropriately.
For fiscal year 2017: $6,333,044 (TANF) For fiscal year 2018: $28,419,923 (TANF) For fiscal year 2019: $31,155,361 (TANF) For fiscal year 2018: $593 (SSBG) For fiscal year 2019: $111,262(SSBG)
For fiscal year 2018: $497,987 (SNAP) For fiscal year 2019: $139,564 (CCDF)
All information related to this audit finding has been referred to the Mississippi Office of the State Auditor Investigative Division, the United States Department of Justice, the Office of Inspector General for the United States Department of Health and Human Services, and the Federal Bureau of Investigation.
See page 71 for complete listing of all funds at the disposal of MCEC and FRC 2017-2019. All of which are deemed possibly to have been misused.
Pages 71 – 104 Details of the auditor’s evaluation of the:
Effects of MDHS fraud, waste and abuse of federal funds.
This includes that the widespread fraud, waste, and abuse has led to public distrust of MDHS, and a loss of integrity in the public welfare system in the State of Mississippi.
Pursue legal remedies
Conduct a widespread forensic audit of MDHS
Perform internal investigations of former and current MDHS staff
Report any suspected criminal activity
Strengthen existing controls
Procure adequate and appropriate training for all staff
Increase awareness of regulations in subrecipients
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