‘Downright sinful’: As Mississippi is mired in welfare scandal, advocates say the state still isn’t aiding the poor

This story was originally published by Mississippi Today

Nearly three years after arrests in the largest public embezzlement scheme in state history, exposing systemic corruption and negligence within Mississippi’s federal safety net grants, advocates and clients say the state’s welfare program still contains widespread flaws.

On Tuesday morning, the Mississippi Legislative Democratic Caucus held the first of several planned hearings to address how the state administers its Temporary Assistance for Needy Families (TANF) program.

"My hope is that the tragedy of the scandal behind this program leads to changes to how much money families receive to help with everyday expenses, who is eligible for the program, and how families are prepared for their exit from the program,” Brandy Nichols, a working mother of four and TANF client, said during her testimony.

The hearing, held by the minority party and not an official legislative committee, was the first legislative hearing about the corruption or the TANF program specifically since the scandal broke three years ago. No legislative leader has called a similar hearing.

First, some statistics on Mississippi’s TANF program currently:

  • Mississippi Department of Human Services is still approving less than 10% of poor families who apply for cash welfare assistance.
  • Of the $86.5 million in federal funds allocated each year, it spends roughly $4 million on direct payments to poor families and leaves roughly $20 million unused.
  • Of roughly 190,000 children living in poverty in the state, just 2,600 receive the monthly aid.
  • The state is using around $30 million of the grant to plug budget holes at the child protection agency.
  • The state isn’t using any of the money to increase the availability of the child care voucher, which is regarded as one of the most meaningful work supports and is reaching a fraction of the families that qualify for the assistance.
  • The state is still spending around $35 million in TANF funds per year on subgrants to private organizations to provide services like workforce training, after school programs and mentorship. But MDHS Director Bob Anderson confirmed Tuesday that the agency isn’t tracking outcomes of the programs — though it hopes to start doing so soon.
  • MDHS has successfully lobbied for legislation to increase the monthly TANF cash assistance amount from $170 to $260 for a family of three.
  • MDHS has lobbied unsuccessfully for legislation to roll back some provisions of the 2017 HOPE Act (Act to Restore Hope, Opportunity and Prosperity for Everyone). The act imposed some of the strictest eligibility restrictions in the nation, primarily for clients of the Supplemental Nutrition Assistance Program (SNAP), or food stamps, creating maze of bureaucratic red tape that burdens the department and arbitrarily kicks people off the programs. Anderson said the state should repeal the HOPE Act.
  • Mississippi could be on the hook to pay back $75 million to $95 million, depending on how much spending the U.S. Department of Health and Human Services deems impermissible, plus additional penalties if the federal government finds the misspending was intentional. The money would have to come from state coffers, HHS told Mississippi Today in 2020.

The known TANF corruption scandal — in which forensic auditors say state and nonprofit officials misspent $77 million — occurred from 2016 to 2020, but the state’s decision not to use much of the money on evidenced-based methods to reduce or prevent poverty began long before, and it has continued since.

“That we have had nearly $100 million per year for 26 years in welfare funds and that we still have the highest poverty rate of any state is, in my opinion, downright sinful,” Carol Burnett, founder of the Mississippi Low-Income Child Care Initiative, said at the hearing.

The Mississippi Department of Human Services has increased internal controls to address fraud with the TANF program. Currently, Mississippi does not appear to be spending TANF money on things like volleyball stadiums or contracts with former NFL quarterback Brett Favre — two 2017 TANF purchases that have made national headlines.

But that doesn’t mean the state is using the money in the wisest ways to meet the needs of poor families.

“There’s two parts to this, one is the part that’s in the headlines, which needs to be in the headlines, and that is the scandal and the illegal activity. The harder work for us is going to be to fix the program going forward. Just because something is legal doesn’t mean it’s smart,” Sen. David Blount, D-Jackson, said.

During her testimony, Nichols, who has held jobs as a waitress, a receptionist, a housekeeper, and a cashier, explained the barriers she faced in receiving government assistance.

“What may seem like an easy handout program is not. It’s work. And sometimes work that takes away from my ability to find a true stable job,” Nichols said. “TANF is supposed to help us find jobs, but if you don’t find a job within a week of being in the program, you’re stuck spending hours at DHS offices to fulfill volunteer hours. You’re basically exchanging your body to sit or file papers at the office for less than minimum wage. That’s not career development. That’s called being stuck in limbo.”

“When you apply for TANF, it takes nearly a month for your application to be processed. But when you need money in hand immediately, waiting a month for help only digs you further into the ground,” she continued. “Communication with the office is poor. You can’t directly contact your caseworker. And your caseworker is often changed without you knowing. It hurts to know that this program was taken advantage of by people who already make more money than I could ever imagine. A former quarterback received in a lump sum, over 300 times what I have ever received from TANF.”

Reginald Buckley, senior pastor of Cade Chapel Missionary Baptist Church in Jackson, provided more anecdotal evidence of the impact the scandal had on needy families in Mississippi. Buckley’s church noticed in 2019 that the number of people seeking their help for things like food, rent, and electricity was increasing, week by week. The congregation supplies a benevolent fund to pay these costs, and while members were continuing to give, it wasn’t enough anymore to cover the need.

“We speculated that the sharp increase for assistance was due to just the economy, inflation, stagnation – the standard culprits,” Buckley told lawmakers. “But later that year, when State Auditor Shad White announced the largest fraud case in state history due to the improper use of TANF funds, things became much clearer. It was not just hard times. It was not just fewer jobs. The sharp increase of need was largely a result of support for the needy being siphoned from the less fortunate and poured into the coffers of the connected and put into the financing of pet projects. We have all seen and read the reports that implicate some of the state’s highest public officials and their connection to what has happened here. And if it is true, the stench of hypocrisy is pungent and repugnant.”

While federal criminal investigations and a state civil case are ongoing to address the illegal spending, Anderson acknowledged that, at a less than 10% TANF approval rate, the funds still aren't being pushed out to families that need the aid. Many people who apply for TANF abandon their application before the process is complete, contributing to the low approval rate.

“I told my staff when I arrived that I thought we were doing a woefully inadequate job at providing basic assistance to families. And that is something I have a plan for,” Anderson said at the hearing. “I want to get to the individual answers about why families either don’t feel comfortable coming to us to apply or what figures into their decision to abandon their application. Are they fearful of sanctions? I don’t know. Are the eligibility guidelines too harsh? Could be. We’re looking at all of those things.”

Mississippi currently imposes a drug screening requirement on welfare applicants, a significant barrier to eligibility, even for people who don’t abuse substances, because applicants must find transportation to the testing clinic. Yet, during the scandal, TANF funds were used to pay for drug treatment at a luxury rehab facility for former professional wrestler Brett DiBiase. Former Gov. Phil Bryant even enlisted the help of his welfare director to try to get his nephew into treatment, according to text messages Mississippi Today obtained.

"So in effect, if you’re poor and in many cases a person of color - the use of drugs could disqualify you from receiving assistance. But if you’re rich and in many cases not of color - then the funds that were not intended for you that were restricted to others based on drug usage, can be yours. Mississippi, you have to make this right," Buckley said in the hearing.

The most recent federal TANF financial report from 2020 shows that Mississippi had piled up an unused balance of TANF funds totaling nearly $50 million. That number has likely grown significantly, as the state is currently leaving $20 million on the table annually.

In explaining why the state has such a large unobligated TANF balance, Anderson explained that the state may be required to return those funds — but federal law requires Mississippi to use state funds to pay back the misspent money, so federal penalties should not impact the state's existing TANF fund.

Anderson also told lawmakers that MDHS could not provide outcome data for programmatic grants issued under TANF — something Mississippi Today has been requesting since 2018 — because the agency is still not tracking the efficacy of the programs at lifting families out of poverty. "You’re asking me for information that doesn’t exist," he said.

In limited output reports Mississippi Today has retrieved in the past, the documents contained nonsensical figures, such as the number of clients served year-to-date declining in certain months. In 2019, Mississippi Today reported that MDHS was not even maintaining a list of organization to which it was awarding grants.

“There’s not really a culture of keeping documentation at DHS,” Stephanie Palmertree, financial and compliance audit director for the state auditor’s office, said at the time.

MDHS began maintaining a list of subgrantees, which it has provided to Mississippi Today multiple times, most recently in September.

Anderson said the agency is working on a strategic plan that will dictate how the TANF program is administered going forward. One concept the agency is mulling is hiring navigators who can help MDHS clients apply for and maintain assistance.

Elizabeth Lower-Basch, deputy director for policy for the Center for Law and Social Policy (CLASP) and national TANF expert, noted a navigator program would be MDHS creating extra programming to “navigate the obstacles you created.”

“Remove the barrier,” she suggested.

Asked whether Mississippi should repeal the 2017 HOPE Act, Anderson said yes.

The hearing, which took place in the Senate committee room, was not live-streamed as some lawmakers expected. The Senate denied the caucus’ request for to use the Senate infrastructure for live-streaming since it was party-affiliated and not an official committee hearing, lawmakers told Mississippi Today. The Democratic Caucus is expected to schedule more hearings to discuss TANF in coming months.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

Retired wrestler says GOP Gov. Phil Bryant cut welfare funding to nonprofit because of Democratic support

A former professional wrestler and defendant in the Mississippi welfare scandal is alleging that he personally witnessed Republican Gov. Phil Bryant instruct an appointee to cut welfare funding to a nonprofit because its director supported Democrat Jim Hood in the 2019 governor’s race.

The allegation that Bryant leveraged his control of welfare spending to punish a political opponent comes in a two-year-old federal court filing released Friday after Mississippi Today successfully motioned to unseal the case.

The account echoes a similar allegation Mississippi Today published just over a week ago that the same nonprofit was forced to fire Hood’s wife in order to keep receiving welfare grant funding.

Former WWE wrestler Ted “Teddy” DiBiase Jr. had received millions of federal welfare dollars to conduct various anti-poverty services for two private nonprofits when suddenly, the state allegedly pulled the program.

Federal authorities, who are attempting to seize DiBiase’s house because of his alleged role in the welfare scheme, say the Mississippi Department of Human Services “abandoned” the program and the wrestler failed to perform the work under his contracts. The federal complaint against DiBiase mirrors new federal charges that former welfare director John Davis pleaded guilty to on Thursday.

But what actually happened, DiBiase says, is that in 2019, Gov. Bryant directed Davis to discontinue the agency’s partnership with nonprofit Family Resource Center of North Mississippi because of its connection to Democrats in the state.

Family Resource Center director Christi Webb was an outspoken supporter of her friend and then-Attorney General Jim Hood, a Democrat who was running against Republican then-Lt. Gov. Tate Reeves for governor in 2019. That year, the term-limited Bryant, who still oversaw the welfare agency, also worked hard on the campaign trail to get Reeves elected to the Governor's Mansion.

FRC was one of two nonprofits that funded the wrestler. DiBiase said his program, called the “RISE” program, was then moved out from under the private nonprofits to the state agency.

“Shortly before John Davis retired in mid-2019, he indicated … that the RISE program would be taken ‘in-house’ and overseen at MDHS as opposed to being overseen by FRC or MCEC,” reads DiBiase’s Aug. 10, 2020, answer to the federal complaint for forfeiture against him. “Upon information and belief, this occurred as a result of the Governor directing John Davis to cease funding and working with FRC because FRC’s Executive Director, Christi Webb, was openly supporting Jim Hood in the race for Mississippi Governor.”

“The claimant, who witnessed Bryant give that direction to Davis, was subsequently informed by Davis that his contracts with FRC would be moved to MCEC,” the filing continued. “This did not affect Claimant’s performance under the contract.”

Teddy DiBiase made this claim in his response to a federal forfeiture complaint the U.S. Department of Justice filed against him in 2020 alleging he entered fraudulent contracts in order to obtain welfare funds. Mississippi Today motioned to unseal the case on Aug. 18.

U.S. Magistrate Judge Keith Ball dismissed the U.S. Department of Justice’s initial complaint against Teddy DiBiase in 2021, after his lawyers successfully argued that the complaint failed to allege a crime, and allowed the government to enter an amended complaint in August. Teddy DiBiase argues that he completed the work the nonprofits paid him to conduct, therefore earning the money legally.

Teddy DiBiase Jr.’s allegation against Bryant adds to claims that the former governor used his power to influence welfare spending, not just to benefit political allies, but to punish a Democratic opponent.

Officials have not charged Bryant civilly or criminally.

The state prosecutor who secured a guilty plea from Davis last week said investigators have their sights set on higher level officials as the welfare probe continues.

“We’re still looking through records and text messages as we continue to move up,” Hinds County District Attorney Jody Owens said after Davis’ guilty plea Thursday. “We also continue to work with the federal authorities in Washington and in Mississippi. John Davis is critical because the ladder continues to move up.”

Mississippi Today first reported a similar allegation from Webb that a local lawmaker had threatened her on Bryant’s behalf to fire Hood’s wife Debbie Hood in order to keep receiving funding from the state. Webb said she relayed the news to Debbie Hood, who agreed to resign. Hood’s campaign manager Michael Rejebian said Debbie Hood confirmed the account. Webb also alleged that she eventually refused to continue paying the DiBiases, which angered Davis.

READ MORE: Welfare defendant alleges Gov. Phil Bryant used federal funds to hurt political rival

Family Resource Center’s original founder, Cathy Grace, was also running as a Democrat in 2019 for a local House seat against Republican Rep. Shane Aguirre, R-Tupelo, who worked for FRC as an accountant in charge of reviewing invoices from its partners. Aguirre told Mississippi Today he did not work on or review the DiBiase projects.

Teddy DiBiase Jr. is the son of WWE legend Ted “The Million Dollar Man” DiBiase Sr. His younger brother, Brett DiBiase, also received welfare funds and pleaded guilty to his role in the fraud scheme in 2020. Through various contracts with the men, as well as Ted DiBiase Sr.’s Christian ministry, the DiBiase family received over $5 million in welfare funds.

In the 2020 ongoing forfeiture complaint against Teddy DiBiase, federal authorities are attempting to seize his $1.5 million French-colonial lakeside home in the Madison community of Reunion, Clarion Ledger first reported. Prosecutors say he purchased the property with money obtained from the state’s welfare program — a total of over $3 million, according to the state auditor. At the time in 2020, the complaint contained details of an ongoing investigation.

Davis pleaded guilty on Sept. 22 to two federal charges — one count of conspiracy to commit wire fraud and one count of theft — related to these payments to Teddy DiBiase. Mississippi Today identified one of the four unnamed alleged co-conspirators in the charges against Davis as Teddy DiBiase.

Teddy DiBiase Jr. and Ted DiBiase Sr. have not publicly faced criminal charges, though they are targets of an ongoing state civil case that attempts to recoup misspent welfare funds.

All of the charges are part of a wider scandal that resulted in the misspending of $77 million in federal welfare funds. The money flowed through Family Resource Center of North Mississippi and another nonprofit Mississippi Community Education Center, founded by defendant Nancy New. New, who has pleaded guilty to bribery and fraud, was a friend of Bryant’s wife.

The two nonprofits were running a statewide program called Families First for Mississippi.

Filings in the federal forfeiture case against Teddy DiBiase Jr. outline several alleged events:

June 2017: Teddy DiBiase’s company Priceless Ventures signed a contract with FRC and MCEC for $250,000 to “act as a ‘leadership training coordinator’” for Families First for Mississippi. FRC paid the retired wrestler in full on June 1, 2017, the first day of the contract period.

August 2017: FRC paid Ted DiBiase Sr. $250,000, near the beginning of a year-long contract to be a motivational speaker for Families First.

May 2018: Teddy DiBiase’s company Priceless Ventures signed a contract with FRC for $500,000. MCEC paid $500,000 on May 17, 2018. He “performed no significant work under this leadership outreach contract,” the complaint alleges, “but instead merely provided one or two training sessions — an immaterial amount of work that fell far short of what the contract required.”

July 2018: FRC paid Priceless Ventures nearly $500,000 in emergency food assistance funds on July 13, 2018, for a contract that was supposed to run from May 2018 to September 2018. “The only work DiBiase Jr. completed on this contract was to send a list of food pantry locations to FRC,” the filing alleged.

October 2018: Priceless Ventures signed a $130,000 contract with MCEC to create a personal development training program. MCEC eventually paid the company $199,500 under this contract.

December 2018: MDHS signed a $48,000 contract with Brett DiBiase to conduct training sessions on opioid addiction from December 2018 to June 2019.

February 2019: Brett DiBiase began treatment at a luxury drug rehabilitation center in Malibu called RISE, where he would receive therapy for four months. Davis directed MCEC to make four $40,000 payments to the facility.

The federal complaint alleges that Teddy DiBiase used the money from the Family Resource Center contracts to make a more than $400,000 down payment on his Madison home. Teddy DiBiase denies the assertion that he failed to complete the work for which he was hired.

The federal complaint also uses Davis’ text messages to establish the close relationship that the government bureaucrat developed with the DiBiase family, such as Davis telling his administrative assistant that he “loves B. DIBIASE like his own child,” the amended complaint reads. Davis also pleaded guilty last week to charges related to welfare payments to Brett DiBiase and to pay for his drug rehab stint.

As Mississippi Today previously reported, Davis and Teddy DiBiase swapped Christian devotionals, traveled out of state and exercised at the gym together. Davis frequently texted the older brother, “I love you.” The welfare director flew across the country to visit Brett DiBiase while he was in drug rehab, discussed his treatment options with a specialist and called him the “son I never had.” When not together, they shared long, late-night phone calls, phone records show.

While Teddy DiBiase Jr. was never a payroll employee of the state welfare agency — only a contractor of the welfare-funded private nonprofits — he occupied one of the largest offices inside the private downtown high-rise where Davis relocated MDHS offices after he became director.

Under one of the contracts, Teddy DiBiase was supposed to accomplish several things, including meeting “the multiple needs of inner-city youth”; identifying services for “successfully linking the youth served with opportunities for self-sufficiency and independence”; providing feedback about “parents as they pursue skill-building and education that lead to better jobs”; and helping employers on “improving opportunity and outcomes in the workforce.”

In Mississippi, nearly one in five people live in poverty. Average wages in the state, as well as the state’s workforce participation rate, are among the lowest in the nation. Teddy DiBiase’s contract illustrates both the state’s frenetic emphasis on workforce development and its disregard for whether the programs it supports actually produce the desired outcomes.

In this case, the U.S. Department of Justice contends the actions were illegal.

Davis and DiBiase Jr. entered into the workforce-related contracts, according to the federal complaint, “even though DAVIS and DIBIASE JR. knew, at the inception of the contract … that, in fact, no significant services would be performed under the contract and that the actual purpose of entering into the contract and disbursing funds under it was to enrich DIBIASE JR. by stealing and misapplying funds under the federally-funded contract.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

Former Mississippi official to plead guilty to state and federal charges related to welfare scandal

Former welfare agency director John Davis is set to plead guilty on Thursday to two federal charges and 18 state counts of fraud or conspiracy related to his role in the Mississippi welfare scandal, according to separate federal and state court filings.

The new federal charges pertain to welfare funds Davis allegedly helped funnel to the companies of retired professional wrestler Ted "Teddy" DiBiase Jr., son of famed WWE wrestler Ted "The Million Dollar Man" DiBiase. Davis and Teddy DiBiase Jr. had developed a close relationship during Davis' term as welfare director from 2016 to 2019, as Mississippi Today has reported in its investigative series "The Backchannel."

Davis instructed two nonprofits receiving tens of millions in welfare funds from his department to pay Teddy DiBiase Jr. under what the federal court filing called "sham contracts" to deliver personal development courses to state employees and a program for inner-city youth, “regardless of whether any work had been performed and knowing that no work would ever be performed.”

Davis, who had not previously faced federal charges for his role in the welfare scandal, is the latest defendant to plead guilty and agree to aid prosecutors. In April, Nancy and Zach New pleaded guilty to state charges in the welfare case as well as to separate federal fraud charges they faced related to public school funding. The News are cooperating with federal investigators, who continue to probe the welfare scheme and who else may have been involved.

The federal bill of information unsealed Wednesday, to which Davis is set to plead guilty, also describes four unnamed co-conspirators in the scheme. Based on the incorporation dates provided in the filing for the co-conspirators' affiliated organizations or companies, Mississippi Today identified three of the alleged co-conspirators as Nancy New, director of Mississippi Community Education Center; Christi Webb, director of Family Resource Center of North Mississippi; and Teddy DiBiase Jr., owner of Priceless Ventures, LLC and Familiae Orientem, LLC.

A fourth unnamed co-conspirator, a resident of Hinds County, is unidentifiable in the filing.

Davis and the three alleged co-conspirators are each facing civil charges in an ongoing lawsuit Mississippi Department of Human Services is bringing in an attempt to recoup welfare money from people who received it improperly.

"As a result of the actions of DAVIS, the Co-Conspirators, and others, millions of dollars in federal safety-net funds were diverted from needy families and low-income individuals in Mississippi," the federal filing reads.

The bill of information signals that Davis chose to waive a formal indictment and plead guilty to one count of conspiracy to commit wire fraud and one count of theft, which come with maximum prison sentences of five and 10 years, respectively. The court filing does not indicate what kind of deal he received for pleading guilty.

The federal charges specifically outline four payments or contracts Family Resource Center made to Teddy DiBiase's companies in June and August of 2018 totaling nearly $2.2 million.

Casey Lott, the attorney for Webb, who is facing civil charges but has not been charged criminally, said his client stopped making payments to Teddy DiBiase Jr. when it became clear his companies were not conducting the services.

"The DiBiase’s and their organizations contracted to provide services to needy families," Lott said in a written statement Wednesday evening. "The problem is they didn’t hold up to their end of the bargain. And once they refused to do everything Christi asked them to do, she refused to award any additional subgrants to those organizations. This enraged John Davis. He yelled and cursed Christi and other FRC employees for not sending them money anyway. He threatened to cut their funding if Christi didn’t do what he told her to do. And when she stood her ground and did the right thing, he followed through with his threat. Christi is the only one who ever told John Davis 'no,' and she was punished for it. She was forced to lay hundreds of people off. Those innocent people who were providing much needed services to the North Mississippi community lost their job because Christi stood up to John Davis and did the right thing. So, to say she’s a 'co-conspirator' is absurd."

Attorneys for New, Davis and Teddy DiBiase either declined to comment or could not be reached Wednesday.

Officers from the auditor's office initially arrested Davis in February of 2020 on state charges of conspiracy, embezzlement and fraud after a roughly nine month investigation. Hinds County prosecutors accused Davis of using federal money administered by the agency he oversaw to send Ted DiBiase Sr.'s other son, Brett DiBiase, to a luxury rehab facility in Malibu. The criminal charges pertained to just a small portion of a scandal that forensic auditors eventually determined totaled misspending of at least $77 million in funds from a federal program called Temporary Assistance for Needy Families.

Brett DiBiase pleaded guilty to his role in the scandal — raking in $48,000 from the agency for work he didn't complete while he was in treatment — in December of 2020.

In April, Davis was indicted again on 20 state charges, including nine counts of bribery, which came with a possible sentence of 150 years.

An order of dismissal filed Wednesday in the state case signals Davis plans to plead guilty to five counts of conspiracy and thirteen counts of fraud in state court Thursday after pleading guilty to federal charges. The filing indicates that Davis will spend his entire sentence in the case in federal court and avoid notoriously harsh conditions of Mississippi's state prisons, an arrangement similar to the plea deal New received in April. New, her son Zach New, Brett DiBiase, and Mississippi Community Education Center accountant Ann McGrew have pleaded guilty but have not been sentenced.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

Former Gov. Phil Bryant helped Brett Favre secure welfare funding for USM volleyball stadium, texts reveal

Text messages entered Monday into the state’s ongoing civil lawsuit over the welfare scandal reveal that former Gov. Phil Bryant pushed to make NFL legend Brett Favre’s volleyball idea a reality.

The texts show that the then-governor even guided Favre on how to write a funding proposal so that it could be accepted by the Mississippi Department of Human Services – even after Bryant ousted the former welfare agency director John Davis for suspected fraud.

“Just left Brett Favre,” Bryant texted nonprofit founder Nancy New in July of 2019, within weeks of Davis’ departure. “Can we help him with his project. We should meet soon to see how I can make sure we keep your projects on course.”

When Favre asked Bryant how the new agency director might affect their plans to fund the volleyball stadium, Bryant assured him, “I will handle that… long story but had to make a change. But I will call Nancy and see what it will take,” according to the filing and a text Favre forwarded to New.

The newly released texts, filed Monday by an attorney representing Nancy New's nonprofit, show that Bryant, Favre, New, Davis and others worked together to channel at least $5 million of the state’s welfare funds to build a new volleyball stadium at University of Southern Mississippi, where Favre’s daughter played the sport. Favre received most of the credit for raising funds to construct the facility.

Bryant has for years denied any close involvement in the steering of welfare funds to the volleyball stadium, though plans for the project even included naming the building after him, one text shows.

New, a friend of Bryant’s wife Deborah, ran a nonprofit that was in charge of spending tens of millions of flexible federal welfare dollars outside of public view. What followed was the biggest public fraud case in state history, according to the state auditor’s office. Nonprofit leaders had misspent at least $77 million in funds that were supposed to help the needy, forensic auditors found.

New pleaded guilty to 13 felony counts related to the scheme, and Davis awaits trial. But neither Bryant nor Favre have been charged with any crime.

And while the state-of-the-art facility represents the single largest known fraudulent purchase within the scheme, according to one of the criminal defendant's plea agreement, the state is not pursuing the matter in its ongoing civil complaint. Current Gov. Tate Reeves abruptly fired the attorney bringing the state’s case when he tried to subpoena documents related to the volleyball stadium.

The messages also show that a separate $1.1 million welfare contract Favre received to promote the program – the subject of many national headlines – was simply a way to get more funding to the volleyball project.

“I could record a few radio spots,” Favre texted New, according to the new filing. “...and whatever compensation could go to USM.”

New, who is now aiding prosecutors as part of her plea deal, alleged that Bryant directed her to make the payment to Favre in a bombshell response to the complaint in July.

The allegation and defense “are not based on speculation or conjecture,” the Monday court filing reads. “The evidence suggests that MDHS Executives, including Governor Bryant, knew that Favre was seeking funds from MDHS to build the Volleyball Facility … and participated in directing, approving, or providing Favre MDHS funds to be used for construction of the Volleyball Facility.”

The latest motion, filed on behalf of New’s nonprofit Mississippi Community Education Center, represents the first time these messages, which include texts directly between New and Bryant and New and Favre, have been made public. The messages are printed here exactly as they appear in the filing without corrections.

In July, the attorney for New and the nonprofit, Gerry Bufkin, filed a subpoena on Bryant asking for the former governor’s communication related to the volleyball project.

On Aug. 26, Bryant’s recently-hired attorney Billy Quin filed an objection to the subpoena, refusing to turn over the records without a protective order. Quin argued that Bryant’s texts are protected by executive privilege and that producing them to the public would run afoul of existing gag orders in the criminal cases.

Bufkin’s latest motion includes texts that the attorney picked, not entire text threads, and may only reflect one side of the story. In a short statement to Mississippi Today for this story, Bryant didn’t offer an explanation for his communication.

“(The New defense team's) refusal to agree to a protective order, along with their failure to convey the Governor’s position to the court, unfortunately shows they are more concerned with pretrial publicity than they are with civil justice,” Bryant said.

Bufkin’s motion asks for the court to compel Bryant to produce the documents, arguing they are central to New’s defense.

“Defendant reasonably relied on then-Governor Phil Bryant, acting within his broad statutory authority as chief executive of the State,” reads New’s July response to the complaint, “including authority over MDHS and TANF, and his extensive knowledge of Permissible TANF Expenditures from 12 years as State Auditor, four years as Lieutenant Governor, and a number of years as Governor leading up to and including the relevant time period.”

Bufkin told Mississippi Today that the governor's involvement in building the volleyball stadium, suggested by the text messages, "lends an air of credibility to the project, which is important to our defenses."

"We do not believe a protective order shielding the Governor's documents from public view, and thus limiting our ability to use them in open court or public pleadings in support of our defenses, is appropriate," Bufkin said.

Federal regulations prohibit states from using money from the welfare program, called Temporary Assistance for Needy Families (TANF), on “brick and mortar,” or the construction of buildings.

The scheme to circumvent federal regulations in order to build the volleyball stadium has already resulted in a criminal conviction.

New’s son Zach New admitted in his April plea agreement to defrauding the government when he participated in a scheme “to disguise the USM construction project as a ‘lease’ as a means of circumventing the limited purpose grant’s strict prohibition against ‘brick and mortar’ construction projects in violation of Miss. Code Ann. 97-7-10.”

Favre’s attorney Bud Holmes denied that the athlete knew the money he received was from the welfare fund. “Brett Favre has been honorable throughout this whole thing,” Holmes said Monday.

When Mississippi Today asked Favre by text in 2020 if he had discussed the volleyball project with the governor, Favre said, simply: “No.”

The motion filed Monday offers a detailed look at the earliest days of the planning of the USM volleyball center between Favre, New, Davis and other key players — a chronology that had not up to this point been publicly revealed.

Favre first asked for funding from Mississippi Department of Human Services during a July 24, 2017, meeting at USM with New, Davis, university athletic staff and others, according to the motion.

By this time, the University of Southern Mississippi and the Southern Miss Athletic Foundation, which would pay for the construction, had already made some progress on Favre’s idea. On July 1, according to records, the university leased its athletic facilities and fields to the foundation for $1, which made it possible for the foundation to lease the facilities to the New nonprofit for $5 million.

Because of the strict prohibition on using TANF funds to pay for construction, the parties had to craft an agreement that would look to satisfy federal law and give the illusion they were helping needy families. With the help of legal advice from MDHS attorneys, they came up with the idea for New’s nonprofit to enter a $5 million up-front lease of the university’s athletic facilities, which the nonprofit would purportedly use for programming. And in exchange, the foundation would include offices for the nonprofit inside the volleyball facility, which they called a “Wellness Center.”

Davis immediately committed $4 million to the project, according to the motion.

“While Favre was pleased with MDHS’s $4 million commitment, he knew a state-of-the-art Volleyball Facility was likely to cost more,” the filing reads. “To make matters worse, USM apparently had a policy that any construction project on campus had to be funded fully, and the money deposited in USM’s account, before construction could begin.”

Favre thought of a way to get some extra cash to the program: even more money could flow through his company in exchange for the athlete cutting ads for the state’s welfare program. New said she thought it was a good idea.

“Was just thinking that here is the way to do it!!” Favre texted.

Only days after Favre received the financial commitment from Davis, he “had grown impatient with USM, which was moving slowly. Favre contacted Governor Bryant to speed things along. In response, Governor Bryant called Nancy New,” the motion reads.

“Wow,” New texted Favre, “just got off the phone with Phil Bryant! He is on board with us! We will get this done!”

The governor remained in tune on the project as it progressed. On Nov. 2, 2017, New texted Favre, “I saw the Gov last night … it’s all going to work out.”

Four days later, New’s nonprofit paid the first lump sum of $2.5 million. It paid another $2.5 million on Dec. 5, 2017, according to the state auditor's office report released in 2020. Favre also received his first payment under the advertising agreement of $500,000 in December 2017.

“Nancy Santa came today and dropped some money off,” Favre texted New that day, “thank you my goodness thank you. We need to setup the promo for you soon. Your way to kind.”

The nonprofit paid the athlete another $600,000 in June 2018.

By 2019, as the cost of construction for the volleyball center grew and Favre had committed to pay more than $1 million himself that he expected to receive from MDHS, the athlete became antsy. According to a calendar entry entered by Davis, Bryant and Favre requested to meet with welfare officials about the USM facility in January of 2019.

Favre nudged the welfare officials who promised to help, but the state agency and nonprofits were in financial turmoil. Months went by with no USM payments.

In June of 2019, Bryant ousted Davis after an MDHS employee came forward with a tip about suspected fraud. Bryant replaced Davis with former FBI Special Agent in Charge Christopher Freeze.

When Favre asked Bryant if Davis’ departure would affect the project, according to the motion, the governor responded, “I will handle that… long story but had to make a change. But I will call Nancy and see what it will take.”

“Just left Brett Favre,” Bryant then texted New. “Can we help him with his project. We should meet soon to see how I can make sure we keep your projects on course.”

Later that day, New texted Favre to tell him that she would be meeting with the governor in two days.

“He wants me to continue to help you and us get our project done,” she said.

With the new guard in place at the top of the welfare agency, Favre and New tried to put together a proposal for more volleyball funding that would pass the smell test. Part of their plan was to put Bryant’s name on the building, according to one text from New to Favre. Favre relayed to New that Bryant said New would have to submit proper paperwork to MDHS.

“While the Governor’s text to Favre said New needed to ‘get the paperwork in,’ the Governor confided to Favre on a call that he had already seen Favre’s proposal. Favre texted New, ‘[the Governor] said to me just a second ago that he has seen [the funding proposal] but hint hint that you need to reword it to get it accepted,” reads New’s motion.

New had questions about how to reword the proposal, but instead of having a conversation directly with the governor, she relied on what the governor would tell Favre, the texts show.

“Hopefully she can put more details in the proposal,” Bryant said, according to a text Favre forwarded to New. “Like how many times the facility will be used and how many child will be served and for what specific purpose.”

Favre later texted, “I really feel like he is trying to figure out a way to get it done without actually saying it.”

Favre, New, Bryant and Freeze met in September 2019 to discuss progress on the new facility.

Though the texts illustrate the governor's support for the program around that time, Bryant said in an April 2022 interview with Mississippi Today that he rejected the request from New and Favre fund the project further.

“I stood up and I said, ‘No,’” Bryant told Mississippi Today. “... I remember a meeting with Nancy New and Chris (Freeze), and maybe it was another one, and me. And she came in one more time, ‘Volleyball, volleyball.’ And she said, ‘My budgets have been cut and I can’t do all of these things … And that’s another thing: ‘Budgets are cut,’ so I’m thinking somebody’s watching over spending. And then she said, ‘And oh, by the way, can we have the money for the volleyball?’ And I said, ‘No. No, we’re not spending anything right now. That is terminated.’”

Two days after the meeting, New received a letter from the welfare agency informing her that the agency was increasing her TANF subgrant by $1.1 million, which the letter said was for the purpose of reimbursing payments the nonprofit made to its partners.

Under Freeze, MDHS reinstated its bid process for TANF subgrants. Though New's nonprofit was under investigation, and had been raided by the auditor's office months earlier, the welfare agency notified New in December of 2019 that she had won another grant for the coming year. That month, Bryant texted New to ask if she had received the award.

“Yes, we did,” New responded to the former governor. “From all the craziness going on, we had been made to believe we were not getting refunded. But we did. ‘Someone’ was definitely pulling for us behind the scenes. Thank you.”

Bryant responded with a smiley face.

In early 2020, as funding to the nonprofits slowed and Bryant entered the waning days in his final term as governor, Favre and state officials scrambled to come up with the funds to finish the USM volleyball project. Communication obtained by Mississippi Today shows that another state agency that had been receiving grants from the welfare department joined talks of funding the remainder of the construction.

New sent Favre’s funding request to Andrea Mayfield, then-director of the Mississippi Community College Board.

“I am at a loss right now,” New wrote, “and am honestly trying to save coworkers’ jobs, too. Are we closer on a lease, etc. for him. Sorry to have to ask this as I know everybody is doing everything they can. Thank y’all.”

Mayfield proposed having the USM athletic foundation front the $556,000 that the builders needed, and then be reimbursed by various state agencies through monthly rent payments.

“I can work each agency to execute a contract. Once they execute a contract with me, I can quickly execute with MCEC. I am sorry it is taking time. I am at the mercy of each partners schedule. Thoughts?” Mayfield texted USM Athletic Director Jeremy McClain, according to the message she forwarded to New and Favre.

“Let me know,” Favre responded, “and we have a few weeks until it’s finished. If need be Deanna and I will just pay it. If the university will at least Agree on a deal maybe we can get some funding fairly quickly.”

It’s unclear if any more federal grants went to Favre or the athletic foundation after this point.

Bufkin isn’t the only person who has subpoenaed the former governor’s communication related to the volleyball project. Attorney Brad Pigott, who originally represented the state’s welfare department in the civil suit, also subpoenaed the athletic foundation for its communication with Bryant or his wife Deborah Bryant – and was fired from the case as a result.

Pigott previously called the $5 million agreement between the New nonprofit and the athletic foundation “a sham, fraudulent, so-called lease agreement” in which the parties pretended that the purpose of the deal was for the nonprofit to provide services at the facilities, “all of which was a lie,” Pigott said.

Pigott said he believed his firing was political. Reeves and his current welfare agency director have waffled on their reason for terminating Pigott.

The state’s civil case, which seeks to recoup $24 million from 38 people or organizations, appears to have slowed since Pigott’s firing. The athletic foundation is not named as defendant and the volleyball stadium is not discussed once in the complaint. The state canceled and has not rescheduled several depositions that were supposed to take place this month — including one with Favre.

“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 told Mississippi Today after his firing in July.

It’s unclear how the athletic foundation has responded, if at all, to either Bufkin or the state’s subpoena, as no related filings appear in the case file. Objections to subpoenas, such as Bryant’s, are not entered into court. If a subpoenaed entity produces documents as requested, those documents could also go directly to the requesting parties and would not appear in the public court file.

The FBI is still investigating the welfare scandal, but officials haven’t publicly indicated which figures they might be pursuing. President Joe Biden recently nominated Todd Gee to serve as U.S. attorney for the Southern District of Mississippi, a position that has been vacant for nearly two years. Gee, a Vicksburg native, will inherit the welfare investigation in his new job after serving as the deputy chief of the Public Integrity Section of the U.S. Department of Justice since 2018.

Gee previously served as lead counsel for the House Homeland Security Committee under chair U.S. Rep. Bennie Thompson, who in July wrote a letter to U.S. Attorney General Merrick Garland asking the U.S. Department of Justice to investigate Bryant’s role in the welfare scheme.

Shad White, the state auditor who originally investigated the case, was appointed by and formerly served as a campaign manager for Bryant. Shortly after his office arrested New, Davis and four others for their alleged roles in the scheme, White publicly called Bryant the whistleblower in the case.

Asked on Monday how he would characterize Bryant’s role in the scandal now, White said, “I wouldn’t because we don't know everything that's going to come out ultimately.”

“I would just let the public decide how they interpret his actions over the course of that entire thing,” White said. “You know, really, if you think back about the corpus of events here that happened, a lot of it has been put out in the news. And so I think anybody who's reading the newspaper can look at that and say, ‘OK, people at DHS did this right, and they did this wrong. People in the governor's office did this right, and they did that wrong.’ And they can decide.”

“That’s not for me to decide what somebody’s legacy is,” White added.


This article first appeared on Mississippi Today and is republished here under a Creative Commons license.