New information has come to light in the ongoing investigation into what State Auditor Shad White has called the “largest public embezzlement case in Mississippi history.”
Last week, former Department of Human Services Executive Director John Davis and five others were arrested following an 8-month long investigation that revealed that Davis and his co-conspirators allegedly obtained millions in public funds from the Temporary Assistance for Needy Families (TANF) program administered by DHS, and used a variety of business entities and schemes to defraud the taxpayers.
While no specific dollar amount has been made public, White has stated that the loss already exceeds any embezzlement scheme in the records of the Auditor’s office which dates back 20 years.
The investigation began following a tip from a previously unknown whistleblower, who has now been identified as former Governor Phil Bryant.
“We would not have found out about this without somebody coming forward to the Auditor’s office and letting us know, and that person, in this case, was Governor Phil Bryant,” White explained during an appearance on the Gallo Show on SuperTalk Mississippi this morning.
White stated that DHS employees alerted the then-Governor to the alleged wrongdoings within the department, and the investigation began immediately after Bryant came to the Auditor’s office with the information.
In addition to Davis, the five other suspects in the scheme include former DHS employee Latimer Smith; Dr. Nancy New, owner and Director of the Mississippi Community Education Center (MCEC) and New Learning, Inc.; Zach New, Assistant Executive Director of MCEC; Anne McGrew, accountant for MCEC; and Brett DiBiase.
The list of exact charges has not been released, but the allegations against the individuals were detailed in a press release from White’s office last week.
“Davis and Smith stand accused of fraudulently manufacturing documents to enrich Brett DiBiase using TANF money. Davis and Smith created invoices to pay DiBiase TANF funds for teaching classes about drug abuse, but DiBiase was in a luxury rehabilitation facility for his own drug use in California at the time and did not perform the services. Davis and Smith created documents and arranged payment knowing DiBiase was not performing the work he was hired to perform.
Nancy New and her son, Zach New, stand accused of using the News’ non-profit, MCEC, to pay for DiBiase’s drug treatment using TANF funds. At Davis’ direction, MCEC used TANF money received from DHS to pay for DiBiase’s opioid treatment at the Rise in Malibu facility. The documentation submitted by the News claimed this was to pay DiBiase for conducting training classes that never, in fact, took place.
The News also stand accused of transferring millions in TANF funds to their private businesses. They then converted funds to their personal use and concealed the conversion through various fund transfers, fraudulent documents, at least one forged signature, and deceptive accounting measures.
Finally, Davis and the News are accused of creating a fraud scheme to take TANF funds to pay for personal investments in medical device companies (Prevacus, Inc., and PreSolMD, LLC) in Florida.”
On Thursday, U.S. Attorney Mike Hurst released a statement explaining that the FBI had not been made aware of the ongoing investigation and learned about it along with the general public. White said that “all the violations that were uncovered were violations of state law,” but as the investigation continues, it will broaden in scope. The Auditor’s office was set to meet with the FBI this morning.
“Now is the time to bring every investigative resource together to make sure we get to the bottom of all of this, “White said.
During his interview with Paul Gallo on SuperTalk Mississippi, White urged the legislature to order a “full forensic audit” of DHS to be handled by an independent CPA firm to determine the full extent of the scheme. If this is done, White says this will provide the most complete look at the case.
“We will have had the most exhaustive & transparent look at a state agency in Mississippi so far,” White said.