Mississippi’s Ex-Welfare Director, 5 Others Arrested Over ‘Massive’ Fraud

Mississippi’s state auditor has arrested the former head of the state’s Department of Human Services along with four colleagues and a former pro wrestler, saying they were all part of a multimillion-dollar embezzlement scheme that took money intended for needy families and used it for personal investments, a luxury rehab stay in California, and other inappropriate uses.

“If convicted on all counts, the accused face hundreds of years in prison,” State Auditor Shad White said in a news release about the arrests.

White’s office says it’s still determining how many millions of dollars were diverted. But it adds that the loss to the state and its neediest citizens already surpasses any embezzlement scheme in at least the past 20 years – the span in which it normally retains case records.

Those accused in the alleged scheme include John Davis, the former executive director of the Mississippi Department of Human Services; Dr. Nancy New and her son, Zach, who operate a nonprofit community education center; and Brett DiBiase, a former pro wrestler who was paid for teaching classes on drug awareness – but who was actually saying at a drug rehabilitation facility called Rise in Malibu during the same time he purportedly taught those classes.

DiBiase, 31, is the son of hall of fame wrestler Ted “The Million Dollar Man” DiBiase, who lives in Mississippi and is now a Christian evangelist minister. The DiBiases are one of the most famous families in pro wrestling, dating back to Brett DiBiase’s grandfather, “Iron” Mike DiBiase.

The state auditor says Davis told the News to pay for DiBiase’s rehab treatment using public money from the Temporary Assistance for Needy Families program, which is meant to aid low-income families with children under 18 years old. But after DHS sent TANF money to the News’ Mississippi Community Education Center, the News allegedly submitted documents back to the state saying they were paying DiBiase “for conducting training classes that never, in fact, took place,” the auditor’s office says.

Mississippi’s DHS says it triggered an inquiry into Davis last June, when it “self-reported” information about the case to then-Gov. Phil Bryant’s office. That report

“That report ultimately led to [Wednesday’s] arrests,” the agency said in a spokesperson’s email to NPR. It also thanked the auditor’s office for its investigation, adding, “We look forward to this moving through the justice system to a final disposition.”

In addition to paying for a stay at an oceanside drug treatment facility, the state auditor accuses the defendants of funneling public funds for their own uses, from personal expenses to private investments in two medical companies — Prevacus, Inc., and PreSolMD, LLC, which are both based in Florida.

“I don’t care how politically connected a person may be,” White said. “You do not have the right to treat taxpayer money as your own or to lie to the taxpayers about what you’re doing with that money. Others doing this kind of thing are on notice: this will not be tolerated now.”

Davis retired from DHS one month after his agency shared the information with state authorities. In a note posted to the DHS’s website, Davis said the July 4th holiday had given him “time to make life-changing decisions” about leaving the agency where he’d worked for 28 years. His retirement became effective at the end of July.

Davis, the News, and DiBiase were charged along with former DHS employee Latimer Smith, who allegedly helped fabricate documents, and Anne McGrew, an accountant for MCEC. All of them are now under a grand jury indictment and face prosecution in Hinds County, which includes the state capitol in Jackson.

“Our office looks forward to working with the State Auditor Shad White and his dedicated team to end public corruption in Mississippi,” Hinds County District Attorney Jody Owens said via Twitter. He added, “The misuse of government funds designed for families in need will not be tolerated and those who break the law will be prosecuted.”

Mississippi’s TANF program that was allegedly misused to support investments and personal spending was created to provide cash benefits to residents whose income falls below the state’s minimum limits. For a family of three, the gross monthly income limit is currently $680, according to the agency’s website.

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