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

Special agents from the Mississippi Office of the State Auditor arrested John Davis, the former executive director of the Mississippi Department of Human Services, on Wednesday. He and five others are accused of diverting millions of dollars from a family-welfare program.
Rogelio V. Solis
Special agents from the Mississippi Office of the State Auditor arrested John Davis, the former executive director of the Mississippi Department of Human Services, on Wednesday. He and five others are accused of diverting millions of dollars from a family-welfare program.

Mississippi's former welfare director, four colleagues and a former pro wrestler have been charged with carrying out a multimillion-dollar embezzlement scheme to siphon public money from needy families for their own personal use — from business investments to a luxury rehab stay in California.

Special agents from the Office of the State Auditor arrested John Davis, who is the former head of the Mississippi Department of Human Services, and the others on Wednesday.

The six are accused of working together to misappropriate funds and falsify records, and they are now under indictment for a range of charges related to fraud and embezzlement.

"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. His office did not specify the exact charges in the case.

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 Davis; Nancy New and her son, Zach New, who together 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 staying at a drug rehabilitation facility called Rise in Malibu during the 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 Brett 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 the Department of Human Services sent TANF money to the News' Mississippi Community Education Center, the News allegedly submitted documents back to the state claiming they were using the money to pay DiBiase for the drug awareness classes. But the auditor's office says those classes "never, in fact, took place."

Mississippi's TANF program was created to provide cash benefits to residents whose incomes fall below the state's limits. For a family of three, the gross monthly income limit is currently $680, according to the agency's website.

"The funds that were illegally obtained in this case were intended to help the poorest among us. The funds were instead taken by a group of influential people for their own benefit, and the scheme is massive. It ends today," White said.

Mississippi's Department of Human Services 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 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."

The state auditor also accuses the defendants of funneling public funds for other 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 the Department of Human Services one month after his agency shared the information with state authorities. In a note posted to the department's website, Davis said the July 4 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 Department of Human Services 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 capital of 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."

Copyright 2021 NPR. To see more, visit https://www.npr.org.

Bill Chappell is a writer and editor on the News Desk in the heart of NPR's newsroom in Washington, D.C.
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