“Multiple prosecutors” are still examining the facts and making decisions about criminal charges in Mississippi’s sprawling welfare scandal that saw millions in funds meant for poor families go instead to wealthy celebrities, Mississippi State Auditor Shad White said on Thursday, Sept. 15.
The auditor made that remark on CNN after court documents filed on Monday, Sept. 12, revealed dozens of text messages showing how retired-NFL star Brett Favre, former Mississippi Gov. Phil Bryant and nonprofit leader Nancy New coordinated on procuring welfare funds to finance an $8-million volleyball stadium.
New ran the nonprofit Mississippi Community Education Center when it directed $5 million in Temporary Assistance For Needy Families to The University of Southern Mississippi Athletic Foundation, whose board she sat on, to fund the stadium on the Hattiesburg campus. Her nonprofit also directed $1.1 million to Favre for motivational speeches he never delivered.
She and her son, Zach New, have pled guilty to multiple state charges, including bribery and wire fraud as part of a plea agreement. The newly revealed text messages, revealed publicly in a court filing in a separate civil suit this week, shed light on how $6.1 million meant for the poorest families in the poorest state wound up going to Favre and a pet project at his alma mater instead.
The civil suit is part of the State of Mississippi’s efforts to recover tens of millions in misspent funds from dozens of players, including Favre, New and MCEC, her nonprofit.
A ‘Very Big Deal’
In a filing seeking to compel ex-Gov. Bryant to turn over information about the volleyball stadium scheme that went public on Monday, Sept. 12, MCEC noted that the State’s lawsuit claims the organization “paid Favre $1,100,000 simply for the ‘purpose of enriching’ him.”
“The evidence, however, shows that MCEC paid Favre $1,100,000 expressly to provide Favre with additional funds to use for construction of the Volleyball Facility,” the New-founded nonprofit group’s filing says.
“On July 24, 2017, a meeting was held at USM. In attendance were Favre, (then-Mississippi Department of Human Services Director) John Davis, Teddy DiBiase, Nancy New, USM Athletic Staff and other MDHS and MCEC officials,” MCEC’s filing continues, pointing to Exhibit 2, a photo of the group at The Rock, USM’s football stadium.
“Supposedly, this was the first time Favre asked MDHS for funding for his Volleyball Facility. Yet, MDHS, on the spot, committed $4 million in TANF funds for construction of the Volleyball Facility.”
The filing directs readers to Exhibit 3, showing a text message Favre sent New at 5:10 p.m. later that day: “Nancy thank you again!!! John mentioned 4 million and not sure if I heard him right. Very big deal and can’t thank you enough. 😊”
But Favre “knew a state-of-the-art Volleyball Facility was likely to cost more,” the MCEC filing says. “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. Therefore, Favre sought to secure additional funds that he knew would be needed to break ground.”
The Sept. 12 court filing showed that retired NFL star sent New another text several days later, on July 29, 2017.
“Also I want to help you and was thinking a (Public Service Announcement) is one option that could be done quick and easy to put together,” Favre wrote. Soon after, he wrote saying he “could record a few radio spots here initially” and “See how it is received and whatever compensation could go to USM.”
“4 million dollars😅😅😅. Just kidding,” New wrote. “The first phase could be $500,000 and after Sept. we can renew. This is a good approach. What do you think?”
“Was just thinking that here is the way to do it!!” Favre replied, as the Sept 12 court filing shows..
New said she would have her son, Zach New, work up an agreement. About 33 minutes later, though, Favre wrote back.
“My biggest concern is time commitment so can manage that I’m good,” the retired NFL star texted.
Nancy New assured him that it would be fine, the texts show.
“Please do not worry about your time commitment,” she replied. “We can only imagine how many directions you are pulled. Just a few things here and there, spread out, will be plenty.”
“Ok great,” Favre said.
On Aug. 2, 2017, the NFL star from Hattiesburg, Miss., sent a text to New saying he had spoken with John Davis, the head of MDHS at the time who now faces multiple charges in the TANF scandal.
“Looks as though the facility is gonna be more than we thought which is always the case,” Favre wrote.
Later that month, Favre’s daughter, Breleigh Favre, would begin her freshman year at the University of Southern Mississippi and her freshman season on the USM women’s indoor volleyball team. On Aug. 21, 2017, Hattiesburg’s WDAM reported that she would be the “only Mississippi native on this year’s squad.”
Breleigh Favre had just graduated from Oak Grove High School just outside Hattiesburg proper months earlier. While she was a student there, in 2015, Brett Favre and his wife, Deanna Favre, successfully pushed for and helped sponsor the building of a new high school women’s volleyball facility—one of the first of its kind in Mississippi.
‘Is There Anyway The Media Can Find Out?’
After prosecutors announced their first indictments in the investigation in the TANF welfare-fraud scandal in February 2020 following a seven-month investigation, Brett Favre denied knowledge of the source of the $1.1 million payment he had received. But the texts included in MCEC’s filing indicate he had concerns about the funding’s source becoming public.
“If you were to pay me is there anyway [sic] the media can find out where it came from and how much?” Favre wrote to Nancy New on Aug. 3, 2017, as the Sept. 12 court filing shows.
“No, we never have had that information publicized,” the nonprofit operator responded. “I understand you being uneasy about that though. Let’s see what happens on Monday with the conversation with some of the folks at Southern. Maybe it will click with them. Hopefully.”
The next day, New sent a text to Favre offering good news.
“Wow, just got off the phone with Phil Bryant! He is on board with us! We will get this done!” she wrote, per the Sept. 12 filing.
“Awesome I needed to hear that for sure,” the former NFL quarterback replied.
New sent more good news in the coming days, writing on Aug. 10, 2017, that she had heard the university was “moving ahead to get this done.”
Federal TANF block grants allow states broad discretion over their spending, state law prohibits using the welfare funds for “brick and mortar” construction projects. The News, MCEC and Davis found a workaround, however.
In his plea agreement on April 22, 2022, Zach New explained that he “acted with” his mother “and others, at their direction, 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.”
The disguised sublease scheme, now for $5 million in TANF funds, gained the approval of the Mississippi Attorney General, USM and the Mississippi Institutions of Higher Learning, which oversees the State’s colleges and universities. The IHL board minutes indicated that the sublease between MCEC and the Athletic Foundation used funding obtained “via a Block Grant from the Mississippi Department of Human Services.”
The minutes said MCEC was “designed to provide schools, communities and families with educational services and training programs” and “will use the subject facilities to support their programming efforts for South Mississippi.”
“It’s a go,” Nancy New wrote to Favre in a text on Oct. 19, 2017, which appears in the Sept. 12 filing. “All approved by IHL!”
But Favre had new reasons to worry about the cost of the volleyball stadium.
“Finally and thanks Nancy. I hope it’s enough now,” he wrote. The former football star claimed the USM Director of Athletics Jon Gilbert had told him that $500,000 of the new funds would need to go toward renovations for the campus’s old Reed Green Coliseum and another $500,000 to a maintenance fund.
New assured Favre “we will get the rest” and mentioned a “fundraiser” as an option.
“Also, in the next few days I could send you a draft proposal to do a couple of psa’s, etc. for Families First,” she wrote, referring to an initiative that MCEC and another nonprofit, the Tupelo-based Family Resource Center, spearheaded together. (FRC would also later become embroiled in the welfare scandal’s fallout, as the Daily Journal’s Caleb Bedillion reported in May 2020.
“K good,” Favre replied.
That same day, Gilbert announced plans for the new 28,000-square foot volleyball stadium, called the “Wellness Center,” on the Hattiesburg campus.
“On behalf of the university, the Department of Athletics, and as a community member, I am proud and honored to announce this facility,” The Student Printz reported Gilbert saying. “It is certain to be a point of pride, as it stands to serve our student-athletes, our student body and community constituents for years to come.”
The USM Athletic Foundation, whose board Nancy New sat on, received the first installment of $2,500,000 in TANF funds on Nov. 6, 2017, followed by a second payment for the same amount on Dec. 5, 2017.
That same year, MDHS confirmed to the Clarion-Ledger that it had approved just 1.42% of poor families who applied for assistance through the TANF program, or 167 out of 11,700. For those MDHS did approve for TANF benefits, a family of three would receive just $170 in assistance per month at that time. It has since risen to $260. To be eligible, a caregiver must either be pregnant or the parent of a child younger than 18; a three-person household must earn no more than $680 in gross monthly income.
‘Santa Came Today’
Two days after Christmas on Dec. 27, 2017, Brett Favre sent a celebratory text to Nancy New.
“Nancy Santa came today and dropped some money off 😊😊 thank you my goodness thank you,” he wrote in a text included in the Sept. 12, 2022, court filing. “We need to setup [sic] the promo for you soon. Your [sic] way to [sic] kind.”
Favre had received the first payment in TANF funds from MCEC for his forthcoming work in the form of a $500,000 check to Favre Enterprises Inc., a company Favre and his wife first incorporated in Mississippi in 1995 for “real estate management and marketing of professional athletes.”
“Yes, he did,” New replied to Favre, referring to St. Nicholas. “He felt you had been pretty good this year! After these holidays, let’s get our calendars together on a few activities, etc. please know if we asked you to do something and you can’t, it is ok. We will get it all worked out.”
New asked Favre for an update on the volleyball stadium’s construction and about a beach volleyball project, but the retired football star said it was a question of “when they will start.”
“Now it’s February they are saying 👎,” he replied.
The next texts included in the Sept. 12 filing skip to March 28, 2018, when Favre texted New to offer an “update” on the volleyball projects.
“The bids are all in and shockingly the lowest is 6.9 (million dollars),” he writes. “The architects were confident it would come in lower than what we have saved. Really frustrating. Jon said he wanted to go back to lowest bid and talk to them about getting it down to 5.9. I’ll keep you updated.”
New called the news “disturbing.”
“Lordy, all this time and now to find this out,” she wrote in a text revealed in the Sept. 12 filing. “Well, let’s see what the lowest bid comes back with and then if we need to, we will roll up our sleeves and get the rest. We can still have the fundraiser at the Governor’s mansion, too. We can use Phil’s business list that he offered earlier. I will be thinking and hopefully there will be something in the new budget for Families First to offer. But that’s not til [sic] July. I will be thinking on other things.”
In June 2018, MCEC transferred a second TANF payment to Favre Enterprises in the amount of $600,000. That same month, WDAM reported that the beach volleyball project would consist of three new outdoor courts constructed just south of the upcoming stadium and that it would cost $250,000 with a June 2019 completion date. The story said the beach volleyball project was “funded through private donations,” but did not name the apparent donors.
The Mississippi Community Education Center’s Sept. 12 filing includes a calendar invite showing that then-MDHS Executive Director John Davis scheduled a meeting with Favre, Bryant and Ted DiBiase, Jr., on Jan. 1, 2019.
“This meeting was requested by Brett Favre and the Governor to discuss the Educational Research Program that addresses brain injury caused by concussions. They also want to discuss the new facility at USM,” the meeting invitation said. Neither the invitation nor the filings elaborate further on the contents of the meeting.
‘I Am Feeling Good’
After the 2018 season, Breleigh Favre had left the indoor Southern Miss Women’s Volleyball team and switched to the outdoor Southern Miss Beach Volleyball team, which announced its inaugural season on Jan. 17, 2019.
On May 15, 2019, Favre texted New to give her an update not only on the efforts to procure funding to finish the volleyball stadium, but also about the beach volleyball project.
“Nancy I asked the college for an update on what is owed as of today and it’s $1,070,000,” he wrote. By the end of the month, though, the figure had jumped significantly higher.
“Nancy, are you still confident you can cover the 1.8 (million) and that number will probably be less as we get closer,” Favre texted on May 30, 2019, at 5:12 a.m., per the Sept. 12 filing.
“Morning. In a meeting with John Davis now,” she replied at 5:54 a.m. “He said we will cover much of it but may have to be in a couple payments. We are on board!”
Despite Favre’s prediction, the figure did not “get less.”
“Nancy as of today the number is 1.95 mill for everything,” he wrote on June 26, 2019. “It’s not due and if anything that number will go down but not up. Deanna and I will keep chipping away also. Thank you as always.” Deanna Favre is his wife and the vice president and treasurer of Favre Enterprises as of its March 2022 secretary of state filing.
New replied that she was “steadily working on” procuring the funds and that she hoped “to have some relief after the first of July.”
“I am feeling good about getting some of it knocked down and then more should be available soon after,” she wrote in the texts in the Sept. 12 legal filings. Then in a followup text, the filings show New asked Favre a question: “Is this amount on the facility or beach volleyball?” she asked.
“Total,” the retired quarterback replied.
Bryant Raised Alarm About ‘Kickback’
July would not go as Nancy New had hoped. Unbeknownst to her or Favre, Gov. Phil Bryant had alerted Mississippi State Auditor Shad White to concerns about fraud inside the Mississippi Department of Human Services on June 21, 2019. Davis, whom Bryant first appointed to the position in January 2016, would resign several weeks later.
Austin Smith, the nephew of John Davis and an eventual defendant in the welfare-fraud case, recounted his story about the days that followed in a June 24, 2022, court filing in the civil case. Auditor White’s office would later reveal that Davis had hired Smith to work at the Department of Human Services in 2016 and allegedly promoted him using TANF funds, which would also later pay for him to work for MCEC, Family Resource Center and to create a coding academy.
In the filing, Smith said he “admits that he is John Davis’ nephew,” but “knew only that at least some of the money which MCEC and FRC were spending consisted of grants from the State.” It says that no one told him that “the money that he was receiving either by salary or by independent contract were TANF funds.”
“Shortly before John Davis resigned as director of DHS, John Davis explained to family members that Governor Bryant had told him (John Davis) that he (John Davis) was going to ‘fucking jail,’” Austin Smith’s filing claims.
“John Davis told family members, including Austin Smith, that (retired pro-wrestler) Brett DiBiase had received a check at John Davis’ mailbox, and Governor Bryant apparently believed this check was a kickback,” Smith’s filing continues. “John Davis indicated that Jacob Black, John Davis’ second in command, had informed Governor Bryant about the check going to Davis’ mailbox.
“Governor Bryant then reported the matter to the State auditor, and this report from Governor Bryant to the State auditor formed the basis of the State auditor’s claim that Governor Bryant was the ‘whistleblower’ responsible for the investigation into the fraud occurring at the Department of Human Services.” White also recited the story of Bryant’s tip in his 2019 Single Audit Report.
The public record does not indicate whether Bryant knew his decision could pose risks for New and her nonprofit, however. In fact, New’s text messages show that Bryant agreed to meet with her on July 2, 2019, about what she described as a “truly important” matter. MCEC’s Sept. 12, 2022, filing suggests the conversation was related to the USM volleyball stadium, but no public evidence to date confirms that suggestion.
The news about Davis’s sudden “retirement” broke on July 8, 2022, with Davis saying in a statement that day that he had spent the “long July 4th weekend … with family and friends” and that it had “provided time for reflection.” He would retire on July 31, 2019, he said.
“Specifically, I have chosen to take the next steps into the future outside of the Mississippi Department of Human Services,” Davis said, praising Bryant as “the greatest.” The governor whose tip had kickstarted an investigation into Davis and MDHS praised him in turn, describing the outgoing director as a man who had “dedicated his life to serving others and has been a tremendous advocate for Mississippi’s children and families.”
‘Politics and People’
Davis’ departure from DHS stressed New. In a July 16, 2019, text message, Favre offered comfort.
“Nancy if I can help you in any way you know I will. Please know that,” he wrote in the text revealed in the Sept. 12 public court filing.
“Thanks Brett,” she replied. “That means a lot to me. I am ok, just politics and people. We are trying to stay above all the foolishness and we will. Too much good stuff to get done. I am concerned though that I may not be able to assist you in Aug. as we had planned. I will continue to work on that though. I am not sitting still! Hope all is well with you.”
“Oh goodness. Even if it’s a little later? The due date,” Favre wrote.
“Will continue to work on it for sure. 👍👍,” New said.
The Sept. 12, 2022, court filing shows that the former NFL player texted New that he could “try to delay as long as possible,” adding that the funds needed for the beach volleyball project would not be due for at least six months.
“Do that and that will give me time to work some other angles for us. 👍,” the nonprofit operator wrote.
Several hours later, Favre texted New to tell her he was “about to see Governor Bryant.”
“Anything I can say to him that could help?” he asked.
“Let him know how much we work together on youth development, sports programs that instill leadership and future work skills,” New wrote.
MCEC’s filing indicates that Favre asked Bryant “about whether John Davis’ firing would affect the Volleyball Facility’s funding.” The governor replied with a text message, which Favre forwarded to New: “I will handle that… long story, but had to make a change,” Bryant’s text, revealed in the Sept. 12 filing, said. “But I will call Nancy and see what it will take. 👍”
About 35 minutes later, the filing’s attachments show, New received a text from Bryant.
“Just left Brett Favre,” the governor wrote, per the recent court filing. “Can we help him with his project. We should meet soon to see how I can make sure we keep your projects on course.”
The MCEC founder responded that she “would really appreciate having the opportunity to follow through with all the good things we are working on, especially projects like Brett’s” and said she would make herself available for a meeting when Bryant had time.
“I can do 4pm on Thursday,” the governor wrote.
New informed Favre about the plans, texting him to say that Bryant “wants me to continue to help you and us get our project done.”
“I feel good about that,” she wrote.
“I love John so much. And you too😊,” Favre replied. (It is unclear from the texts why he expressed his love for “John” or if it was an error).
The filing does not detail New’s scheduled meeting with Bryant.
‘He Said For Us To Keep The Faith’
More ill tidings arrived for John Davis on July 22, 2019, when Mississippi State Auditor Shad White, whom Bryant had appointed a year earlier to fill a vacancy, revealed a 2018 audit report that found “serious issues” in two state agencies—including the Mississippi Department of Human Services.
Among other things, the report said MDHS “did not monitor recipients of several grants to determine whether grant money was spent in accordance with the law”; “did not compile basic, required documents, like a comprehensive list of grant recipients”; and “did not follow all legal requirements for ensuring beneficiaries of large programs like Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance For Needy Families (TANF), and Child Care and Development Fund (CCDF) were actually eligible for the programs.”
Some of those problems, though, had been an issue for years, including before Davis became director. In a press release, White said several of those findings had been “repeatedly identified by the Auditor’s office since 2014 with no corrective action completed.”
“The taxpayers deserve to know that money is being spent appropriately, in accordance with the law, and that the proper safeguards to prevent fraud are in place,” White said in a statement at the time.
On July 25, 2019, Bryant announced that he had appointed former FBI Special Agent Christopher Freeze to replace Davis as interim director at MDHS. That same day, Favre texted Bryant to follow up on the volleyball project. The former NFL star shared the governor’s response with New.
“👍 just back in town,” Bryant’s text said, as the Sept. 12, 2022, court filing revealed. “Met with new Director today. It will take time to get the Auditors report. Working on it..”
New told Favre she was “not sure what to make of that but maybe whatever he is waiting on will be done soon.”
“He has so much to deal with all the time,” she continued. “I think the new Director will be good to work with, too. He is a retired FBI Director. I look forward to getting to know him. I hope to meet with him in the next few days.”
“He said for us to keep the faith also😊,” Favre replied.
The USM alumnus followed up with a text to New on Aug. 2, 2019, asking if she had heard anything or met Freeze, yet.
“Not yet, but I have asked for (a meeting) ASAP,” she replied. “Yesterday was his first day so I am in hopes to get to see him at least by Monday. I am very anxious to get in there and talk with him. The Gov wants me too, [sic] so I am counting on his push, too.”
‘Someone Was Definitely Pulling For Us’
On Aug. 8, 2019, Nancy New texted Brett Favre saying the governor had told her that “y’all are meeting on the proposals I gave him.” Favre confirmed that Bryant “did say at the end (of the meeting) that he will get this done with you!!!”
“He sure came across as sincere and believable,” the former NFL star added in texts included in the Sept. 12, 2022, court filing.
Later, New sent Favre information about additional details she said Bryant wanted added to a proposal to secure more funds from MDHS for Favre’s projects.
“He said something about project managers,” she said. “We will need those, too. We have to make this all about teaching, education, obesity prevention, exercise, etc.”
Two days later, New asked Favre what Bryant had said about the proposal for the volleyball stadium and said she had spoken with Freeze about it.
“He asked if that was the one that the Gov’s name was to go on the bld??? I said yes but honestly I couldn’t read why he asked that about his name,” she wrote in the texts the Sept. 12 filing revealed. “Keep that quiet right now. Lots of politics I think.”
Favre told her that “Phil is adamant that it will get done.”
“Of course he is a politician so I’m a little uneasy,” he added.
“Yep, I totally agree. I hope he will stay steady and help us get it done,” she replied.
On Aug. 14, 2019, Favre relayed a message to New from Bryant, who was out of the country on a trip to Ghana.
“Nancy has to provide the proper documentation to MDHS. It’s all up to her get the paperwork in and then I can help,” Bryant wrote in a text revealed in the Monday filing.
New told Favre she had “given the proper information to several people several times. 😳,” but added that she would resubmit it that day.
“Do you want me to say anything back to the Governor?” Favre asked. “He said to me just a second ago that he has seen it but hint hint that you need to reword it to get it accepted.”
“Reword??? Wonder what he means,” New said. “I am making a call now to get a little more information from someone on the inside and will get back with you. Just let him know that it was submitted but I am reworking it today.”
The Sept. 12, 2022, court filing shows that two days later, on Aug. 16, 2019, Favre shared a text with New that he said came from the governor: “That’s all I know to tell her. Hopefully she can put more details in the proposal. Like how many times the facility will be used and how many child [sic] will be served and for what specific purpose.”
“Gee, that’s what we did. Thanks,” New wrote, while agreeing to “get even more details added to the proposal and sent as an addendum now.”
Then, 42 minutes later, she sent another text to the retired football player.
“Confidential. Do you get the impression that the governor will help us?” the nonprofit operator asked.
“I really feel like he is trying to figure out a way to get it done without actually saying it,” Favre replied.
Favre shared another text with her that he had received from the governor that day. “I would have listed the number of people proposed to be reached by the program and the number of employees necessary to achieve these goals,” Bryant texted per the Sept. 12 court filing. “Taking off from Ghana so may be my last message for a while.”
After New sent in the updates to the proposal, Favre told her on Aug. 23 that the “Governor said we should meet with him and new director.” The pair met with Bryant and Freeze at his office on Sept. 4, 2019, “regarding additional funding proposals for the Volleyball Facility,” the MCEC filing says. “On Sept. 6, 2019, two days later, Freeze wrote New confirming that MCEC’s TANF subgrant was to be increased by $1,172,992.”
A letter attached to the filing shows that Freeze wrote New on Sept. 6, 2019, to inform her that MDHS had approved the new funds based on her statements that “MCEC incurred these costs at the direction of former Executive Director John Davis.” But Freeze’s letter also notes that MDHS rejected requests for an additional $804,213 that Freeze said was “not allowed under federal regulations.”
“MDHS does not have and has never had the authority to circumvent federal regulations or instruction with federal funds nor do we have the authority to instruct subgrantees to do so,” he wrote.
In an interview on Friday, Sept. 16, 2022, Freeze told the Mississippi Free Press that MDHS officials “felt like we had an obligation because the (previous) executive director (Davis) had verbally approved” some of News’ requests. But he was working to implement new controls at MDHS that had been sorely lacking under Davis, who often made verbal agreements without accompanying paperwork. Part of that process included implementing an RFP process, which would require entities like New’s to make formal proposals for funding.
By the end of the year, New had submitted an RFP, Freeze said. “Our independent team reviewed it along with everybody else’s, and I funded the programs that we thought were appropriate under TANF guidelines. … In Nancy’s case, they got less than half of what they had requested.” He said he did not recall her final RFP including funding for the volleyball stadium or USM-related money, but that his senior team was not involved in the review ” so as to maintain integrity of the RFP.”
On Dec. 18, 2019, Bryant, who was now in the final days of his last term as governor, sent New a text message, the filings show.
“Did y’all get any Of the new programs from DHS.?” he wrote.
“Yes, we did. From all the craziness going on, we had been made to believe we were not getting refunded,” she replied. “But we did. ‘Someone’ was definitely pulling for us behind the scenes. Thank you.”
Bryant responded with a single emoji: “😊”
But if New thought “somebody was looking out for her, it had nothing to do with the governor talking to me,” Freeze told the Mississippi Free Press on Friday, Sept. 16, 2022.
“The governor can send smiley faces back, but within two weeks he said don’t fund her and don’t fund Chirsti Webb at the Family Resource Center,” he said.
USM completed the Wellness Center later in December 2019, much to the chagrin of student commuters who did not appreciate that a new volleyball stadium had stolen yet another 200 spots of precious parking real estate out from under them.
After this story first published, Insider reported on Sunday, Sept. 18 that Bryant’s attorney, William M. Quin II, said the former governor “was not involved in the details of (the volleyball) project and he did not know the extent of MCEC’s involvement. … Governor Bryant did not receive any information indicating wrongdoing associated with the project.”
A ‘Sprawling Conspiracy’
In a Jan. 23, 2020, Associated Press article, Brett Favre excitedly previewed the addition of a new volleyball stadium at USM.
“We built one at Oak Grove High School. And for Southern Miss, that was difficult—it’s hard to get people to donate for volleyball,” he said. “But we’ll be opening an $8 million facility that will be as good as any in the country at Southern Mississippi.”
Breleigh Favre continued to play on the USM volleyball team until August 2022, when she transferred to Louisiana State University to continue her college volleyball career there.
Tate Reeves took the oath of office, officially becoming Mississippi’s 65th governor, on Jan. 14, 2020. But within weeks, he would swear off the support of some of the donors who had helped put him there; Nancy New and Zach New had donated a combined $5,000 to his gubernatorial campaign.
On Feb. 5, 2020, Auditor Shad White and Hinds County District Attorney Jody Owens announced the indictments of John Davis, Nancy New, Zach New, Brett DiBiase, MCEC Accountant Anne McGrew and former DHS employee Latimer Smith on “a range of violations involving fraud and embezzlement.” All six would initially plead not guilty.
Former Gov. Phil Bryant’s June 2019 tip about a single concerning allegation had started the ball rolling on an investigation that would uncover what White described it as a “sprawling conspiracy” and the largest welfare fraud scandal in State history.
“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,” Auditor White said in a statement that day.
Prosecutors accused Davis and Latimer Smith of “fraudulently manufacturing documents to enrich Brett DiBiase using TANF money” and said that “Davis and Smith created invoices to pay DiBiase TANF funds for teaching classes about drug abuse, but DiBiase was in a luxury rehabilitation for his own drug use in California at the time and did not perform the services.”
“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,” the statement said. DiBiase is the son of retired wrestler Ted DiBiase Sr., known as the “Million Dollar Man.”
White’s office said the News had transferred “millions in TANF funds to their private businesses” and “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.”
The indictments included allegations that the News and Davis were guilty 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.” Later reporting would reveal that Favre, an investor in Prevacus who had sat on its advisory board, had pitched bringing the company to Mississippi in conversations with then-Gov. Bryant.
Neither White’s announcement nor the indictments that day mentioned Favre nor the volleyball stadium. But on Feb. 27, 2020, Mississippi Today’s Anna Wolfe reported a lease showing that MCEC had used $5 million in welfare funds to help pay for the volleyball stadium’s construction. The story noted that Favre was close to New and had publicly claimed credit for helping obtain funds for the volleyball stadium.
“Although the center is supposed to be multipurpose, it’s infamously known for being a new and improved volleyball facility that’s getting in the way of 200 parking spots,” the campus’ Student Printz Editorial Board wrote in a scathing criticism of the stadium on March 4, 2020. “Finally, our anger toward its construction is justified. We know that the construction of a volleyball court can’t help those below the poverty line.”
Favre: ‘I Was Unaware’
On April 30, 2020, White released his office’s 2019 Single Audit Report of the State of Mississippi, citing tens of millions in misspending, including revealing publicly for the first time that MCEC had paid Favre a total of $1.1 million in TANF funds between 2017 and 2018. The audit said MCEC contracted Favre “to appear at several events, record promotions, and provide autographs for marketing materials.”
“Due to the inability to verify that any work was performed in order to fulfill the contract, and due to the unreasonable amount paid, the entire payment of $1,100,000 paid in FY 2018 is questioned,” White’s audit said.
The football star responded to the revelations in a series of May 6, 2020 tweets:
“My agent is often approached by different products and brands for me to appear in one way or another. This request was no different, and I did numerous ads for Families First,” the retired NFL star wrote, referring to New’s umbrella organization that includes MCEC. “I have never received monies for obligations I didn’t meet. To reiterate Auditors White’s statement, I was unaware that the money being dispersed was paid for out of funds not intended for that purpose, and because of that I am refunding the full amount back to Mississippi.
“I have spent my entire career helping children through Favre 4 Hope donating nearly $10 million to underserved and underprivileged children in Mississippi and Wisconsin. It has brought a ton of joy to my life, and I would certainly never do anything to take away from the children I have fought to help! I love Mississippi and I would never knowingly do anything to take away from those that need it most.”
White’s 2020 audit also raised questions about the use of TANF funds for the USM volleyball stadium.
“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,” the audit report said.
“The property was leased almost three years before its construction was completed; the rent was prepaid in order to build the space; any additional use of the property was limited to one occurrence in a three-year period; and the revenue did not appear to be classified as rental revenue on the USM Athletic Foundation form 990 (nonprofit tax return).”
Mississippi Commissioner of Higher Education Alfred Rankins Jr. objected to the report in a letter to White, claiming it included “factual inaccuracies.” The state auditor responded with a scathing letter on May 7, 2020.
“The thrust of your objection seems to be that IHL ‘did not approve’ (emphasis is yours) a sublease agreement between the USM Athletic Foundation and the Mississippi Community Education Center (MCEC),” White wrote, pointing to the October 2017 IHL board minutes.
“IHL cannot claim ignorance of this fact. That assertion flies in the face of your own minutes,” he wrote. “If IHL objected to the arrangement with MCEC, then the time to voice that objection was when the matter came up for a vote, not after the State Auditor pointed it out. … Instead of quibbling, perhaps your time could be better spent providing the public with a plan for the Wellness Center to be used by the at-risk community in Hattiesburg and providing that to me in a letter. This way, the TANF money that was paid for the Center might be used to benefit the community it was intended to benefit.”
Despite his vow to repay the full $1,100,000, Favre only repaid $500,000 in 2020. In October 2021, White issued a letter demanding the additional $600,000 from Favre along with $228,000 in interest. He also sent demand letters to retired pro-wrestler Ted DiBiase, Sr., who he said owed $722,299 for money that his Christian ministry received in TANF funds; to retired WWE wrestler Ted DiBiase, Jr. for $3.9 million; to Brett DiBiase for for $225,950; to the Marcus DuPree Foundation for $789,534; to Davis for $96.3 million “for his role authorizing $77 million in illegal TANF spending; to Davis’ nephew, Austin Smith, for $378,791; to MCEC for $68.2 million; and the Family Resource Center for $15.5 million.
Favre repaid $600,000 later that month, but did not pay back the $228,000 he owed in interest and disputed White’s claim that he did not do the work MCEC used the TANF funds to pay him for, prompting the auditor to publicly accuse him of lying. In November 2021, the state auditor referred Favre and nine others who he said had not paid back what they owed to Mississippi Attorney General Lynn Fitch’s office, tasking her with enforcing the demands in civil court.
Several people charged in the scheme eventually entered into plea agreements in exchange for testifying against their alleged co-conspirators. Brett DiBiase was the first to enter a guilty plea in December 2020 on a count of making fraudulent statements for the purpose of defrauding the government; Anne McGrew, the MCEC accountant, pleaded guilty on a charge of conspiracy to commit embezzlement Oct. 11, 2021.
The News, who also faced federal charges in 2021 for using $2 million in public education funds to pay teacher’s salaries at a private school they owned, eventually entered their own guilty pleas in April 2022 with reduced charges in exchange for assisting with the ongoing investigations.
Lawyer Fired After Bryant Subpoena
On May 9, 2022, the Mississippi Department of Human Services announced that the State had filed a massive civil lawsuit against 38 people or entities involved in the sprawling welfare fraud scandal in an effort to recoup the misspent funds. Those targeted included Brett Favre, John Davis, Nancy New, Zach New, the DiBiases and MCEC.
“As part of that process, MDHS has been working hard to restore trust and put in place numerous internal controls to ensure that misspending is not repeated in the future,” MDHS Executive Director Bob Anderson, whom Reeves appointed in March 2020, said in a statement that day. “The rest of the task involves recovering and returning to the taxpayers the millions of dollars in misspent funds which were intended to benefit Mississippi’s needy families. We begin that task today with the filing of this civil complaint.”
Though the complaint sought to recover tens of millions in misspent funds, it did not mention the $5 million in TANF funds that Davis, New and MCEC had steered toward the construction of a volleyball stadium in Hattiesburg.
But on July 11, the private attorney the State had hired to lead the case, Brad Pigott, issued a subpoena to The University of Southern Mississippi Athletic Foundation asking for copies of its communications with Bryant, his wife and Nancy New’s friend Deborah Bryant, Favre, the News, Davis and Ted DiBiase Jr.
After the subpoena, MDHS fired Pigott on July 22. The lawyer told Mississippi Today that he believed he was fired for “trying to get to the truth” about the volleyball stadium and claimed the current governor, Tate Reeves, was involved in the decision.
Pigott, whom Democratic President Bill Clinton once appointed to serve as the U.S. attorney for the Southern District of Mississippi, said he was sure the state “can find a loyal Republican lawyer to do the work.” White criticized the decision, saying that “firing Pigott is a mistake.”
In a statement after Pigott’s termination, current MDHS Director Bob Anderson said that Pigott had “made a solid start at moving the litigation along” but had since “made decisions about the litigation and filed pleadings without any prior dialogue with officials at MDHS.”
“Although USM Athletic Foundation is not yet a party in this case, Brad Pigott issued an extensive subpoena to that entity without any prior discussion of the matter with MDHS,” Anderson said. “Attorneys represent clients, and MDHS is the client here. … When it becomes apparent that the client and the lawyer are not on the same page, the client has every right to find another attorney.”
Pigott disputed the claim, and Mississippi Today reported emails they had obtained showing Pigott had sent a draft copy of the subpoena to MDHS’ general counsel and to the Mississippi Attorney General’s Office before filing them.
On July 25, 2022, Nancy New’s attorney, Gary Bufkin, subpoenaed Gov. Bryant for documents related to the volleyball stadium, saying they had “no confidence” that the state would “pursue the evidence wherever it leads” and vowed to “find the truth, even if we have to drag it kicking and screaming into the light.”
In mid-August, the State announced that it had hired Jackson-based law firm Jones Walker LLP to take over the civil suit with a $400,000 contract, up from Pigott’s $75,000 contract.
“(Jones Walker) will eagerly cooperate with those criminal investigators whose mission is to get truth and justice for the misconduct that occurred during the previous administration,” Gov. Reeves said in a statement after announcing the contract in mid-August. “And they will leave no stone unturned in the effort to recover misspent TANF funds.”
MCEC: ‘Governor Bryant Knew’
In the filing on Monday, Sept. 12, 2022, that contained text messages between New, Favre and Bryant, MCEC explained that it was seeking to compel the former governor to turn over documents related to the volleyball stadium funding because it is relevant to their defense in the civil suit. The filing expresses particular concern with the claim that MCEC used TANF funds to pay Brett Favre $1.1 million simply for the purpose of “enriching” him.
“The evidence detailed herein suggests, quite strongly, that Governor Bryant knew MDHS funds were being sought by Favre to construct the Volleyball Facility; approved of the use of MDHS funds to construct the Volleyball Facility, and participated in securing MDHS funds for construction of the Volleyball Facility,” the Sept. 22, 2022, court filing says.
“This evidence of involvement by MDHS executives, including Governor Bryant, directly impacts MCEC’s Defenses and Counterclaims to MCEC’s claims, including its Claim to recover $1,100,000 paid to Favre Enterprises, Inc. for construction of the Volleyball Facility.”
During a CNN interview about the welfare fraud scandal on Thursday, days after the texts became public, Auditor White revisited Favre’s claims that he did not know where the money came from in light of the texts revealed in the Sept. 12, 2022, MCEC court filing.
“Now we know that Mr. Favre not only knew that he was receiving money from this nonprofit funded by taxpayer dollars, we know that the funding for that was a sham, and we know that he knows that, too. And we know he didn’t want the media or the public to find out about this. Thank goodness for the men and women of the State Auditor’s Office who brought this to light to foil his desires and that the public is able to see how taxpayer dollars were spent in the State of Mississippi.”
CNN reported that Favre’s attorney had shared a statement with the network saying that the retired NFL star’s “fundraising efforts regarding the volleyball facility have been honorable and he wouldn’t at one time think he was taking money from funds that were not designated for that type of venture.”
As the case progresses, the state auditor told CNN, “it’s important that we show the public there are consequences for this.”
White also accurately reiterated that his office cannot indict or prosecute, only investigate and audit.
“My title is state auditor. I’m not the state attorney general,” he said. “I don’t get to decide who faces criminal charges for any of the facts we dig up, but I think it’s important for the public to know there are multiple prosecutors’ offices looking at this and they’re going to make a decision about who faces criminal charges at the end of it. And my hope is that, going forward into the future, those charges create enough of a deterrent so that something like this doesn’t ever happen in the State of Mississippi again.”
Editor’s Note: Jones Walker provides legal services to the Mississippi Journalism and Education Group, which produces the Mississippi Free Press. Attorney Brad Pigott has also donated to the Mississippi Free Press in the past. Christopher Freeze has also submitted Free Press opinion column. Neither the law firm, Pigott nor Freeze have any influence on our coverage.