John Davis, the former Mississippi Department of Human Services director who presided as a massive welfare fraud scandal unfolded, plead guilty on Thursday morning to multiple federal and state charges relating to the misuse of funds meant for poor families with children. Court filings say he has agreed to cooperate with prosecutors in cases against other potential defendants. U.S. District Court Judge Carlton Reeves accepted the plea.
“The State and Defense have announced that a global plea resolution has been reached between the State, the federal authorities and the Defendant, John Davis, whereby the Defendant, John Davis, has agreed to fully cooperate, including providing truthful testimony at trial, with the State and all federal authorities in the prosecution of any and all additional criminally charged defendants, in State or Federal Court, for the criminal misuse of Federal TANF grant funds, ” said a court filing in the Circuit Court of the 1st Judicial District of Hinds County on Wednesday.
The filing said that Davis would “enter a guilty plea to five counts of Conspiracy and thirteen counts of Fraud Against the Government” and that “all parties have agreed that the Defendant, John Davis, will serve all of his incarcerated time in the custody of the Federal Bureau of prisons.” He is also pleading guilty to two federal charge involving allegations that he diverted money to a company owned by retired pro-wrestler Ted “Teddy” DiBiase Jr.
Teddy DiBiase has not been charged with a crime related to the welfare scandal, but his brother, Brett DiBiase, pleaded guilty on charges related to the TANF scandal in December 2020. Their father, retired pro-wrestler Ted DiBiase, Sr., known as the Million Dollar Man, also received millions in TANF funds for his Christian ministry from MSDH under Davis’ tenure, according to the state auditor and other investigators. The elder DiBiase has not been charged with a crime.
“Today marks an important day for justice for Mississippians in the massive welfare scheme that my office uncovered more than two years ago,” Mississippi State Auditor Shad White said in a statement to the Mississippi Free Press on Friday morning after this story first published. “District Attorney Jody Owens and his team did an incredible job putting a stop to the flow of money to the fraudsters who took from the poorest in the state.
“We would not be here if they had not shown courage and the willingness to charge these individuals with crimes. We are also grateful for our federal partners and their work obtaining a guilty plea this week, too. My team has given every piece of evidence we have to federal investigators and will continue to work jointly with them to see this matter to its conclusion.”
Millions Diverted to Volleyball Stadium
Since 2020, Davis has faced multiple state charges in Mississippi after an investigation found that MDHS misspent more than $77 million in welfare funds under his reign. That includes $1.1 million in Temporary Assistance For Needy Families funds that a non-profit organization, the Mississippi Community Education Center, gave to retired NFL quarterback Brett Favre for speeches that State Auditor Shad White says he never gave.
MCEC’s founder and former leader, Nancy New, and her son, Zach New, plead guilty to multiple charges in the welfare fraud scandal earlier this year and agreed to cooperate with prosecutors. Text messages between her, Brett Favre and former Gov. Phil Bryant show that they discussed using TANF funds to build a volleyball stadium at the University of Southern Mississippi.
U.S. District Magistrate Judge F. Keith Ball unsealed a Sept. 15 federal indictment against Davis on Wednesday for multiple counts of conspiracy, fraud and embezzlement, revealing allegations that he conspired with four unnamed conspirators “to commit certain offenses against the United States.” The indictment alleges that he and the co-conspirators sought to “obtain through fraud and to divert federal funds intended for needy families and low-income individuals for their personal use and benefit.”
In one July 24, 2017, text message after a meeting between Nancy New, Brett Favre, John Davis and others, Favre appears to indicate that Davis agreed to use MDHS funds for the volleyball stadium. “John mentioned 4 million and not sure if I heard him right. Very big deal and can’t thank you enough. 😊,” reads the text message which appeared in a recent court filing.
In his plea agreement on April 22, 2022, Zach New claimed 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.”
TANF funds are federal funds that are supposed to go to poor families with children. But under Davis’ leadership, TANF approval rates for $170 a month in cash assistance were the lowest in the nation, bottoming out at 1.42% in 2017—the year Davis allegedly helped divert $5 million in TANF funds to the volleyball project and $1.1 million to Favre.
Indictment Includes Unnamed ‘Co-Conspirators’
Wednesday’s indictment does not appear to reference the volleyball issue, but does describe other alleged instances of misuse of funds.
“On or about June 26, 2018, at DAVIS’s direction, Organization 2 entered into a contract with Company 1 for approximately $1,000,000 purportedly in exchange for creating a program to serve inner-city youth,” the federal indictment alleges at one point.
The federal federal indictment, which Taylor Vance first reported at The Daily Journal, says that two unnamed non-profit organizations are involved in the indictment as well as two unnamed companies. It does not mention DiBiase, Favre, Bryant, New, the volleyball project or anyone else by name.
The indictment says that unnamed “Co-Conspirator 1 was the executive director of Organization 1.” The indictment says “Organization 1” refers to “a non-profit registered in Mississippi on or about June 22, 1992.” That is the same founding date that the Mississippi Secretary of State website lists for Nancy New’s Mississippi Community Education Center.
Similarly, the indictment describes unnamed “Co-Conspirator 2” as “the executive director of Organization 2,” a non-profit “registered in Mississippi on or about May 22, 1998.” That date corresponds with The Family Resource Center of North Mississippi, Inc., whose director is Christi Webb. Taylor Vance reported Wednesday evening that Casey Lott, an attorney for the Tupelo non-profit, said it appears federal prosecutors are describing Webb. “Lott said it was ‘absurd’ for DOJ to believe she conspired (with) John Davis,” he reported.
In addition to misusing TANF funds, the Sept. 15 federal indictment alleges that Davis also diverted money from The Emergency Food Assistance Program, a U.S. Department of Agriculture program that helps provide low-income individuals with emergency food assistance at no cost to them. The indictment says the illegal activities took place between 2016, when Davis first took over as MDHS director, and 2019, when then-Gov. Bryant fired him.
The federal indictment says near that end that “John Davis is hereby notified that upon pleading guilty to both counts of this information, he shall forfeit … any property, real or personal, constituting, or derived from, any process John Davis obtained, directly or indirectly, as a result of such violation.”
It includes signatures from U.S. Attorney Darren J. Lamarca of the Southern District of Mississippi; U.S. Department of Justice Fraud Section Chief Glenn Leon; and U.S. Department of Justice Money Laundering and Asset Recovery Section Acting Chief James Curt Bohling.
Read more stories in our Mississippi TANF Scandal archive. Also read our in-depth story on How Brett Favre Secured $6 Million in Welfare Funds For A Volleyball Stadium.
This story has been updated on Friday, Sept. 22, to include information about the plea agreement.