Attorneys for Austin Smith, a defendant in a civil lawsuit over Mississippi’s massive welfare scandal case, have issued a subpoena to former Gov. Phil Bryant for a broad range of documents and communications related to the alleged misspending of $77 million in federal welfare funds.
The Oct. 7 subpoena includes a request for documents related to Prevacus, a Florida pharmaceutical company caught up in the state investigation that was manufacturing a concussion drug, and its affiliate, PreSolMD. After state officials announced arrests in the scandal in 2020, Mississippi Today’s Anna Wolfe reported that retired NFL quarterback Brett Favre and Bryant had discussed bringing Prevacus to Mississippi. The South Mississippi sports star was an investor in Prevacus at the time who served as a spokesperson.
Smith is the nephew of John Davis, the former Mississippi Department of Human Services executive director who prosecutors say authorized the misuse of the welfare funds. Davis pleaded guilty to multiple state and federal charges last month in exchange for assisting investigators in ongoing cases.
MDHS is suing Austin Smith for $426,398 in TANF funds that his uncle allegedly transferred to him through two nonprofits where Smith worked as an employee, including MCEC and the Family Resource Center of North Mississippi. In a June 24, 2022, response to the complaint, though, Smith’s attorneys said that “[n]o one ever told Austin Smith the money that he was receiving either by salary or by independent contract were TANF funds.”
Drug Companies Received $2.1 Million
The Mississippi Department of Human Services filed its civil suit in May in order to claw back tens of millions in welfare funds from 38 individuals or entities who allegedly received them, including Favre, Smith, Davis and Prevacus founder Jake W. VanLandingham. Aside from Davis, none of those defendants in the civil suit nor Bryant, who is not named in the civil suit, have been accused of crimes.
“In late December of 2018, Defendant Brett Favre was the largest individual outside investor and holder of corporate stock in Defendant Prevacus, Inc., a private, for-profit biotechnology corporation in which Favre had individually invested over $250,000,” the May 2022 complaint said. “Also in late December of 2018, Defendant Brett Favre urged Defendant Jacob W. (“Jake”) VanLandingham, the Chief Executive Officer of Prevacus, to solicit Nancy New to use MDHS grant proceeds to invest in the stock of Prevacus, informing VanLandingham that Nancy New had previously provided substantial grant funds on his behalf.”
New operated the Mississippi Community Education Center, which controlled $60 million in Temporary Assistance For Needy Families funds that Davis transferred to her nonprofit through MDHS.
“She has strong connections and gave me 5 million for Vball facility via grant money. Offer her whatever you feel like,” Favre allegedly told Vanlandingham in a late 2018 text message, according to messages Mississippi Today reported earlier this year. The outlet did not disclose the source of the text.
The former NFL player was referring to a volleyball stadium at his alma mater, the University of Southern Mississippi, that he sought Davis and New’s help obtaining. Records and court filings indicate that New’s nonprofit transferred $5 million in TANF funds to build the volleyball stadium along with $1.1 million directly to Favre. The Mississippi Free Press compiled a comprehensive timeline of the volleyball saga including dozens of text messages. In July, attorneys for Nancy New subpoenaed Bryant for information on the volleyball project.
On Jan. 2, 2019, MDHS’s May 2022 complaint says, Favre hosted a meeting between VanLandingham, Nancy New and her son, Zachary New, John Davis and retired WWE wrestler Teddy DiBiase, Jr., “for the purpose of explaining a stock sales pitch, principally delivered by VanLandingham to the News and Davis, concerning a substantial stock investment in Prevacus.” The complaint says the News “would spend substantial MDHS grant funds to purchase stock in Prevacus, and later in its corporate affiliate, Defendant PreSolMD, Inc.”
“As an overt act in pursuit of that agreement, Defendants VanLandingham, Prevacus, and PreSolMD caused Nancy New MCEC to enter a written contract with Prevacus, dated January 19, 2019, obligating Defendant MCEC to transfers $1.7 million in funds derived from MDHS to Defendant Prevacus to provide ‘development funding’ to the for-profit Prevacus,” the complaint alleges. “That same Agreement falsely pretended that the $1.7 million investment of MDHS-derived funds in Prevacus was for the purpose of securing ‘clinical trial sites’ to be located within Mississippi in order to promote an experimental anti-concussion drug being developed by Prevacus.
“That representation of that motive or purpose, for investing $1.7 million of TANF funds into Prevacus and/or PreSolMD, was false,” the filing continues, calling it a “sham” that “concealed the material fact that the actual purpose of the transaction was to financially benefit” the defendants, including the News, VanLandingham, Favre, Prevacus and PreSolMD.
“The false statements and concealments of material fact included in that sham Agreement resulted in by payments by MCEC to Prevacus and PreSolMD of $2.1 million in TANF funds, between January 18, 2019 and October 7, 2019 …, all such $2.1 million to be debts now due to MDHS within the meaning of Mississippi Code. Ann. § 43-1-27, under which Defendants VanLandingham, Prevacus, PreSolMD, and Favre are jointly and severally liable to MDHS,” the complaint says.
In an answer to the MDHS complaint on Sept. 16, 2022, George W. Schmidt, II, an attorney for VanLandingham said that the Prevacus founder “is not responsible and has no liability” for damages that “were the result of independent intervening events” and that “[i]f there was a civil conspiracy as alleged in the Complaint, MDHS, acting through MDHS Executives, was a co-conspirator and cannot recover Damages.”
“MDHS, acting by and through the MDHS Executives and MCEC Executives, was the proximate cause of any alleged misspending; without MDHS’s conduct, through the MDHS and MCEC executives, no alleged misspending would have occurred.”
In April, Wolfe reported that, after leaving office, former Gov. Bryant had agreed to accept stock in Prevacus, but he cut ties with the company following the arrests of six people in connection to the state’s sprawling welfare scandal in February 2022—including Nancy New, Zach New and John Davis. In an interview with Mississippi Today that month, Bryant said he “never asked for, received or wanted stock in that company.”
“Now, were they offering that? But people come up to you all the time and say, ‘Oh man, I’d like you to do this. I want you to do that.’ And I try to be nice and say, ‘Thank you very much. We can talk about it later.’ But if you notice, I didn’t take it. I turned that down,” Bryant told Wolfe.
Retired Wrestlers Received Millions
On Feb. 5, 2020, Democratic Hinds County District Attorney Jody Owens and Republican State Auditor Shad White announced the arrests. A statement that day said that, among other things, “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.”
Retired WWE wrestler Brett DiBiase was among the arrested.
“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,” the announcement said. “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’ nonprofit, 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.”
Brett DiBiase accepted a plea deal in December 2020. Smith’s Oct. 7, 2022, subpoena of former Gov. Bryant demands a copy of “all Documents and Communications” with not only Brett DiBiase, but his father, retired WWE wrestler Ted DiBiase Sr., and his brother, Teddy DiBiase Jr. Neither Brett DiBiase’s father or brother have been charged with a crime.
MDHS is suing all three DiBiases over welfare funds they allegedly received, including seeking $1.9 million from Ted DiBiase Sr. and $1.7 million from his Christian ministry, Heart of David Ministries Inc.; $2.9 million from Teddy DiBiase Jr.; and $824,000 from Brett DiBiase for services he received payments for but did not perform.
The lawsuit alleges that Ted DiBiase Sr., who was also known as the Million Dollar Man in WWE, was supposed to use the $1.7 million his ministry received to provide assistance to the poor, but did not use it for lawful TANF purposes.
The May 2022 complaint alleges that Teddy DiBiase received millions in TANF funds to serve “inner-city youth,” but instead “spent most of his workday hours accompanying John Davis at MDHS offices and on trips” and “made no substantial effort to supply any contractual services, either as an individual or through any organization or entity.”
The lawsuit also seeks Bryant’s communications with others related to the MDHS lawsuit, including former MSU and Canadian Football League linebacker Paul Lacoste, who is a defendant in the lawsuit for $1.3 million. MDHS’s May 2022 complaint says that his company, Victory Sports, allegedly received more than $1 million in TANF funds to conduct three “fitness boot camp” programs in Flowood, Madison and Pascagoula, Miss., “none of which were designed to achieve, or did achieve, any lawful TANF purpose.”
Subpoena Seeks Information on Gov. Reeves
Smith’s Oct. 7 subpoena asks Bryant to turn over “a copy of all Documents and Communications concerning Tate Reeves’ efforts to obtain funding for Paul Lacoste or for Victory Sports Foundation, LLC.” Mississippi Today reported allegations in August that Reeves, who is now governor, may have helped LaCoste obtain the funds when he was lieutenant governor in 2019; Reeves’ office has denied those allegations.
In July 2022, Brad Pigott, the private attorney who the state first hired to lead the MDHS civil lawsuit, issued subpoenas for information on efforts to build a volleyball stadium at USM. Days later, the State fired him, and Gov. Reeves claimed credit for the decision, saying Pigott was “too focused on the political side of things.”
“He is the wrong person to represent the taxpayers because he is much more interested in chasing a political angle than he is in focusing on doing what’s best for the state,” the governor said at the Neshoba County Fair in late July. The State announced its decision to hire Jones Walker, a New Orleans law firm, to take over the case in August.
In addition to subpoenaing Bryant for documents, Smith’s lawyers also issued a subpoena on Friday, Oct. 7, to Telesouth Communications, the company behind SuperTalk radio, for an array of documents, including communications and interviews with figures named in the MDHS complaint or related to the welfare scandal.
Neither attorneys for Bryant nor Smith responded to requests for comment on Saturday.
Click here to see our #MSWelfareScandal archive dating back to February 2020.
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. Auditor Shad White has submitted Free Press opinion columns. Neither the law firm, Pigott nor White has any influence on our coverage.