JACKSON, Miss. (WLBT) - Six people have been arrested in connection with a multi-million-dollar embezzlement scheme.
One of those people is John Davis, the former Director of the Mississippi Department of Human Services.
Also charged, former DHS employee Latimer Smith; Dr. Nancy New, owner and Director of the Mississippi Community Education Center (MCEC) and New Learning, Inc.; Zach New, Assistant Executive Director of MCEC; Anne McGrew, accountant for MCEC; and Brett DiBiase.
Special agents from the office of State Auditor Shad White are accusing the defendants of stealing millions of public funds from Temporary Assistance for Needy Families (TANF) which is a program administered by DHS.
Investigators said that they used a variety of business entities and schemes to defraud taxpayers.
“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,” said Auditor White.
Davis and Smith are accused of faking documents so that Brett DiBiase could use the TANF money. 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. 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’ non-profit, 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.
The News also stand accused of transferring millions in TANF funds to their private businesses. They then 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.
Finally, 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.
The Mississippi Department of Human Services has responded to a call made by 3 On Your Side on today’s charges.
They released a statement saying:
“MDHS self-reported the information that initiated this investigation to former Governor Phil Bryant’s office in June 2019. That report ultimately led to today’s arrests. MDHS would like to thank the Office of the State Auditor investigators for their diligent work in seeing this investigation through. We look forward to this moving through the justice system to a final disposition.”
All accused were indicted by a grand jury assembled by Jody Owens, District Attorney of Hinds County. District Attorney Owens and assistant district attorneys will prosecute the case.
The total amount of money lost to these schemes has not yet been determined, but the loss already exceeds any embezzlement scheme in the records of the Auditor’s office. Records are kept for all cases from the last twenty years.