State auditor details $94 million in ‘questionable spending’ after releasing in-depth audit of DHS

State auditor details $94 million in ‘questionable spending’ after releasing in-depth audit of DHS

JACKSON, Miss. (WLBT) - State Auditor Shad White said a newly-released audit of the Mississippi Department of Human Services shows $94 million in taxpayer dollars could have been questionably spent over the last three years.

The audit details how executives at nonprofits got federal welfare dollars -- through the Temporary Assistance for Needy Families program -- from DHS and used this money instead to hire lobbyists, award contracts to the former DHS director’s family members, and even repay a loan with those federal dollars.

The announcement comes nearly three months after the former head of DHS, John Davis, and several associated with the nonprofit Mississippi Community Education Center were indicted on several charges.

White said MCEC alone got around $60 million from DHS, and was responsible for a lot of that misspending.

“The question about why they got special access is really a question that I think John Davis is going to have to answer. I think it’s a question the folks at MCEC are going to have to answer. We have arrested both John Davis and key folks at MCEC, and so, if they’ve got a good excuse for why this amount of misspending happened, I would tell them to go ahead and get that excuse ready for court," White said.

These nonprofits, primarily MCEC and the Family Resource Center of North Mississippi, were given over $98 million in DHS grants over the last three years, $94 million of which auditors say could have been questionably spent.

The audit states MCEC engaged in extensive misspending, paying salaries, cell phone bills and other costs for members of Nancy New’s family as well.

MCEC purchased three luxury vehicles -- all for personal use -- for members of the New’s family.

In one instance, auditors discovered TANF money had been used to pay for a speeding ticket New received.

New is the former director of the nonprofit now facing conspiracy, fraud and embezzlement charges along with her son.

In all, six have been indicted and could face serious jail time if convicted.

“It would be hundreds of years between the six of those folks, and, too, if you’re asking for maximum jail time for the total number of people, we don’t know the total number of people who could be indicted, ultimately. We’ve got six folks indicted right now, but there’s certainly the possibility for more folks," White said.

Because the original indictments only account for $4 million embezzled in the scandal, the much higher possible figures in Monday’s audit hint at the possibility that more people and charges could follow.

“The more we looked at these expenditures, the more we saw that a lot of the misspending really originated with former director John Davis at DHS. He was director of DHS for about three years," White said.

White said Davis didn’t really monitor the other organizations to which the TANF money was given, like MCEC, and in some cases forged documents and accounting entries to hide who was getting money.

This level of corruption and waste, White said, could also mean greater scrutiny from the federal government going forward.

“They will identify for themselves what was misspent, and then they will come back and impose some sort of sanction on the state, likely," White said.

That could include cutting TANF grant money and an imposition of penalties on the state.

At the same time, White said some may have benefited from this money and never realized it.

“If a nonprofit is handing you money, and they’re saying spend it on this, they’ve got a responsibility to tell you, ‘Oh, that’s TANF money.’ And we saw no documentation that would suggest they were informing the people who ultimately got this money that it was TANF money," White said.

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