John Davis, former director of the Mississippi Department of Human Services

The former Mississippi Director of Human Services and nonprofit officials conspired to embezzle millions of dollars meant for services to poor Mississippians, according to a Wednesday release from the office of the state auditor.

Special agents arrested John Davis, the former Human Services director, along with his employee, Latimer Smith.

Nancy New, Zach New, Anne McGrew — all officials from the nonprofit Mississippi Community Education Center — as well as retired professional wrestler Brett DiBiase were also arrested in connection with the scheme uncovered during an eight-month investigation. Indictments include charges of fraud and embezzlement.

“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 State Auditor Shad White.

A human services department media release Wednesday evening stated that the agency self-reported the information that prompted the investigation to Gov. Phil Bryant in June 2019. The department of human services announced Davis’ retirement in early July of that year.

“We look forward to this moving through the justice system to a final disposition,” the agency’s release stated.

According to the auditor’s release, Davis and Smith allegedly manufactured documents to enrich Brett DiBiase with money from the federal Temporary Assistance for Needy Families program, which provides basic assistance to the nation’s poorest residents.

“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 release 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, allegedly used the funds the human services department granted their nonprofit to pay for DiBiase’s drug treatment at a Malibu treatment facility, as well as funneled money for their personal use through “deceptive accounting measures,” the auditor’s office said.

“The documentation submitted by the News claimed this was to pay DiBiase for conducting training classes that never, in fact, took place,” the release said.

The release also alleges Davis and the News used welfare dollars to pay for personal investments in medical device companies in Florida.

“I don’t care how politically connected a person may be. You do not have the right to treat taxpayer money as your own or to lie to the taxpayers about what you’re doing with that money. Others doing this kind of thing are on notice: this will not be tolerated now,” said White.

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Anna Wolfe is a Pulitzer Prize-winning investigative reporter who covers inequity and corruption in government safety net programs, nonprofit service providers and institutions affecting the marginalized. She began reporting for Mississippi Today in 2018, after she approached the editor with the idea of starting a poverty beat, the first of its kind in the state. Wolfe has received national recognition for her years-long coverage of Mississippi’s welfare program, in which she exposed new details about how officials funneled tens of millions of federal public assistance funds away from needy families and instead to their friends, families and the pet projects of famous athletes. Since joining Mississippi Today, she has received several national honors including the Pulitzer Prize for Local Reporting, the Livingston Award, two Goldsmith Prizes for Investigative Reporting, the Collier Prize for State Government Accountability, the Sacred Cat Award, the Nellie Bly Award, the John Jay/Harry Frank Guggenheim Excellence in Criminal Justice Reporting Award, the Al Neuharth Innovation in Investigative Journalism Award, the Sidney Award, the National Press Foundation’s Poverty and Inequality Award and others. Previously, Wolfe worked for three years at Clarion Ledger, Mississippi’s statewide newspaper, where she covered city hall, health care, and wrote stories about hunger and medical billing, earning the Bill Minor Prize for Investigative Journalism two years in a row. Born and raised on the Puget Sound in Washington State, Wolfe moved to Mississippi in 2012 to attend Mississippi State University, where she currently serves on the Digital Journalism Advisory Board. She has lived in Jackson, Mississippi since graduating in 2014.