Concussion drug company ensnared in welfare fraud scandal plans relocation to south Mississippi ‘medical city’

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Gov. Phil Bryant at Tradition Medical City in south Mississippi

When professional football legend and Mississippi native Brett Favre introduced the state’s top welfare officials to the founder of a company developing concussion treatment drugs, it set off a chain of events leading to what the state auditor calls the largest public embezzlement case in state history.

A Hinds County grand jury indicted the founder of Mississippi Community Education Center, Nancy New, and her son Zach New in February for allegedly transferring $2.15 million from a federal grant, Temporary Assistance for Needy Families, into personal investments in Prevacus. They’ve pleaded not guilty. The company is developing a pharmaceutical nasal spray called Prevasol which that, when used after a head injury, reduces harmful swelling and inflammation.

The founder of Tallahassee-based Prevacus, Dr. Jake Vanlandingham, told Mississippi Today that he signed an agreement with the nonprofit, Mississippi Community Education Center, outlining the goals of the program.

Separately, the state’s welfare agency, the Mississippi Department of Human Services, had  awarded tens of millions of federal welfare dollars to the nonprofit. The former agency director, John Davis, was also indicted within the scheme and pleaded not guilty.

But Vandlandingham said he didn’t know the nonprofit would invest in the project using federal funding intended to serve the state’s most vulnerable citizens.

“I just knew it was coming from MCEC, which I thought was associated with like a public grant or something. It was never mentioned about TANF or anything like that,” he said, referring to Temporary Assistance for Needy Families program.

His comments echo the responses of many people and organizations that received funding from Mississippi Community Education Center in recent years who claim they didn’t know the source of the dollars.

“How that money could have ever come to be put into a private company or public company of any kind, I don’t know how that’s possible. It shouldn’t have been done and we certainly wouldn’t have been part of it,” Vanlandingham said.

Under the agreement with Prevacus, Mississippi Community Education Center was given the rights for a clinical drug trial to be located in Mississippi, as well as exclusive rights to manufacturing Prevacus’ drugs in Mississippi, Vanlandingham said in a written statement to the news media. The indictments against the News allege that they, in their individual capacities, would have received any profits not the nonprofit or state.

The plan is for Prevacus to locate human trials for the concussion drug at the state’s new “medical city” called Tradition, home to several healthcare companies and postsecondary education programs on the Gulf Coast.

“Further we are hopeful when the time comes that Tradition will have a manufacturing site in place for companies like ours to produce their drugs, supplements and medical devices. Having a state-of-the-art biotech manufacturing center in MS will bring many jobs and provide vital treatments to those in need,” Vanlandingham’s emailed statement reads.

Tradition is considered a legacy of former Gov. Phil Bryant; the Mississippi Gulf Coast Community College’s nursing school in Tradition is named in the former governor’s honor.

Vanlandingham told Mississippi Today he had conversations about his plans with Bryant, but stressed that he and Bryant never discussed Mississippi Community Education Center as a possible funding source. Favre, who invests in and endorses Prevacus, also discussed the idea with Bryant, Mississippi Today first reported.

Bryant previously said that he did not recommend that the human services agency be involved in the concussion research venture. In a written statement to Mississippi Today in March, Bryant said during his administration he directed individuals interested in partnering with the state “to the appropriate agency for review and disposition by subject-matter experts.”

Said Vanlandingham: “All I know is I have the utmost respect for the governor and for Brett Favre. Our intent was and still is to bring this drug back to the state of Mississippi and continue to develop it in the state. Hopefully that’s going to continue in the fall.”

He did not provide a copy of Prevacus’ agreement with Mississippi Community Education Center, citing its potential to impede the ongoing investigation.

“There was fraud at the heart of this,” state Auditor Shad White told Mississippi Today. His investigation began in June of 2019 after receiving information about improper spending at the agency from Bryant.

The indictments allege that the alleged conspirators used fraudulent documents to make the Prevacus investment. It is the largest piece of the embezzlement scheme outlined in the indictments, but it also represents just “the thing that was first readily provable,” White said, within what he called a “sprawling conspiracy.”

The investigation, now a joint effort between the auditor’s office and the FBI, is ongoing. White said he also turned over information regarding Vanlandingham’s company to state law enforcement agencies in Florida.

The Mississippi Community Education Center’s current staff has declined repeated interview requests. Through written statements, the organization has maintained that any welfare money allocated was done so at the behest of the Mississippi Department of Human Services, the state agency that administers the Temporary Assistance for Needy Families program.

A representative from the nonprofit, Cassandra Williams, previously said the entity could not answer any questions about Prevacus due to ongoing legal matters.

“Any funding and support provided by MCEC to a particular program, service or project was generally expressly directed by MDHS,” said a written statement from the nonprofit.

“That’s such a hollow defense,” said human services department spokesperson Danny Blanton. “They are their own entity … It’s still their decision whether or not to take John Davis’ suggestion.”

Davis, the former human services department director, had discussed concussion research in emails obtained by Mississippi Today prior to the alleged fraud. In one from January 2019, he writes that the former governor and Favre requested a meeting at Nancy New’s office to discuss “the Educational Research Program that addresses brain injury caused by concussions.” Vanlandingham said he first met with the welfare officials in December of 2018.

Davis’ attorney, Merrida Coxwell, told Mississippi Today by text message that Davis did not direct any money toward Prevacus and that any such grants from the agency “go through a process” and are reviewed by several people “whose job it is to make sure any request for funds are appropriate.”

“Mr. Davis cannot answer questions about what other people did or what was in the mind of other people,” Coxwell said.

Nancy New did not return calls or texts to her cell phone and Zach New’s attorneys at Butler Snow did not return emails Friday afternoon.

Favre previously told Mississippi Today that his involvement with Prevacus and the News was for the purposes of economic development. “My hope was/is to see the concussion drug manufactured in the state of Mississippi!!!” he said in a text message to Mississippi Today in March.

Economic development projects in Mississippi are typically led by the Mississippi Development Authority; Mississippi Today submitted a public records request for all emails across the agency that reference Prevacus, Presol or Vanlandingham for a nearly two-year period. The agency said none exist. 

So far, Vanlandingham said Prevacus has 1) conducted toxicology for the drug on animals to establish the appropriate dosing; 2) configured the drug into a GMP-certified drug that humans can use; 3) developed a nano-formulation of the drug to reduce side effects; and 4) implemented phase one of human trials in Australia.