Zach New, left, and his mother Nancy New exit the Cochran federal courthouse on March 18, 2021, in Jackson. Credit: Vickie D. King/Mississippi Today

The Hinds County District Attorneys Office is asking a grand jury to consider new information gathered during its investigation into Nancy and Zach New, figures in Mississippi’s welfare scandal.

The state has also asked Hinds County Circuit Court Judge Faye Peterson to postpone the New case, which is set for trial on Feb. 7, to give the grand jury enough time to convene. The recent motion suggests the state expects a grand jury to hand down new criminal indictments against the News, which will likely have many parallels to the first.

Meanwhile, attorneys for the News wrote a scathing 12-page motion accusing State Auditor Shad White, who originally investigated the case, of attempting to try their case in the media.

“Auditor White’s statements went beyond the information contained in the indictments and instead amounted to character attacks and assurances that those charged were indeed guilty,” the attorneys wrote. “White’s emphasis on ‘influential people,’ ‘politically connected’ persons, and allegations of stealing from the poor for personal gain gave the story special pique and media saturation across Mississippi.”

Attorneys for another defendant in the scheme, former welfare director John Davis, made similar arguments in his case recently.

The News’ motion asks the court to suppress White from speaking to the media — even though there is already a gag order in the case — and also asks the judge to move the trial, known as a change of venue, “due to the relentless actions taken by the State Auditor to poison the jury pool.”

The auditor’s office declined to comment for this story.

A Hinds County grand jury first accused the News in 2020 of each defrauding the state and embezzling over $4 million in federal dollars their nonprofit Mississippi Community Education Center received from Mississippi Department of Human Services. A year later, a grand jury combined their charges into one case.

The News are also facing separate federal charges related to public school funds they allegedly bilked from the government for their private schools. Most recently, U.S. District Court Judge Judge Carlton Reeves set trial in that case for May 9.

The state criminal charges address just a fraction of a sprawling alleged scheme that resulted in $70 million wasted or misspent, according to auditors. Though the money was supposed to help the poor and prevent poverty, much of it enriched the friends and families of powerful officials.

In October, a forensic audit revealed new details about the state’s welfare spending, but because the News did not cooperate with the audit, the accountants could not parse out exactly what happened to $40 million the New nonprofit spent. The public still doesn’t know where millions went.

“The State of Mississippi has conducted a through (sic) investigation of the financial and corporate records of the Defendant Nancy New, her Co-Defendant, Zachary New, as well the various corporations in which those defendants hold either ownership or directorship interests or positions in,” the state’s latest motion reads. “…additional involvement of a Hinds County Grand Jury is necessary to address specific instances of potential criminal conduct … which may result in a superceding (sic) indictment.”

What makes the New case so complicated is the manner in which they kept their books. The News had several bank accounts for each of the family’s ventures — from Mississippi Community Education Center to New Learning Resources, most well known as New Summit School, to New Learning Resources Online to Spectrum Academy and private LLCs, such as 204 Key or Avalon Holdings, which shared a $6 million commercial loan with NLR, documents show. The nonprofit MCEC was the one receiving the welfare funds, but in their accounting, fund sources were co-mingled. Over the last two years, welfare agency officials and the auditor’s office have expressed their difficulty following the money.

“This has become a numbers case,” Nancy New told reporters in November of 2020, before a judge issued the first gag order.

Prosecutors allege the News took welfare money from their nonprofit to make personal investments of over $2 million into a biomedical startup that was trying to develop a new drug to prevent the damaging effects of concussions. The companies, Prevacus and PreSolMD, were started by Florida scientist Jake Vanlandingham. Brett Favre had endorsed and invested in the companies. The former NFL quarterback even hosted meetings at his house with welfare officials and the scientist, during which they came up with the deal.

Vanlandingham promised the News a 2% share “and getting paid regularly,” and Zach New told Vanlandingham to put the stock in the name of N3 LLC, public records show. Vanlandingham told Mississippi Today in 2020 that while he knew the nonprofit was associated with a public grant, he had no idea their money came from the federal welfare program.

Creative Commons License

Republish our articles for free, online or in print, under a Creative Commons license.

Take our 2023 reader survey

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.