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

Nancy New, a once prominent private school and nonprofit founder, and her son Zach New pleaded guilty to state criminal charges in Mississippi’s sprawling welfare scandal on Friday.

The 69-year-old former educator is pleading guilty to four counts of bribing a public official, two counts of fraud against the government, six counts of wire fraud and racketeering. Her deal comes with a total maximum sentence of 99 years, with 25 to serve.

But state prosecutors have recommended that the state judge wait to sentence Nancy New until she receives a sentence in her separate federal case — which is expected to produce a sentence of no more than ten years — and then sentence her to equal or lesser time to run concurrently with the federal sentence.

In other words, state prosecutors recommend Nancy New serve her entire sentence in federal prison and serve no additional time for the state charges above what she serves in the federal case. She pleaded guilty in the federal case earlier this week to one count of money laundering, which carries a maximum sentence of ten years.

Zach New, the 39-year-old vice president of his mother’s nonprofit, pleaded guilty to the same charges, minus racketeering and one wire fraud charge. His charges come with a total maximum sentence of 75 years, with 17 to serve. State prosecutors have offered him the same deal to serve only the number of years he receives in the separate federal case. He pleaded guilty in the federal case to conspiracy to commit wire fraud, which comes with a maximum sentence of five years.

Both Nancy and Zach New have agreed to cooperate with prosecutors and testify against their co-defendants. Both state and federal criminal investigations are ongoing and could result in charges against additional people, sources close to the probes say.

Under the state plea deal, the News will serve whatever sentence they receive in federal prison, instead of Mississippi’s state prisons with notoriously barbaric conditions.

The News, who could also pay more than $3.6 million in restitution as part of the plea deal, are changing their plea earlier than he was required since their state trial was not set to take place for at least three months. Their petitions filed Friday include new details about their role in the bribery and theft of funds from the Mississippi Department of Human Services, the state’s safety net agency.

In these cases, the News separately scammed both the Mississippi Department of Human Services out of welfare funds and the Mississippi Department of Education out of public education dollars. The News ran the nonprofit Mississippi Community Education Center, which received tens of millions of federal grant funds as a subgrantee of the Mississippi Department of Human during the administration of then-welfare director John Davis.

Three of the wire fraud charges relate to financial transfers they made from the nonprofit to the private, for-profit school district called New Learning Resources, then to a drug company in Florida called Prevacus, as well as transfers they made directly from the nonprofit to Prevacus.

Text messages published earlier this month in Mississippi Today’s “The Backchannel” investigation reveal that right before the News agreed to funnel welfare money to Prevacus, the company’s owner and former NFL quarterback Brett Favre offered former Gov. Phil Bryant company stock in exchange for help Bryant provided when he was governor. Bryant appeared to agree by text to accept that offer after he left office, Mississippi Today reported. Favre even referenced in texts to Bryant the public funding that the company was receiving from the state and Nancy New. Bryant responded positively.

The News were accused also of funneling embezzled funds to an affiliate of Prevacus, called PreSolMD, but those transfers were not included in the counts to which the News recently pleaded guilty. The companies allegedly received $2.15 million in stolen federal grant funds.

READ MORE: Phil Bryant had his sights on a payout as welfare funds flowed to Brett Favre

In 2017, the News also made an “off the books” purchase of a black GMC Yukon for Davis, the state welfare agency director, and two of his senior executives at their request to incentivize them to keep agency funds flowing to the nonprofit. Davis is also facing charges, to which he’s pleaded not guilty, related to the scheme.

The News also hired WWE wrestler Brett DiBiase on a salary of $250,000 and Davis’ nephew Austin Smith, knowing that they weren’t qualified for the jobs, and gave Davis unrestricted access to the nonprofit’s credit card.

They also defrauded the state by transferring $1.2 million to Victory Sports Foundation, run by local former football player Paul Lacoste, knowing the foundation was not eligible for the funds and by paying $4 million to build a volleyball stadium, a payment he and others disguised as a “lease.”

Another count of wire fraud relates to the construction of a virtual reality center in downtown Jackson, which the News also helped disguise as a lease.

The nonprofit also at one point transmitted $3,000 to Davis, which he distributed to attendees of “Law of 16,” a professional development presentation conducted by retired WWE wrestler Ted “Teddy” DiBiase Jr., who himself collected more than $3 million in welfare funds.

Nancy New’s racketeering charge, which is not included on Zach New’s guilty plea, relates to her and Davis transferring money from her nonprofit to a rehab facility in California, where Brett DiBiase was receiving treatment. An additional wire fraud charge against Nancy pertains to $40,000 worth of children’s books the nonprofit purchased.

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Anna Wolfe, a native of Tacoma, Wa., is an investigative reporter writing about poverty and economic justice. Before joining the staff at Mississippi Today in September of 2018, Anna worked for three years at Clarion Ledger, Mississippi’s statewide daily newspaper. She also worked as an investigative reporter for the Center for Public Integrity and Jackson Free Press, the capital city’s alternative newsweekly. Anna has received national recognition for her work, including the 2021 Goldsmith Prize for Investigative Reporting, the 2021 Collier Prize for State Government Accountability, the 2021 John Jay/Harry Frank Guggenheim Excellence in Criminal Justice Reporting Award, the 2020 Al Neuharth Innovation in Investigative Journalism Award and the February 2020 Sidney Award for reporting on Mississippi’s debtors prisons. She received the National Press Foundation’s 2020 Poverty and Inequality Award. She also received first place in the regional Green Eyeshade Awards in 2021 for Public Service in Online Journalism and 2020 for Business Reporting, and the local Bill Minor Prize for Investigative Journalism in 2019 and 2018 for reporting on unfair medical billing practices and hunger in the Mississippi Delta.