Gov. Phil Bryant speaks during the Neshoba County Fair in Philadelphia, Miss., Thursday, Aug. 1, 2019. Credit: Eric J. Shelton/Mississippi Today, Report For America

Perpetrators in the Mississippi welfare scandal lawsuit are cooperating with federal prosecutors. 

High-profile officials confirm that a federal investigation into the misspending continues. Top defendants in the civil case have implored state prosecutors to pursue their boss, former Gov. Phil Bryant, who they say was responsible for much of the scandal.

But federal prosecutors are keeping quiet about their ongoing probe into the $77 million in welfare funds squandered while Bryant was governor.

And they’re demanding others keep quiet, too, according to a recent court filing.

“John Davis knows of the extent of personal involvement of former Governor Bryant and Governor (Tate) Reeves and the massive waste of taxpayer money,” attorney Jim Waide wrote in a Jan. 12 motion to dismiss the state’s massive parallel criminal case. “John Davis refuses to answer discovery because the FBI has directed him to keep silent.”

Meanwhile, attorneys for people accused of perpetuating the scheme — and even someone who committed fraud in an unrelated case — say they’ve taken all the blame for actions Bryant took, too.

“The landscape is very uneven out here, and if you’re not powerful and you don’t have powerful friends, then you are not protected,” said Lisa Ross, a defense attorney in the unrelated fraud case. “All the people with power get the benefit of the doubt.”

Davis, the former director of the Mississippi Department of Human Services, pleaded guilty in September to a combined 20 state and federal counts of fraud, conspiracy, or theft and has agreed to aid the prosecution in the ongoing investigation, delaying his sentencing. He is a key witness.

“John Davis is critical because the ladder continues to move up,” Hinds County District Attorney Jody Owens said after Davis pleaded guilty.

Up the ladder from Davis is Bryant, the former governor who appointed him, and potentially Reeves, the current governor who served as lieutenant governor at the time of the known misspending.

Bryant’s spokesperson, Denton Gibbes, told Mississippi Today on Friday that the former governor has not been interviewed or even contacted by federal authorities.

Most of the stolen funds came from the nation’s welfare program called Temporary Assistance for Needy Families or TANF. Bryant — who has been tied to the now infamous illegal spending on former NFL quarterback Brett Favre’s pet projects but has not faced any civil or criminal charges — oversaw the welfare agency during the heist.

“As policy director of MDHS, former Governor Bryant adopted policies of spending only a minuscule portion of TANF funds for payments to needy families, of foregoing competitive bidding, and of distributing massive amounts of TANF funds through private conduits,” Waide wrote in the recent filing. “These negligent policies foreseeably caused all of the misexpenditures alleged in the First Amended Complaint.”

Waide also pointed to communication in which Davis described the illegal transfer of $1.3 million in welfare funds to a celebrity fitness camp by former athlete Paul Lacoste as “the Lt. Gov’s fitness issue,” referring to then-Lt. Gov. Reeves. 

Records show that Reeves and Favre discussed the University of Southern Mississippi volleyball stadium, which was built with $5 million in welfare funds, in early 2020. Those texts, as well as Reeves’ decision to fire the attorney who originally attempted to investigate that purchase, have also raised questions about his involvement. Reeves’ texts prior to becoming governor are not considered public records because the Legislature exempted itself from Mississippi’s Public Records Act, so any communication he had with Favre during the scandal, when he was lieutenant governor, has not been released.

Waide is representing Austin Smith, Davis’ nephew and one of dozens of defendants in the state’s civil litigation that attempts to claw back misspent or ill-gotten public funds. The state has accused Smith of taking more than $426,000 in primarily TANF funds to teach coding skills to needy students and failing to conduct the work — an allegation Smith denies.

Owens and State Auditor Shad White, who initially investigated the case, have recently confirmed to Mississippi Today that the federal investigation is ongoing.

“I would speak more generally on this point and say anytime you see sentencing withheld, the reason you withhold sentencing is to get information from those people,” White said. “So, those folks are going to be talking to prosecutors and are talking to prosecutors.”

Under Bryant, the welfare department essentially privatized the TANF program by pushing tens of millions of the grant funds to two nonprofits, including Mississippi Community Education Center founded by Nancy New, a politically connected educator and friend of Deborah Bryant, the governor’s wife. Virtually all of the misspending occurred under the umbrella of this nonprofit-run program, called Families First for Mississippi.

Gov. Bryant was so involved in Families First that he described the privatized program as “us” in a never-before-published text message to New, one of the primary criminal and civil defendants in the case.

In the fall of 2018, shortly after the launch of a new judicial initiative called Family First aimed at preventing the need for Child Protection Services to separate families, there was much confusion between the two entities because of the similar name, shared logo and overlapping members.

Bryant texted New on Nov. 1, 2018, a photo that PR specialist Becky Russell, whose daughter worked on the initiative, took with Attorney General Jim Hood, the Democratic candidate for governor who ran against Gov. Tate Reeves. Reeves was lieutenant governor at the time and gearing up to run for governor in 2019.

“Jim Hood is a strong supporter of the Mississippi’s Family First Initiative-Believes in the approach that Mississippi must first fix families in order to fix foster care,” Russell wrote in a tweet containing the photo. 

“Not good,” Bryant wrote to New with a screenshot of the tweet. “The LtGov will not like this at all.”

“Omg! That makes me sick,” New responded. “The Family First Initiative is causing so much confusion. Just not good.”

The messages provide some insight into the conflict between various officials working on child welfare in the state, exclusively detailed in a July article by Mississippi Today, and the political nature of the programs.

At the time, Mississippi Supreme Court Justice Dawn Beam, who worked with Deborah Bryant to launch the Family First initiative months earlier, was distancing herself from Families First for Mississippi because “it was obvious they were not what they had held themselves out to be,” Beam recently told Mississippi Today.

Beam said welfare officials promised to build a database, which they estimated to cost $5 million – the same amount that went to the volleyball stadium – that could connect needy families to resources in their communities and collect data that could be used to better meet needs in the future. But by the time of Bryant and New’s text exchange, Beam said she knew the computer system wasn’t going to materialize. “They were lying,” Beam said.

The two factions hid their infighting behind closed doors while advertising to the public that they were making generational change for families in Mississippi.

Bryant asked New if the entity represented in Russell’s tweet was the privatized welfare program known as Families First for Mississippi, before correcting himself. “Oh that’s Dawn Beam..” he said, referring to the separate judicial initiative.

New explained to Bryant that Beam initially wanted the judicial initiative and Families First to “complement each other,” but then decided New’s program would not be as involved.

“Thanks. Just glad that not us..” Bryant texted, referring to Families First.

New also expressed her frustrations to Bryant when the investigation into her nonprofit’s spending began in 2019. New was squabbling with another nonprofit called Family Resource Center of North Mississippi, which ran Families First for Mississippi in the northern part of the state. The nonprofits, which were affiliated with opposite political parties, had to compete for funding from the welfare department, especially after learning their grants would be cut in early 2019. At one point, one of the defendants in the welfare case alleges, Bryant threatened to cut funding to Family Resource Center because of its director’s support for Hood.

“Sorry to have bothered you. I just wanted to share that I have no choice but to stand up for myself,” New texted Bryant in October of 2019, the same month auditor’s investigators raided her nonprofit offices. “I have tried my best to stay about all this mess that north ms and others started over a year ago. I was not only put in the middle but now I am being dragged through the mud. I have run MDHS grants for 24 years to end up being treated like crap by them now. It’s completely wrong.”

“Go get em..” Bryant responded.

Credit: Graphic by Bethany Atkinson

Texts in the months following reveal that Bryant spoke with New about her legal troubles, which she described as “my whole life’s work go(ing) down the drain.” 

“Will b glad to facilitate a meeting,” Bryant responded.

“Waiting to hear back from Lucien,” New said, likely referring to Mississippi GOP Chair and consultant Lucien Smith.

Smith did not return calls or texts from Mississippi Today.

New and her son Jess New visited Bryant on Friday, Dec. 13, 2019, after which, she said “All of this ‘crazy making’ is just way too much and hoping will end soon. Thank you for listening. I always value your input and guidance.”

“I am always here when you need me to listen. Keep the faith…” he texted.

New would be arrested seven weeks later.

Credit: Graphic by Bethany Atkinson

The newly revealed texts were recently entered into discovery, joining hundreds of thousands of pages of communication existing in the criminal and civil cases. Key communication that has not been released include text messages between Davis and Bryant prior to February of 2019.

New also pleaded guilty and has agreed to cooperate with the prosecution. Her attorney in the civil case, Gerry Bufkin, has similarly blasted the state for not including Bryant as a defendant in the case. Bufkin and Waide are both fighting with Bryant over subpoenas for the former governor’s communication, which would include some of the messages between Bryant and Davis.

Text messages uncovered by Mississippi Today in April of 2022, which covered February to June of 2019, reveal how Bryant steered Davis to award welfare grants to his favored vendors.

The texts show Bryant was in talks about two of Favre’s pet projects – a pharmaceutical startup and a new volleyball stadium at University of Southern Mississippi – that illegally received a total of more than $8 million in welfare funds. Even Favre is facing civil charges for his role in the scandal while Bryant is not. Favre told Bryant when his pharmaceutical venture, Prevacus, began receiving funds from the state and the governor even agreed by text to accept stock in the company after leaving office.

In mid-2019, Bryant relayed a small tip of suspected fraud brought forward by an employee of Mississippi Department of Human Services to Auditor White, whom Bryant initially appointed to the office. White was also Bryant’s former campaign manager.

Bryant was discussing a future working relationship with Prevacus and setting up meetings just one day before White arrested the nonprofit officials who funneled the money to the company.

In a recent unsuccessful appeal attempt, defense attorney Ross criticized White for failing to equitably pursue fraud suspects, namely former Gov. Bryant and current Gov. Reeves. She echoes the sentiments from some Mississippians who believe White has unfairly targeted lower-level offenses, leading to record-making demands for repayment, for political gain – an assertion White rejects

Ross represented Toni Johnson, a Democratic Hinds County Election Commissioner who recently pleaded guilty to embezzlement and was sentenced to 20 years for using private grant funds to purchase two personal televisions.

“White bragged in the email that his office ‘has pursued aggressive consequences for embezzlers regardless of whether they were Republicans or Democrats.’ Text messages published by Mississippi Today belie White’s claim that he pursues public corruption ‘regardless of whether they were Republicans or Democrats,’” Ross wrote in a Jan. 6 petition for interlocutory appeal. “The text messages show former governor Phil Bryant and Governor Tate Reeves directed public employees to unlawfully divert $94 million of Temporary Assistance to Needy Families funds to Brett Favre and other friends of Phil Bryant and Governor Reeves. At the behest of White, Hinds County District Attorney Jody Owens has doggedly pursued Johnson about the misuse of private funding but has buried his head in the sand when it comes to the alleged involvement of Bryant and Governor Reeves and others in a $94 million heist of public funds.”

(The state auditor’s 2020 report questioned $94 million worth of welfare agency spending while forensic auditors found $77 million in unallowable purchases. The state has relied on the forensic audit to determine which funds to claw back.)

Favre also alleged in his motion to dismiss the civil case that the state has neglected the roles of Bryant, and even White, in the welfare scandal.

White recently explained to Mississippi Today that his office conducts investigations, but it does not decide who to prosecute.

“We have a system with multiple players who look at the facts of a situation, and then the system itself comes to a conclusion about who is held accountable, not just the state auditor,” White said. “And some people believe that out there that I am investigator, judge, jury, executioner. Democracy is not set up that way. It’s not supposed to be set up that way.”

Asked if he thinks Bryant’s role in welfare spending warrants further investigation, White said, “I think everybody top to bottom is going to be thoroughly investigated, period, all the way down to the janitor at DHS.”

Owens called Ross’ claims of selective prosecution “baseless.”

“An allegation of other wrong doings doesn’t exonerate her client and the prosecution of the News and Davis or evidence that we prosecute all cases,” Owens said in a text to Mississippi Today.

Overseeing prosecution on the federal side is the U.S. Attorney’s Office in the southern district of Mississippi, which is without a permanent U.S. attorney. President Joe Biden selected Todd Gee, current deputy chief of the Public Integrity Section of the U.S. Department of Justice, for the position, but he failed to secure the blessing of Mississippi Sens. Roger Wicker and Cindy Hyde-Smith. The new Congress is now waiting for Biden to re-nominate the position.

The criminal case is running parallel to the civil case Mississippi Department of Human Services has filed against 46 people or organizations.

Several defendants have filed motions to dismiss or requests to stay the case while the criminal investigation continues. In his recent motion to dismiss, Waide argues that Davis has evidence crucial to Smith’s defense, but that he won’t share it due to the ongoing investigation. Davis’ plea deal keeps him out of Mississippi’s notoriously harsh state prisons.

MDHS filed its initial complaint in May and an amended complaint, adding several new defendants, in December.

Other recent filings in the civil suit include memorandums in support of motions to dismiss from retired WWE wrestler Ted DiBiase Sr. and Lacoste, the former football player and fitness coach. DiBiase argued that his ministry, Heart of David, conducted the TANF activities it was hired to perform and that the contract was no secret to the agency. Lacoste argues that he didn’t know the money he received came from TANF and therefore can’t be held liable. Attorney Garrig Shields, a former deputy director at MDHS who was added to the suit in December, filed a 94-page answer denying the allegations against him. Another defendant Nick Coughlin, one of the welfare contractors and former reality TV contestant who also worked for the Attorney General’s Office, also filed a lengthy answer denying the state’s claims.

Hinds County Circuit Court Judge Faye Peterson has not scheduled hearings to address several pending motions in the case, including Bryant’s motions to quash subpoenas against him.

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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.