Former WWE wrestler Ted “Teddy” DiBiase Jr. was sitting on the front row behind former Mississippi welfare director John Davis while the now disgraced government bureaucrat testified before Congress in 2019.
Davis, who was at the time admittedly orchestrating a stunning welfare fraud scheme, was telling members of the U.S. House of Representatives Committee on Agriculture about the supposedly life changing work his department was conducting instead of making food assistance available to more Mississippians.
“We know that it takes investment in our staff through things like Law of 16,” Davis told congress members, “which is our personal and professional development programs for our staff members, to then replicate that over with our clients to make sure that they are empowered to be whom they have been called to be.”
Law of 16 was DiBiase Jr.’s nebulous motivational speaking series, one of the projects for which he received roughly $3 million in federal welfare funds from Temporary Assistance for Needy Families (TANF) and The Emergency Food Assistance Program.
Today, nearly four years after the director spoke openly in the nation’s capital about his work, DiBiase Jr. is facing criminal charges for the first time within the larger unfolding welfare scandal, in which officials stole or misspent tens of millions of federal public assistance funds.
He pleaded not guilty and if convicted on all counts in the indictment unsealed Thursday, DiBiase Jr. faces a maximum penalty of up to 175 years in prison.
“It was the government that chose to run this program this way. And it was not a secret. This was done in front of everybody. It was done in front of the United States Congress. This was not a secret. This was not, as the federal law would say, a scheme or artifice to defraud,” Scott Gilbert, DiBiase Jr.’s criminal defense attorney, told Mississippi Today two weeks ago. “So what we’re doing now, for the most part, is second guessing and armchair quarterbacking the way government was run. And that’s not what the criminal law is for.”
This indictment, handed down by a federal grand jury, is the first that the U.S. Attorney’s Office has secured in the welfare case. Each of the other five federal defendants pleaded guilty to bills of information, which are used when a defendant chooses to plead guilty without the case going to a grand jury.
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DiBiase Jr. joins his younger brother Brett DiBiase, who also received hundreds of thousands in welfare funds, to become the eighth person to be charged criminally within the scandal, including those only charged in state court. DiBiase Jr., his brother and their father, former WWE star Ted “The Million Dollar Man” DiBiase, are all facing civil charges in a parallel lawsuit Mississippi Department of Human Services has filed against nearly four dozen people or organizations. DiBiase Sr. has not faced criminal charges.
Under the new indictment, DiBiase Jr. faces 13 criminal counts under Title 18 of the U.S. Code, the main criminal code of the federal government, ranging from conspiracy, wire fraud, theft of federal funds and money laundering.
“It’s ironic that he was involved with the Law of 16, a questionable program at best, because he’s now going to get familiar with the Law of 18, which is Title 18 of the U.S. Code,” quipped current Mississippi Department of Human Services Director Bob Anderson, a former prosecutor tapped by Gov. Tate Reeves to lead the welfare agency after the scandal broke in 2020.
Anderson has said he is cooperating with the federal authorities in their ongoing investigation for his entire tenure at MDHS.
“I believe they will do everything to bring all additional charges they think are appropriate in this case,” he added after DiBiase Jr.’s arraignment Thursday.
Prosecutors say DiBiase Jr. secured at least five “sham contracts” in 2017 and 2018 with two nonprofits, Mississippi Community Education Center and Family Resource Center of North Mississippi, who were receiving tens of millions of federal welfare funds to run a statewide anti-poverty initiative called Families First for Mississippi. The directors of those nonprofits, Nancy New and Christie Webb, have both pleaded guilty within the scheme.
Davis and DiBiase Jr. met after the director initially hired his younger brother, Brett DiBiase, in an executive level position at MDHS in 2017, despite him lacking qualifications for the job. Davis became close with the DiBiase brothers, first Brett and then Teddy. Their communication reflects a familial relationship in which they discussed their faith, hardships, and told each other, “I love you.”
Davis retired from office in mid-2019, shortly after the D.C. trip, after his deputy, Jacob Black, who is facing his own charges in the parallel civil suit, brought a tip of suspected fraud to former Gov. Phil Bryant. In the months leading up to his ousting, Davis expressed concern that his relationship with DiBiase Jr. had weakened.
“I hate that you feel that way,” DiBiase Jr. wrote to Davis in a March 2019 text message. “… You definitely don’t have to ‘chase’ after me … Just want you to know I love you dearly, and I’m so grateful for your friendship.”
In its civil suit, MDHS alleges DiBiase Jr. “exploited his close relationship with John Davis to further enrich his family and friends.”
Under Davis’ direction, the nonprofits made up front payments to DiBiase Jr. “regardless of whether any work had been performed and knowing that no work likely ever would be performed,” the new indictment alleges.
The nonprofits hired DiBiase Jr. to perform vague services — such as leadership outreach, addressing the needs of inner city youth and assessing the need for emergency food assistance — with little requirement of outcomes.
But according to audit reports, interviews and a review of communication, Davis frequently required DiBiase Jr. to accompany him in his day-to-day executive meetings and tasks, interrupting DiBiase Jr.’s duties under the contract.
“It’s just sort of bizarre to think of the executive director of the Department of Human Services actually conducting himself on a regular basis in ways that thwart and interfere with the ability of the contractor to do the work. But that’s exactly what went on, on a regular basis,” Gilbert said.
“You’ve got a guy who’s here that’s trying to perform and do what he’s supposed to do, and to a large extent he does,” Gilbert said. “And then you’ve got this person running MDHS that for whatever reason feels like the best use of Teddy’s time is not to perform his contracts, but to follow him around to meetings and to other events and things like that. And it just, it’s nonsensical. … I don’t know of anybody that understands really what that was about other than just, it’s just pure absurdity.”
The indictment alleges that the money that went to DiBiase Jr. “were diverted from needy families and low-income individuals in Mississippi.”
However, states have long legally diverted funds from the national Temporary Assistance for Needy Families program away from families in need. Since welfare reform in the 90’s, when TANF was created, states have used the lax guidelines in federal statute to shrink the side of the program that provides monthly cash assistance, known as the welfare check, and put the money instead into other programs or pet projects.
Even today, Mississippi’s welfare agency uses only about 5% of its TANF block grant on the welfare check.
While the other TANF programs are supposed to serve one of three other goals — promoting job preparation and marriage, preventing out-of-wedlock pregnancies and encouraging two-parent families — the federal government provides virtually no oversight to ensure that the programs supported by these funds actually correspond with these goals.
In the case of the Mississippi welfare scandal, which involves officials using $5 million in TANF funds to build a volleyball stadium at University of Southern Mississippi, the spending had become especially egregious.
The indictment alleges DiBiase Jr. used the federal funds he received to buy himself a vehicle and a boat and to put a down payment on a roughly $1.5 million lakeside home in the Madison community of Reunion, which the federal government has since seized.
Gilbert is confident the federal government doesn’t have a viable case against his client. He says there are several problems with the prosecution’s legal theory. In the welfare fraud case, prosecutors have used a specific theft or bribery statute, 18 U.S. Code § 666, which applies to agents of an organization or agency that receives federal funds obtaining funding by fraud. Two of DiBiase Jr.’s 13 counts fall under this statute. Gilbert said his client cannot be charged with this crime since he was not an agent of an organization that received federal funds. He makes the distinction that because DiBiase Jr. was a contractor under the nonprofit, not the state agency, he was never an agent of the federal funds.
Gilbert also contests the government’s claim that DiBiase Jr.’s contracts were a “sham.” DiBiase Jr. did conduct work under the contracts, Gilbert said, and any work he did not conduct was as a result of Davis’ interference.
“The big issue from a criminal defense perspective is: Did someone obtain money or property from the government by being dishonest? And what I can tell you in this case is, these contracts, the work that was done, I’ve yet to see a single shred of evidence that would show that Teddy DiBiase was dishonest with anybody about anything in order to get these contracts. These contracts were awarded to him. They came to him. He didn’t solicit anything from MDHS. He undertook these contracts and attempted to perform the work.”
“So what this boils down to is do people feel like this was an appropriate use of TANF money or other money to carry out the function of government?” Gilbert continued. “That’s a fair question, and that’s a question that reasonable people absolutely can disagree about. But it’s not a crime. You resolve your dissatisfaction with the way the government functions at the polling place.”