John Davis, former director of the Mississippi Department of Human Services, sits with his defense attorney Merrida Coxwell, right, in Jackson on Thursday, Sept. 22, 2022. Davis pleaded guilty to federal charges in a conspiracy to misspend tens of millions of dollars that were intended to help needy families in one of the poorest states in the U.S. — part of the largest public corruption case in the state's history.(AP Photo/Rogelio V. Solis)

One year ago today, a former Mississippi state agency director stood before a state and federal judge and admitted to steering federal welfare funds to enrich the sons of a wealthy retired WWE wrestler.

The crimes represent just a sliver of a larger scandal inside a welfare agency that, under the direction of former Gov. Phil Bryant, systematically prioritized federal grant spending on pet projects over people.

“This is often what happens when you have a political party, whether it’s Republican or Democrat, so dominating a state that they think they’re invincible, that they can do anything,” said Doug Jones, a former U.S. senator and U.S. attorney for the Northern District of Alabama.

Auditors accused John Davis, the now 55-year-old disgraced career government bureaucrat, of creating a culture of fear and secrecy at his agency between 2016 and 2019, frittering away at least $77 million in funds that were supposed to assist the state’s poorest residents.

But zooming out, records and text messages obtained by Mississippi Today show that Davis took his direction from the governor who appointed him. While the scandal took place, Bryant often met with Davis about the administration of the federally funded welfare grant and liked what the director was doing. Having agreed to cooperate with prosecutors, Davis is now a key witness in the case.

When the State Auditor’s Office and the Hinds County District Attorney first announced the arrests of Davis and five others in early 2020, they promised to work with their federal partners to fully investigate and pursue every person responsible for what they called the largest public embezzlement case in state history.

Since then, Mississippi Today has surfaced text messages showing that Bryant planned on entering into business with the Florida-based pharmaceutical company at the center of the initial indictments. The texts show that former NFL quarterback Brett Favre briefed Bryant about the funds that welfare officials channeled into the drug startup, Prevacus, and sought the then-governor’s help securing more grants for a new volleyball stadium at University of Southern Mississippi.

Six people ensnared in the case, including Favre, have alleged Bryant approved or even directed some of the spending decisions in question — allegations Bryant has denied.

“We’re still looking through records and text messages as we continue to move up,” Hinds County District Attorney Jody Owens told reporters after Davis’ plea hearing on Sept. 22, 2022, months after Mississippi Today exposed texts between Bryant and the welfare director. “We also continue to work with the federal authorities in Washington and in Mississippi. John Davis is critical because the ladder continues to move up.”

No one in any position above Davis has been charged. Since the 2020 state arrests, federal authorities have charged just two additional people, bringing the total number of state or federal criminal defendants to eight. Bryant and Favre are not facing criminal charges.

Bryant’s attorney Billy Quin said in a statement to Mississippi Today on Thursday that Bryant has not been interviewed by investigators on the case.

READ MORE: Allegations against former Gov. Phil Bryant from Brett Favre, Nancy New, Paul Lacoste, Austin Smith, Teddy DiBiase and Christi Webb

The seven who have pleaded guilty to crimes within the welfare scandal remain free under cooperation agreements with prosecutors. The government has suspended sentencing until it decides it no longer needs the defendants’ cooperation for potential cases against others. Federal authorities have been silent about the progress of their investigation or who else they may be looking at charging. 

“It’s not unusual for their sentencing to be postponed until the full extent of their cooperation is known, and that could be trial testimony,” said Jones, who has followed developments in the welfare case from his neighboring state. “So this could be a ways to go before we see anybody being sentenced.”

The September 2022 federal bill of information against Davis — a charging document to which he pleaded guilty after waiving a formal indictment — represented the first criminal charges the federal government filed within the welfare case, more than two years after the state arrests. Charges against Davis mostly deal with welfare money he pushed to professional wrestling brothers Brett and Ted “Teddy” DiBiase Jr.

Federal prosecutors struck plea deals with nonprofit founder Nancy New and her son Zach New months earlier in April of 2022, but those charges related to public education funds that the News fraudulently obtained for their private schools.

In March of this year, the U.S. Attorney’s Office secured guilty pleas from Brett DiBiase, who went to a luxury rehab facility on the welfare program’s dime, and Christi Webb, director of another nonprofit that contracted with the state. It also indicted Teddy DiBiase, who pleaded not guilty, in April. It has not publicly filed new charges since then.

The U.S. Attorney’s Office in the Southern District of Mississippi, which has been handling the case, has not had a permanent U.S. Attorney at its helm since early 2021 and has been waiting more than a year for the U.S. Senate to confirm President Joe Biden’s nomination Todd Gee. On Wednesday, Sen. J.D. Vance of Ohio again single-handedly blocked the Senate’s confirmations of all U.S. Department of Justice appointments, including Gee, because of the current criminal cases they are bringing against former President Donald Trump.

Separate from the criminal cases, 20 people, including Favre, are facing state civil charges. That lawsuit attempts to recoup $77 million from people or entities it says are liable for the misspending, which mostly occurred through two nonprofits running a program called Families First for Mississippi. The U.S. Department of Health and Human Services, the federal agency that administers the welfare grant, or Temporary Assistance for Needy Families, has said that it will require the state to return any misspent funds out of its own budget, but it has been waiting to see what happens with ongoing criminal and civil proceedings before taking action.

U.S. Congressman Bennie Thompson, a Democrat from Mississippi, said he has asked the federal agency for its assessment of the state of Mississippi’s fitness to manage these funds in the future, but he has not received a response.

“The fact that public funds were directed (away) from the original intent … is egregious, especially when the money is intended for vulnerable families to try to prepare them for a better life, and that money just does not get to them,” Thompson said.

Several people or entities named in the civil suit have pushed back on the prevailing public narrative that they callously looted money from the poor.

The DiBiase family, for example, says they were carrying out the mission of the agency when Davis hired them to conduct multi-million-dollar motivational courses or preach the gospel to low-income teens. Paul Lacoste, a fitness trainer whose company received a $1.3 million contract through Families First, says he met about his program with Davis, Bryant, and officials from the federal office, who all supported the concept of offering exercise classes as part of the welfare agency’s approach to strengthening Mississippi families. Lobaki, a software company that received $795,000 through Families First to conduct a virtual reality academy, says the vocational training it was contracted to perform fits the welfare program’s purpose of “ending the dependence of needy parents on government benefits.”

“It was the government that chose to run this program this way. And it was not a secret,” Teddy DiBiase Jr.’s criminal defense attorney, Scott Gilbert, told Mississippi Today earlier this year. “… 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? That’s a fair question, and that’s a question that reasonable people absolutely can disagree about. But it’s not a crime.”

Ultimately, the federal government has given state politicians broad leeway to spend federal TANF dollars based on their philosophy about poverty and what constitutes helping people, including the boot-straps approach of intentionally withholding government assistance. Gov. Bryant, who oversaw the welfare department and set its agenda during the time the scandal occurred, preferred the “Families First” programming of parenting and fatherhood classes, bullying prevention, abstinence education and anti-obesity initiatives. But Bryant never asked the agency for outcomes to show what those programs accomplished or how they prevented or moved families out of poverty.

“You would think the state is the safeguard for handling funds like this, but when you have people who are the custodian of these funds at the state level who have unclean missions in life, then you have what you have,” Thompson said.

Over time, the purchases attached to those nebulous services morphed into things like a 15-acre horse ranch for former USM running back Marcus Dupree, the construction of a volleyball stadium, lobbying expenses, sports camps for young athletes and star-studded high school rallies. At the same time, from 2016 to 2020, the state cut the number of families receiving monthly assistance in half, from nearly 6,000 to 2,600, with virtually no concern from state leadership.

“There is a culture. Whether or not legally it rises to federal cases, and goes that high up, from a criminal standpoint, it may or may not. But it certainly is morally corrupt what they did and people ought to pay a political price for it,” Jones said.

From 2020 to 2022, under Gov. Tate Reeves, the caseload of families dropped another 1,000 while the state has left over $100 million in welfare funds unspent. Current agency director Bob Anderson told lawmakers last year that the state was still not tracking the outcomes for families receiving services through TANF subgrantees.

The criminal investigation may have halted the actual fraud, but so far it has made little difference to the very poor families seeking help through the program, or to Mississippians looking for answers about how things went so wrong.

When Hinds County Circuit Court Judge Adrienne Wooten asked Davis at his plea hearing last year why he would break the law to enrich Brett DiBiase, all he could muster was, “Very, very bad judgment,” followed by a long pause and then, “I shouldn’t have done it.”

Davis’ state guilty plea to 18 counts of fraud or conspiracy came with a prison sentence of 32 years — a fact featured prominently in news headlines — but that’s nowhere near the time he’ll actually serve. In the generous joint plea agreement between federal and state prosecutors and Davis, the looming federal sentence of no more than 15 years in federal prison on two counts supersedes the state sentence.

The deal all but ensures he’ll never face a criminal trial or see the inside of one Mississippi’s notoriously harsh state prisons. The other defendants received similar deals. Wooten seemed to leave the courtroom unsatisfied.

“Even with the questions that have been asked,” she said by the end of the hearing, “this court is still not understanding what actually took place and more importantly, what would’ve caused you to perform these particular acts.”

As the historic case enters its fourth year, the same could be said for the public.

June 21, 2019

Investigation begins

Mississippi State Auditor’s Office begins investigation into fraud at the Mississippi Department of Human Services

February 4, 2020

Grand jury indicts six people

Hinds County grand jury indicts six people — former MDHS Director John Davis, nonprofit founder Nancy New and her son Zach New, former professional wrestler Brett DiBiase, nonprofit accountant Anne McGrew and former MDHS procurement officer Gregory “Latimer” Smith.

February 5, 2020

The case goes public

Agents from the auditor’s office arrest six people, making the case public. The charges alleges they stole a total of $4 million from the welfare department, $2 million of which went to a pharmaceutical company called Prevacus. The venture involved both former Gov. Phil Bryant and former NFL quarterback Brett Favre, Mississippi Today uncovered shortly after the arrests

February 6, 2020

State Auditor and the FBI

State Auditor Shad White says he turned over all investigative materials to the FBI, but then-U.S. Attorney Mike Hurst says state authorities did not reach out to his office about the investigation and that he learned about the indictment from media reports

May 4, 2020

Annual audit released

The auditor releases an annual audit questioning $94 million in federal grant fund purchases, including $1.1 million New’s nonprofit paid directly to Favre

June 22, 2020

First known court action

Agents from the Money Laundering and Asset Recovery Section of the U.S. Department of Justice in Washington filed a complaint for civil forfeiture to seize the Madison home of former professional wrestler Ted “Teddy” DiBiase. This is the DOJ’s first known court action in the welfare case

December 17, 2020

Brett DiBiase faces state charges

Brett DiBiase pleads guilty to state charges

March 16, 2021

Nancy and Zach New indicted

A federal grand jury indicts Nancy and Zach New on separate charges that their private schools, called New Summit, defrauded the Mississippi Department of Education out of $2 million, later increased to $4 million

October 1, 2021

Forensic audit released

MDHS releases its forensic audit confirming much of the suspected welfare misspending

October 11, 2021

McGrew pleads guilty

Anne McGrew pleads guilty to state charges

April 4, 2022

“The Backchannel” is published

Mississippi Today begins publishing its investigative series, “The Backchannel,” which, for the first time, reveals text messages between Bryant and Favre showing that the athlete offered stock in Prevacus to the governor in exchange for his help growing the company; that Favre told Bryant when Prevacus started receiving funds from the welfare operators; and that Bryant agreed to accept a company package after leaving office, right before the initial arrests in early 2020

April 20, 2022

The News face federal charges

Nancy and Zach New plead guilty to federal charges related to their private school funding scheme

April 22, 2022

The News face state charges

Nancy and Zach New plead guilty to state charges related to the welfare scandal. Zach New’s charges include funneling welfare money to the University of Southern Mississippi Athletic Foundation to build a volleyball stadium

May 9, 2022

MDHS files civil lawsuit

MDHS files a civil lawsuit against 35 people or companies, including Favre, to recoup $24 million in misspent welfare funds. On the direction of Gov. Tate Reeves’ office, the suit does not target the volleyball stadium or University of Southern Mississippi Athletic Foundation

July 22, 2022

Brad Pigott fired

Reeves’s office and MDHS fire Brad Pigott, the lawyer it hired to craft the civil suit, about a week after Pigott subpoenaed University of Southern Mississippi Athletic Foundation for its communication with former Gov. Bryant, among others

September 22, 2022

John Davis pleads guilty

John Davis pleads guilty to state and federal charges

October 3, 2022

Latimer Smith avoids prosecution

Latimer Smith receives pre-trial diversion, allowing him to avoid prosecution

December 5, 2022

MDHS amends charges

MDHS amends charges in the civil lawsuit, adding the USM volleyball stadium scheme and nine new people or companies, bringing the total attempted recovery to $77 million and number of defendants to 44

March 2, 2023

Brett DiBiase faces federal charges

Brett DiBiase pleads guilty to federal charges

March 16, 2023

Christi Webb faces federal charges

Christi Webb pleads guilty to federal charges, the first criminal charges she’s faced

April 20, 2023

Ted “Teddy” DiBiase Jr. pleads not guilty

Ted “Teddy” DiBiase Jr. pleads not guilty to federal charges, the first criminal charges he’s faced

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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.