One of the defendants in what State Auditor Shad White has called the “largest public embezzlement case in state history” has pled guilty.
According to a tweet from the state auditor, Brett DiBiase, the former pro wrestler, pled guilty to charges related to the investigation that stemmed from the Mississippi Department of Human Services’ misuse of funds intended for the ‘Temporary Assistance for Needy Families (TANF)’ program.
Today Brett Dibiase, one of the people we arrested in the DHS embezzlement case, pleaded guilty.
He has pledged to continue cooperation with the prosecution.
This is an important step toward justice for the taxpayers and other victims.
— Shad White (@shadwhite) December 17, 2020
DiBiase pled guilty to one count of making false statements for the purpose of defrauding the government.
Through the Mississippi Community Education Center (MCEC) and the Family Resource Center of North Mississippi, a pair of non-profits, TANF funds were allegedly used to pay for DiBiase’s stay at a luxury drug rehab facility in Malibu despite claiming that he was being paid to teach classes about drug abuse.
John Davis, the former DHS Executive Director, and former DHS employee Latimer Smith stand accused of creating false documents and arranging payments to DiBiase. The documents were then submitted by MCEC and its Director Nancy New.
New and her son, Zach, face charges in the case for allegedly transferring millions in TANF funds to their private businesses and converting those funds for their personal use. Anne McGrew, an accountant for MCEC, was also arrested back in May.
Back in May, State Auditor White detailed the findings of their investigation which revealed the misuse of over $98 million over the past three years.
The audit of DHS showed massive sums were funneled to grantees like the Mississippi Community Education Center (MCEC) and the Family Resource Center of North Mississippi (FRC), two non-profits. Those grantees were given over $98 million in DHS grants over the last three years, mostly from the program Temporary Assistance for Needy Families (TANF).
The audit’s formal finding is that over $94 million of that grant money has been “questioned,” meaning auditors either saw clear misspending or could not verify the money had been lawfully spent. Examples of questioned spending included:
- MCEC and FRC used TANF money to hire lobbyists with TANF money, which is unallowable, often with no paperwork describing the work the lobbyists were hired to do.
- MCEC awarded contracts to and hired former DHS Director John Davis’s family members, sometimes paying them up front in lump sums.
- MCEC and FRC paid large sums to wrestlers Ted Dibiase, Ted Dibiase, Jr., and Brett Dibiase for work that was not performed, for unreasonable travel costs, or with little proof the programs helped the needy.
- MCEC and FRC used TANF money to fund religious concerts with no proof they benefitted the needy.
- MCEC made multiple donations with TANF money—like donations to the American Heart Association, the Mississippi Highway Patrol, booster clubs, pageants, universities—and provided no proof the donations were used to help the needy. FRC also made unallowable donations.
Among the grantees, MCEC was particularly dependent on TANF funding and engaged in extensive misspending. From 2016 to 2019, MCEC was given over $60 million in grants from DHS, while raising just under $1.6 million from other sources. Examples of questioned spending at MCEC included:
- MCEC paid Victory Sports Foundation TANF money for fitness programs for Mississippi legislators and other elected officials/staffers at no charge.
- MCEC purchased three vehicles with grant funds, each for over $50,000, for Nancy New (Director of MCEC), Zach New, and Jess New. MCEC also paid salaries, cell phone bills, and other costs for a variety of members of the New family.
- MCEC made many unallowable sports-related expenditures—like sponsoring a college baseball tournament—for services that could not be proven to benefit the needy. Some sports-related spending was for services that were not actually performed.
- MCEC transferred over $6 million to a private school and organization owned by Nancy New and also purchased curricula and supplies with TANF funds for the school.
- MCEC paid a speeding ticket for Nancy New with TANF funds.
- MCEC issued a $3,000 check to the bookkeeper of MCEC with a handwritten note saying the payment was actually for John Davis.
- MCEC paid a variety of consultants, including Jess New, for no clear deliverables or where there was no proof the spending met TANF requirements.
- Zach New took a loan out against his MCEC retirement plan and repaid the loan with TANF money.
- MCEC paid for extensive unallowable advertising, like using TANF money to advertise at the NCAA basketball tournament and a college football bowl game. TANF money was also used to purchase tickets to a college football game.
- MCEC paid excessive rent well above market value to a holding company owned by Zach and Nancy New. Sometimes the rent paid for spaces that were not used for TANF-related purposes.