Mississippi agency ex-leader pleads guilty in welfare fraud

By EMILY WAGSTER PETTUS
Associated Press

JACKSON, Miss. (AP) — A former director of Mississippi’s welfare agency pleaded guilty Thursday to federal and state 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.

In federal court, John Davis pleaded guilty to one count of conspiracy and one count of theft from programs receiving federal funds. In state court a short time later, he pleaded guilty to five counts of conspiracy and 13 counts of fraud against the government.

Davis, 54, was an influential figure in a scandal that has snared several people, including pro wrestler Ted DiBiase, known as the “million dollar man,” whose Christian ministry was ordered to repay more than $720,000 in misspent welfare money. The scandal also has raised questions about retired NFL quarterback Brett Favre and former Mississippi Gov. Phil Bryant.

As leader of the Mississippi Department of Human Services, Davis had direct control of federal funds that were channeled to pet projects such as a new volleyball arena at the university where Favre’s daughter played the sport.

In state court Thursday, Judge Adrienne Wooten asked Davis to explain why he had allowed the department to squander money for the needy.

“You were entrusted to do good by those that we consider ‘the least of those,’” Wooten said. “This court is very disappointed.”

The state court charges were mostly tied to welfare money spent on one of Ted DiBiase’s sons, Brett DiBiase, who was also a pro wrestler. The spending included $160,000 for drug rehabilitation in Malibu, California; a $250,000 salary for a job he was not qualified to do; $48,000 for him to teach Department of Human Services employees how to identify possible drug use by people seeking help from the agency; $8,000 for him to stay at an upscale hotel in New Orleans; and more than $1,000 for first-class airfare for Davis to fly to Malibu to see Brett DiBiase.

In response to one of many questions from Wooten, Davis said Brett DiBiase was his friend. Davis also said he used “very, very bad judgment” in spending public money.

“I shouldn’t have done it,” Davis said.

Wooten gave Davis a 90-year sentence with 58 of those suspended and 32 to serve. She put Davis on house arrest until his federal sentencing, set for Feb. 2. He faces up to 15 years on the federal charges.

U.S. District Judge Carlton Reeves he hopes Davis makes better decisions from now on.

“I look forward to hoping that this portion of your life is behind you,” Reeves said.

Davis was indicted on state charges in February 2020. He was re-indicted this spring on state charges that he participated in misusing welfare money; that set of charges was dropped in exchange for Davis agreeing to plead guilty to the new, shorter list. Prosecutors said Davis also agreed to testify against others in the case.

The federal charges were handed down Sept. 15, but remained sealed until Wednesday. Davis waived indictment and agreed to plead guilty.

Davis was executive director of the Mississippi Department of Human Services from February 2016 through July 2019. He was appointed by Bryant, a Republican.

The federal charges say Davis conspired with four other people, who are not named. Court documents describe two of the alleged conspirators as executive directors of organizations, one as the owner of two companies and one only as a resident of Hinds County, Mississippi. The capital city of Jackson is in Hinds County.

The conspiracy charges say one organization paid nearly $498,000 to one of the companies in June 2018. A few days later, that company entered a $1.1 million contract with the other company “purportedly in exchange for creating a program to serve inner-city youth.” The charges also say the same organization paid $700,000 that summer to the company with the youth program contract.

The theft charges say Davis misused federal grants of more than $10,000.

In April, a mother and son who ran a nonprofit organization and an education company pleaded guilty to state charges of misusing welfare money, including on lavish gifts such as the first-class airfare for Davis. Nancy New and Zachary New ran the nonprofit organization that paid the $250,000 to Brett DiBiase and that funneled welfare money for his drug rehab. They agreed to testify against others.

In a state court filing Sept. 12, an attorney for one of the organizations run by Nancy and Zachary New listed text messages between retired Favre and Nancy New, between Favre and Gov. Bryant and between Bryant and New.

The messages showed discussions about millions of dollars in welfare money being directed to a pet project of Favre — a volleyball facility being built at the University of Southern Mississippi. Favre, Bryant and New all attended the university, and Favre’s daughter started playing volleyball there in 2017. Favre and Bryant have not been charged in the welfare misspending case.

Hinds County District Attorney Jody Owens responded to questions Thursday about whether charges could be brought against Bryant or Favre.

“We are looking at all individuals that have been identified” in text messages or in other ways, Owens said.

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The story has been corrected to show that Ted DiBiase’s ministry was ordered to repay more than $720,000 in misspent welfare money and to remove a reference to a criminal charge; that demand was not a criminal charge.