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DHS embezzlement case may run to $94 million, audit reveals

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Arrested in embezzlement scheme: Top row, left to right - John Davis, Brett DiBiase, Anne McGrew; bottom row - Nancy New, Zach New, Latimer Smith (photos via Hinds County Sheriff)

More than $94 million meant to support Mississippi’s neediest families went instead to buy cars, sponsor sporting events, pay former NFL quarterback Brett Favre $1.1 million for speeches he never gave, and to other questionable activities, a report from State Auditor Shad White revealed Monday.

In February, White arrested John Davis, the former director of the Mississippi Department of Human Services, and five others in a multimillion-dollar embezzlement scheme after an eight-month investigation. The charges allege that Davis and the other individuals indicted stole millions from the state’s Temporary Assistance for Needy Families program, also known as TANF.

White’s audit of the agency show millions of dollars in grants were misspent, converted to personal use, spent on family members and friends of staffers and grantees, or simply wasted.

“This completed audit of DHS for the previous year shows the most egregious misspending my staff have seen in their careers at the Office of the State Auditor,” White said in a statement. “When you read this one-hundred-plus page audit, you will see that, if there was a way to misspend money, it seems DHS leadership or their grantees thought of it and tried it.”

The audit of DHS showed massive sums were funneled to grantees like the Mississippi Community Education Center and the Family Resource Center of North Mississippi, two non-profits. Those grantees were given over $98 million in DHS grants over the last three years, mostly from 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.

The unallowable spending was achieved through a variety of improper activities, such as: DHS Director Davis limiting monitoring of subgrantees; forged documents; subgrantees providing summaries of expenditures that did not match actual expenditures; a limited or nonexistent RFP process for selecting subgrantees; fraudulent accounting entries that misstate actual payees; a failure by DHS staff to report obviously improper transactions to law enforcement; and others.

Auditors have recommended current DHS leadership take steps to remedy these problems.

“DHS staff should immediately move to seize any property that was purchased by grantees with taxpayer money, as that property belongs to the taxpayers,” White said. “That property does not belong to the Auditor’s office, so we cannot do this for them, but it should be marked as DHS property, and DHS should use their legal authority and move quickly to seize it.”

The audit also suggested DHS conduct an internal investigation into current and former DHS staff who may have played a role in the fraud.

“Thank you to our team of professional auditors for their incredible work,” White said. “The doggedness and attention to detail shown by Stephanie Palmertree, Michael Torres, Jason Ashley and their team of CPAs led to this critical report. Their work is the first step to restoring public trust in DHS.”

The Single Audit report is now forwarded to the federal government, who will determine the consequences for DHS. Those consequences could include cuts to future grants from the federal government or penalties.

While this Single Audit report concluded the Auditor’s office’s audit of DHS, the criminal investigation of this matter by the Auditor’s office and federal authorities continues.

“This audit should be a wake-up call to everyone in government,” White said. “The old way of doing things, where you do whatever your boss or a person who controls a lot of money tells you to do, or you ignore the law around how to spend money because you think no one is looking—those days are over.”

Crime

High speed chase ends in fiery crash

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(photo by David Day)

A high-speed chase Saturday evening that began near the Waffle House in Vicksburg has ended in a crash in Claiborne County and a vehicle in flames.

First reports indicate the incident began around 5:10 p.m. as an argument at the Waffle House at 4100 Pemberton Square Blvd. A man and woman left the scene and stopped at a Shell gas station on U.S. Highway 61 South where the man pulled the woman, who is pregnant, out of the vehicle by her hair.

The man, Bojara O’Quinn of Claiborne County, then fled, leading Vicksburg police officer Michael Battle on a high-speed chase south on 61 South. The chase exceeded 110 mph at times.

The chase ended just inside the Claiborne County line on Shiloh Road in a crash where the vehicle, reportedly a rental with Illinois plates, burst into flames. The crash occurred right at 5:30 p.m.

O’Quinn is in custody and received minor injuries in the crash. The woman involved received very minor injuries and is apparently safe.

Deputies with the Claiborne County Sheriff’s Department, and troopers with the Mississippi Highway Patrol assisted in O’Quinn’s capture.

Bojara O’Quinn (photo by David Day)

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Crime

Woman in custody for Friday’s shooting over a parking space

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UPDATE: Akeyah Daniels, 26, of Vicksburg, appeared before Judge Penny Lawson on Saturday in Vicksburg Municipal Court. Lawson set her bond at $50,000 and bound her over to the Warren County grand jury.

Original story:

The woman is in custody in connection with a shooting that occurred Friday, allegedly over a parking space.

The shooting took place around 3:30 p.m. Friday at an apartment building at 2230 Grove St. in Vicksburg.

Akeyah Daniels, 26, turned herself in to Vicksburg police officers at 1:30 p.m. Saturday, Nov. 28. She was arrested at the police station.

Three men were also briefly detained and released in connection with the shooting, according to the Vicksburg police.

Daniels faces one count of drive-by shooting is being held without bond until her initial appearance, which is taking place Saturday.

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Crime

Governor’s sign-language interpreter arrested

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(Photo source: WAPT)

Gregory Goldman, 52, was arrested Sunday in Madison County for aggravated domestic violence, WAPT reports.

Goldman, who frequently provides sign language interpretation for Gov. Tate Reeves during his news conferences, has also signed for Vicksburg Mayor George Flaggs Jr. during major press events.

Goldman is employed by the Mississippi Department of Rehabilitation Services.

There are few details available about the allegations that led to his arrest. Goldman was released on $1,000 bond Monday.

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