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Former director of MDHS and others arrested in largest public embezzlement case in state history

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Defendants Accused of Obtaining Millions in Funds Intended for the Poor

Special agents from the office of State Auditor Shad White have arrested John Davis, the former director of the Mississippi Department of Human Services, and five others in a multimillion-dollar embezzlement scheme.

Davis was head of the agency from January 2016 through July 2019.

Also arrested were former DHS employee Latimer Smith; Dr. Nancy New, owner and director of the Mississippi Community Education Center and New Learning, Inc.; Zach New, assistant executive director of MCEC; Anne McGrew, accountant for MCEC; and Brett DiBiase. The indictments include a range of violations involving fraud and embezzlement.

After an eight-month investigation, auditors concluded that the accused conspired to illegally obtain millions in public funds from the Temporary Assistance for Needy Families (TANF) program administered by DHS. Defendants used a variety of business entities and schemes to defraud the taxpayers.

“The funds that were illegally obtained in this case were intended to help the poorest among us. The funds were instead taken by a group of influential people for their own benefit, and the scheme is massive. It ends today,” White said in a statement.

Davis and Smith stand accused of fraudulently manufacturing documents to enrich Brett DiBiase using TANF money. Davis and Smith created invoices to pay DiBiase TANF funds for teaching classes about drug abuse, but DiBiase was in a luxury rehabilitation facility for his own drug use in California at the time and did not perform the services. Davis and Smith created documents and arranged payment knowing DiBiase was not performing the work he was hired to perform.

Nancy New and her son, Zach New, stand accused of using the News’ non-profit, MCEC, to pay for DiBiase’s drug treatment using TANF funds. At Davis’ direction, MCEC used TANF money received from DHS to pay for DiBiase’s opioid treatment at the Rise in Malibu facility. The documentation submitted by the News claimed this was to pay DiBiase for conducting training classes that never, in fact, took place.

The News also stand accused of transferring millions in TANF funds to their private businesses. They then converted funds to their personal use and concealed the conversion through various fund transfers, fraudulent documents, at least one forged signature and deceptive accounting measures.

Finally, Davis and the News are accused of creating a fraud scheme to take TANF funds to pay for personal investments in medical device companies (Prevacus, Inc., and PreSolMD, LLC) in Florida.

“I don’t care how politically connected a person may be. You do not have the right to treat taxpayer money as your own or to lie to the taxpayers about what you’re doing with that money. Others doing this kind of thing are on notice: this will not be tolerated now,” White said.

All accused were indicted by a grand jury assembled by Jody Owens, District Attorney of Hinds County. Owens and assistant district attorneys will prosecute the case.

“The Hinds County District Attorney’s Office looks forward to working with the State Auditor Shad White and his dedicated team to end public corruption in Mississippi,” Owens said. “The misuse of government funds designed for families in need will not be tolerated by our office and those who break the law will be prosecuted to the fullest extent possible.”

“We have worked tirelessly in the Auditor’s office to uncover this sprawling conspiracy, so I want to thank the investigators, auditors and analysts who all assisted,” White added.

The total amount of money lost to these schemes has not yet been determined, but the loss already exceeds any embezzlement scheme in the records of the Auditor’s office. Records are kept for all cases from the last 20 years.

Because of the large amount of money involved, and until the full extent of the loss to the taxpayers is determined, this is considered an ongoing investigation by the auditor’s office. There will be no additional comments at this time.

If convicted on all counts, the accused face hundreds of years in prison. Persons arrested by the Mississippi Office of the State Auditor are presumed innocent until proven guilty in a court of law.

Additional suspected fraud involving this case or any other can be reported to the auditor’s office online any time by clicking the red button at http://www.osa.ms.gov or via telephone during normal business hours at 1-800-321-1275.

 

News

Single vehicle crash sends local man to hospital

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Photo by Thomas Parker

A local man was injured after crashing into a pole Sunday morning.

Vicksburg EMS/Fire and Police were dispatched to a single vehicle crash on Mission 66 near its intersection with Military Avenue at around 7:30 Sunday morning.

The vehicle left the roadway striking a utility pole.

The driver was transported by Vicksburg Fire Medic 40 to UMMC for treatment.  His injuries are not believed to be life-threatening.

The investigation into this accident is ongoing.

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Fire

Fire at Cato Fashions Saturday evening

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(photo by Thomas Parker)

Vicksburg firefighters were called to a fire at Cato Fashions, 2184 Iowa Blvd., Saturday around 6:30 p.m. near the Walmart Supercenter.

Firefighter checks the HVAC vents. (photo by Thomas Parker)

First reports say smoke could be seen coming from the vents, and firefighters are checking the HVAC system for problems. The situation seems well under control.

The store has been evacuated as are staff and customers in nearby stores. There are no reports of injuries.

Numerous Vicksburg fire and police units have responded including Engines 7 and 8, Ladder 15, Rescue, Fire Medic 80 and Battalion 1 (Tim Love).

The Vicksburg Daily News will provide updates as we receive them.

See our live, on-the-scene report on our Facebook page.

 

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Education

Mississippi native elected as Harvard student body president

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(photo courtesy Noah Harris)

A Mississippi high school graduate has been elected as Harvard University’s student body president.

Noah Harris, a 2018 graduate of Oak Grove High School in Hattiesburg, Mississippi, is the first African American to serve in the role at prestigious Harvard University in Massachusetts.

“I’m really grateful that the student body is entrusting me with such a historic and unprecedented moment,” Harris told WDAM. “To make the right moves and to really bring their voices to the forefront. I just never expected that I would be in a position to run for this.”

Harris is a junior and a political science major at Harvard. He served as treasurer on the finance committee in his first two years. His vice president and running mate is neuroscience major Jenny Gan. Both plan on making a difference at the university.

Harris and Gan will be sworn in Dec. 6.

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