Auditor Arrests Former Director of DHS and Co-Conspirators in Largest Public Embezzlement Case in State History

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Defendants Accused of Obtaining Millions in Funds Intended for Poor

JACKSON, Miss. – Special agents
from the office of State Auditor Shad White have arrested John Davis, the
former Director of the Mississippi Department of Human Services (DHS); former DHS
employee Latimer Smith; Dr. Nancy New, owner and Director of the Mississippi
Community Education Center (MCEC) and New Learning, Inc.; Zach New, Assistant
Executive Director of MCEC; Anne McGrew, accountant for MCEC; and Brett DiBiase
in connection with a multimillion-dollar embezzlement scheme. The indictments
include a range of violations involving fraud and embezzlement.

Auditors
concluded, after an eight-month investigation, 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,” said Auditor
White.

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,” said White.

All
accused were indicted by a grand jury assembled by Jody Owens, District
Attorney of Hinds County. District Attorney 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,” said Owens. “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,” added White.

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 twenty 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 www.osa.ms.gov
or via telephone during normal business hours at 1-(800)-321-1275.

The post Auditor Arrests Former Director of DHS and Co-Conspirators in Largest Public Embezzlement Case in State History appeared first on Mississippi Office of the State Auditor News .

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