Written By: Kali Martin Trichell
As you cross the Mississippi River Bridge and enter the State of Mississippi, you might notice a sign to your right—“You are now entering the State of Mississippi, the Birthplace of America’s Music.” While some native Mississippians may take pride in that characterization, the truth is that Mississippi is best known not for its music, but for its poverty. World Vision defines poverty as “a lack of access to basic needs such as food, clothing, and shelter.” These conditions affect access to medical care, employment, and quality education. According to World Population Review, Mississippi is the poorest state in America with an average poverty rate of 18.8%. When a state has a high rate of poverty, the overall result is that the state also faces a deficit in quality education, health, and life expectancy. Moreover, these factors may lead to several conclusions: “[T]he nation’s poorest states also tend to rank lowest in quality of life metrics and are often ranked the worst states to live in. To improve the outlook for their residents, these states require increased investment in education, measures to fight income inequality, and additional safety nets…”
So, how exactly is Mississippi improving living conditions for its residents? One such way is through the disbursement of funds under the Temporary Assistance for Needy Families (TANF) program. TANF is a federal grant program designed to provide necessary resources and aid to struggling families. The federal government gives the states funds, but the states are in charge of maintaining the TANF program. “These State TANF programs are designed to accomplish several goals, including: 1) to provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; 2) to end the dependency of needy parents on government benefits by promoting job preparation, work, and marriage…” Further, the TANF program gives the states “broad flexibility” in distributing the funds. “The States, not the Federal government, decide on the design of the program, the type and amount of assistance payments, the range of other services to be provided, and the rules for determining who is eligible for benefits”
While it is no secret that Mississippi receives more federal funds than any other state, how its state agencies are using those funds to help impoverished Mississippi residents is the real secret. In 2020, this secret was exposed in the form of criminal indictments after the State Auditor’s Office conducted an annual, routine audit of the year 2019. The 2019 audit of the Mississippi Department of Human Services (MDHS) revealed that federal TANF funds were, to put it lightly, “misspent” to the tune of around $90 million.
In April of 2020, the Mississippi State Auditor, released a whopping 104-page audit report of MDHS and its theft and misallocation of TANF funds. As a result, the following individuals were arrested for participating in the embezzlement scheme: John Davis, former head of MDHS; Brett DiBiase, former professional wrestler and close friend of Davis; Nancy New, owner and director of the Mississippi Community Education Center (MCED) and New Learning, Inc.; New’s son, Zach New, assistant director of MCEC; and Gregory Latimer Smith, former employee of MDHS.
Instead of using these funds to aid families and improve the state, these public-officials-turned-thieves (and soon-to-be jailbirds) used the TANF funds to buy vehicles, fund personal projects, pay Brett Favre (yes, the former NFL football player) millions of dollars for non-existent public appearances, provide friends/family members with “hundreds of thousands of TANF dollars” in salaries, and make other “payments to hundreds of individuals and organizations for purposes not allowed by the federal guidelines…” Former MDHS Director John Davis accomplished this, in part, by forging documents, approving contracts through “a limited or nonexistent process,” and engaging in fraudulent accounting practices. State Auditor Shad White dubbed this scheme “the largest public embezzlement case in state history… [and] [i]f there was a way to misspend money, it seems DHS leadership or their grantees thought of it and tried it.” Even so, this unprecedented case of corruption was all but swallowed up in the wake of the coronavirus pandemic and failed to receive the public scrutiny and outrage it deserved.
Never fear, however, because the State Auditor’s Office continues to conduct investigations and involve the FBI. Most importantly, MDHS itself filed a civil suit against multiple individuals and entities who participated in robbing the state “for their enrichment or for other private purposes incompatible with…the alleviation of poverty.” For example, MDHS is seeking $23.3 million from the former MDHS director, John Davis, and $19.4 million from Nancy New and her nonprofit. The attorney who drafted the civil complaint put it best: “I do not understand these people. What kind of person would decide that money the law required to be spent helping the poorest people in the poorest state would be better doled out by them to their own families, their own pet projects, and their own favorite celebrities?”
While the federal investigations are still underway, Mississippians continue to suffer from this fraudulent scheme. In fact, the massive scale of this embezzlement scheme drew perhaps too much federal attention, and it may result in sanctions placed on Mississippi, including TANF fund cuts. However, Mississippians can hope that the embarrassment from this scheme will ward off other would-be government crooks. In the words of State Auditor Shad White, “This audit should be a wake-up call to everyone in government…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.”