(MS OFFICE OF STATE AUDITOR NEWS RELEASE) – Special agents fromthe office of State Auditor Shad White have arrested John Davis, the formerDirector of the Mississippi Department of Human Services (DHS); former DHSemployee Latimer Smith; Dr. Nancy New, owner and Director of the MississippiCommunity Education Center (MCEC) and New Learning, Inc.; Zach New, AssistantExecutive Director of MCEC; Anne McGrew, accountant for MCEC; and Brett DiBiasein connection with a multimillion-dollar embezzlement scheme. The indictmentsinclude a range of violations involving fraud and embezzlement.
Auditors concluded, after an eight-month investigation, that theaccused conspired to illegally obtain millions in public funds from theTemporary Assistance for Needy Families (TANF) program administered by DHS.Defendants used a variety of business entities and schemes to defraud thetaxpayers.
“The funds that were illegally obtained in this case were intendedto help the poorest among us. The funds were instead taken by a group ofinfluential people for their own benefit, and the scheme is massive. It endstoday,” said Auditor White.
Davis and Smith stand accused of fraudulently manufacturingdocuments to enrich Brett DiBiase using TANF money. Davis and Smith createdinvoices to pay DiBiase TANF funds for teaching classes about drug abuse, butDiBiase was in a luxury rehabilitation facility for his own drug use inCalifornia at the time and did not perform the services. Davis and Smithcreated documents and arranged payment knowing DiBiase was not performing thework 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. AtDavis’ direction, MCEC used TANF money received from DHS to pay for DiBiase’sopioid treatment at the Rise in Malibu facility. The documentation submitted bythe News claimed this was to pay DiBiase for conducting training classes thatnever, in fact, took place.
The News also stand accused of transferring millions in TANF fundsto their private businesses. They then converted funds to their personal useand concealed the conversion through various fund transfers, fraudulentdocuments, at least one forged signature, and deceptive accounting measures.
Finally, Davis and the News are accused of creating a fraud schemeto 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 donot have the right to treat taxpayer money as your own or to lie to thetaxpayers about what you’re doing with that money. Others doing this kind ofthing 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 assistantdistrict attorneys will prosecute the case.
“The Hinds County District Attorney’s Office looks forward toworking with the State Auditor Shad White and his dedicated team to end publiccorruption in Mississippi,” said Owens. “The misuse of government fundsdesigned for families in need will not be tolerated by our office and those whobreak the law will be prosecuted to the fullest extent possible.”
“We have worked tirelessly in the Auditor’s office to uncover thissprawling conspiracy, so I want to thank the investigators, auditors, andanalysts who all assisted,” added White.
The total amount of money lost to these schemes has not yet beendetermined, but the loss already exceeds any embezzlement scheme in the recordsof the Auditor’s office. Records are kept for all cases from the last twentyyears.
Because of the large amount of money involved, and until the fullextent of the loss to the taxpayers is determined, this is considered anongoing investigation by the Auditor’s office. There will be no additionalcomments at this time.
If convicted on all counts, the accused face hundreds of years inprison. Persons arrested by the Mississippi Office of the State Auditor arepresumed innocent until proven guilty in a court of law.
Additional suspected fraud involving this case or any other can bereported to the Auditor’s office online any time by clicking the red button at www.osa.ms.gov or via telephone during normalbusiness hours at 1-(800)-321-1275.