Mother, son admit guilt in Mississippi welfare abuse scheme

Published 10:00 pm Tuesday, April 26, 2022

A mother and son who ran a nonprofit group and an education company in Mississippi pleaded guilty Tuesday to state charges of misusing public money that was intended to help some of the poorest people in the nation.

Nancy New and Zachary New acknowledged spending welfare grant money on lavish gifts that included first-class airfare for John Davis, executive director of the state Department of Human Services from 2016 to 2019.

Nancy New, 69, and Zachary New, 39, agreed to testify against others in what the state auditor has called Mississippi’s largest public corruption case in the past two decades. Davis is among those facing state charges.

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Federal and state prosecutors said after Tuesday’s court session that they have not ruled out bringing charges against other people, but two state judges have issued orders prohibiting those involved in the cases from discussing them publicly.

“We will not tolerate the powerful preying on the weak,” Hinds County District Attorney Jody Owens said.

Auditor Shad White said his office continues to work with federal and state prosecutors.

“We will provide anything that they need, we will get anything that they need as they make decisions about how this case goes forward,” White said.

During court, Circuit Judge Faye Peterson asked Zachary New and Nancy New, individually, if they understood each charge. They each answered repeatedly: “Yes, ma’am.”

The mother and son ran the nonprofit Mississippi Community Education Center, which received millions of dollars from Temporary Assistance to Needy Families and was supposed to spend it to help poor people. Nancy New was president and Zachary New was vice president of operations for New Learning Resources Inc., which ran three private schools that offered services for children with autism or dyslexia.

In early 2020, Davis, Nancy New, Zachary New and three other people were charged in state court, with prosecutors saying welfare money had been misspent on items such as drug rehabilitation in Malibu, California, for former pro wrestler Brett DiBiase.

New indictments recently filed against Davis say he hired DiBiase for a Department of Human Services job knowing that DiBiase didn’t meet the requirement of having a college degree; and that the department paid DiBiase $48,000 for work he did not do. Davis has pleaded not guilty to all charges.

The state guilty pleas by Nancy New and Zachary New came days after they pleaded guilty in federal court on charges connected to misspending of education money. Nancy New pleaded guilty to federal wire fraud, which carries up to a 10-year sentence and a $250,000 fine. Zachary New pleaded guilty to federal conspiracy, which carries up to five years and a $250,00 fine.

Peterson said she will defer their state sentencing until after the Nov. 9 federal sentencing. The mother and son, who both live in the Jackson suburb of Ridgeland, remain free on bond.

On the state charges, Nancy New faces up to 100 years in prison after pleading guilty to four counts of bribery, two counts of fraud against the government, six counts of wire fraud and one count of racketeering.

Zachary New faces up to 75 years after pleading guilty to four counts of bribery, two counts of fraud against the government and five counts of mail fraud.

Prosecutors could recommend shorter sentences, and Owens said he is recommending that all time be served in federal prison.

Davis was a longtime Department of Human Services employee who was chosen to lead the agency in 2016 by the Republican governor at the time, Phil Bryant.

The state auditor has demanded repayment of $77 million of misspent welfare funds, including $1.1 million paid to retired NFL quarterback Brett Favre, who lives in Mississippi. Favre has not been charged with any criminal wrongdoing.

White said Favre was paid for speeches but did not show up. Favre has repaid the money, but White said in October that Favre still owed $228,000 in interest. In a Facebook post when he repaid the first $500,000, Favre said he didn’t know the money he received came from welfare funds. He also said his charity had provided millions of dollars to poor children in Mississippi and Wisconsin.

As part of the guilty pleas Tuesday, Nancy New and Zachary New acknowledged taking part in spending $4 million of welfare money for a volleyball center at the University of Southern Mississippi. Favre supported construction of that facility. The mother and son also acknowledged they directed welfare money to Prevacus Inc., Florida-based company that was trying to develop a concussion drug. Favre has said in interviews that he supported Prevacus.