Defendant alleges former Mississippi governor used federal funds to hurt political rival
Published 9:59 pm Saturday, September 17, 2022
Within Mississippi’s ever-unfolding welfare scandal, government officials didn’t just use federal funds to lavish their friends and family.
They also allegedly leveraged the money to quell their political foes, according to a defendant in the case and another individual connected to a nonprofit within scheme.
Christi Webb, director of the welfare-funded nonprofit Family Resource Center of North Mississippi, supported her friend and then-Attorney General Jim Hood, a Democrat, in his race for governor against then-Lt. Gov. Tate Reeves in 2019.
To the apparent dismay of state Republican leadership, Webb hired the Democrat’s wife, Debbie Hood, in mid-2018 to run the local Chickasaw County office of the statewide anti-poverty program called Families First for Mississippi. The state welfare department was pushing tens of millions of welfare dollars through Webb’s nonprofit – $11.5 million forensic auditors found was misused over a four-year span.
But around April 2019, as the governor’s race began heating up, a local Republican lawmaker allegedly took that dismay a step further and delivered a threat to Webb: Fire Debbie Hood or lose your public funding.
“FRC will never receive another dollar from the state if you don’t fire Debbie Hood,” a north Mississippi Republican lawmaker told Webb, Webb’s attorney Casey Lott alleged.
“He explicitly said, ‘I’m the governor’s messenger,’” Lott added, referencing then-Gov. Phil Bryant.
Mississippi Today spoke with another person connected to the nonprofit who also witnessed and confirmed the lawmaker’s demand but did not wish to be named.
Bryant, who oversaw over the Mississippi Department of Human Services and appointed the welfare agency’s director, has increasingly faced public scrutiny for his role in what has been called the largest embezzlement scheme in state history.
The former governor, who has not been charged with a crime, wielded control over how the welfare agency and its partner nonprofits spent federal welfare funds, Mississippi Today has uncovered in its ongoing investigative series “The Backchannel.” And Bryant even appeared to help NFL legend Brett Favre and a nonprofit official write a grant to skirt around federal regulations, according to text messages first published by Mississippi Today this week.
Bryant’s attorney in the civil case, Ridgeland-based attorney Billy Quin, declined to comment Saturday for this story. Quin is a former special assistant attorney general under Hood, and the attorney publicly supported Hood for governor in 2019, social media posts show.
Jim Hood’s 2019 campaign manager Michael Rejebian confirmed the account on Saturday. He said that after Debbie Hood learned of the threat, the campaign began trying to run down what happened and, “we came to the conclusion that Tate (Reeves) had his fingers in it.”
“It didn’t surprise us because that’s his M.O.,” Rejebian said.
Ultimately, the Hood camp did not make Debbie Hood’s treatment an issue in the race because “she did not want this to be a distraction to the campaign and what her husband needed to do,” Rejebian said.
Rejebian called Debbie Hood a conscientious person who took the job at the Family Resource Center to help people, and that she wouldn’t have known about the funding structures.
But the questions about what happened to Debbie Hood, Rejebian said, prompted murmurs about what was really occurring at Families First, which would less than a year later be exposed for being the vehicle of millions of dollars worth of theft.
Shortly before the alleged threat to the nonprofit leader, Bryant had met with the local lawmaker, Sen. Chad McMahan, a Republican from Guntown.
McMahan also had direct contact with former welfare agency director John Davis about the agency’s spending decisions, text messages obtained by Mississippi Today show, and he took a special interest in helping secure funding for the Autism Center of North Mississippi — a payment auditors later found improper. When reached for comment for this story, McMahan denied ever threatening Webb’s funding.
“I never said that. I don’t remember ever saying. I don’t even remember a conversation like that at all,” McMahan told Mississippi Today. “… I’m troubled that that’s been said, when I was working on behalf of the autism center to get them their funding restored, and Families First, too. I would have liked to have seen Families First get their grant back. But I’m really troubled by it.”
The Mississippi Department of Human Services is suing Webb for misusing nearly $4 million from the federal program called Temporary Assistance for Needy Families, or TANF, a block grant that officials targeted for widespread misuse during the Bryant administration. The civil lawsuit attempts to recoup back roughly $24 million from 38 individuals or companies. While Webb faces civil charges, she has not been accused of a crime. Because of the ongoing criminal investigation, Webb spoke to Mississippi Today entirely through her attorney for this story.
Davis is facing several criminal charges, including bribery and fraud, related to welfare spending. His attorney did not return calls to Mississippi Today for this story. Mississippi Today could not confirm what BC in his text stands for, but two sources believed it could be a typo.
Bryant, who is not included in the civil lawsuit, has so far escaped any charges – civil or criminal.
The state’s civil lawsuit as well as parallel state and federal criminal investigations, both of which could eventually ensnare new figures, are ongoing.
Hood was a viable Democratic candidate — a rarity in Mississippi — in the 2019 race against then-Lt. Gov. Reeves. Reeves, now governor, also communicated with Davis about Webb, according to text messages Mississippi Today obtained, and seemed to support Davis’ treatment of Webb.
“Tate Reeves just called me said he wanted me to know they don’t give two shits about the BC or Christi to keep doing what I’m doing. Boom,” Davis texted Ted “Teddy” DiBiase Jr., his close associate, in March of 2019. Phone records show Davis also saved Reeves number two days after this text.
Around this time, Reeves also met with Davis about MDHS partnering with Reeves’ fitness trainer Paul Lacoste – another target of the civil suit. Two days after the meeting, Davis asked his deputy to find $2.5 million for the nonprofit funding the Lacoste project, calling it “the Lt. Gov’s fitness issue,” Mississippi Today first reported.
Lacoste cut an ad endorsing Reeves for governor later in the year.
“It is totally accurate to say that Tate Reeves ‘does not give two s**** about’ the players in this conspiracy and that is why his administration is suing to recover misspent TANF dollars from before his time as Governor,” said Reeves’ deputy chief of staff in external affairs Cory Custer in a statement to Mississippi Today on Saturday. “Interesting revelations in this story: Jim Hood’s wife was working at one of the entities that received misspent TANF dollars? The same AG that signed off on contracts in question? The same Democrat that Mississippi Today has completely ignored in your reporting of this scandal?”
Mississippi Today has reported on at least four occasions that the lease agreement allowing for $5 million in welfare funds to be used on the construction of a volleyball stadium at University of Southern Mississippi — a purchase Reeves’ staff has thus far chosen not to pursue in the state’s civil suit — was approved by the Attorney General’s Office, as is routine for such agreements.
“The Governor has no memory of ever calling John Davis and doesn’t really know Christi Webb. (Evidently—like the team at Mississippi Today—she was a big Hood supporter.),” Custer continued. “But people have been throwing around Tate Reeves’ name in claiming authority for years, and it certainly looks like Davis was one of the people who often did so.”
Davis had also reprimanded Webb, Lott said, after the nonprofit director refused to continue pushing money to DiBiase, a retired WWE wrestler, and his family members. Davis was intent on showering the DiBiases, to whom he’d grown close personally, with welfare funds. Speaking through Lott, Webb told Mississippi Today that the DiBiases did not supply the nonprofit with proof of what they were accomplishing under their grants, which totaled over $5 million from the nonprofits at MDHS, and Webb had objected to funding them further.
In September of 2018, on the same day Mississippi Today sent several emails to the agency questioning its TANF spending, Davis held a meeting with several agency and nonprofit employees, Lott said. Davis told the group that the nonprofits should not share any documentation about monitoring or auditing its subgrantees to MDHS, Lott said.
“He explained that he was in charge of the money, and he could do whatever he wanted to do with it,” Lott explained. “He said he only answered to the Governor.”
A year earlier, the state contracted with Webb’s nonprofit, Family Resource Center of North Mississippi, to administer the multi-million dollar Families First program in the northern part of the state, and Mississippi Community Education Center, the nonprofit founded by Nancy New, one of the key figures in the scandal, to run the southern half. Reeves filmed a campaign ad at New’s private school in Jackson New Summit School in 2019.
New also recently alleged in the civil lawsuit that then-Gov. Bryant directed her to make $1.1 million in payments to former NFL quarterback Brett Favre in 2017 and 2018, supposedly to promote the Families First program.
“So many high-ranking officials were actively involved in this program and knew exactly what he (Davis) was doing with the money,” Lott said. “And he (Davis) openly says he answers to no one except the governor. Well, that means you’re talking to the governor about it … I think he (Bryant) was actively involved in it.”
In early 2019, Davis notified organizations who received grants from the agency that due to “budget concerns,” their funding would be cut significantly. Webb’s initial $10.6 million award would be reduced to $5 million. Family Resource Center had received $16.8 million the previous fiscal year, according to a Mississippi Today review of state expenditures.
While Webb pushed out much of her funding to secondary partners, the organization itself did provide some services to needy families, such as parenting classes, which parents are sometimes court-ordered to attend in order to get their children back from state custody.
After receiving notification of the funding cut, Webb announced that her organization would have to lay off 100 employees and close more than half of its 18 centers.
“You just don’t realize how much good work they were doing,” McMahan told Mississippi Today Saturday. “They were providing most of the social services to the courts, to the local court system. They were providing GED education. They were funding the autism center. They were supporting a lot of other charities through their subgrants.”
In February of 2019, Davis’ deputy Jacob Black said that because of the cuts to welfare subgrantees, he was able to find an additional $2.5 million for New’s nonprofit, in part to pay for what Davis called “the Lt. Gov’s fitness issue” – $1.3 million in funding to Reeves’ fitness trainer Paul Lacoste.
Shortly after that, according to Davis, Reeves made the remark that he “don’t give two shits” about Webb.
When Mississippi Today asked Lott about the comment, Webb responded through Lott, “That does not surprise me in the least.”
“I knew they didn’t care about me. I knew I was at their mercy,” Webb said, according to Lott.
In March of 2019, after Webb had complained about her nonprofit’s funding cuts to local officials, including McMahan, the lawmaker met with Davis to discuss funding to Webb and the autism center — payments auditors would later say violated federal rules.
“I asked John Davis to meet with me on several occasions. And he wouldn’t. And finally, I said, ‘I’m coming to Jackson to meet with you.’ And he said, ‘Well, I’ll only meet with you–’ he said, ‘That’s fine, we’ll just meet at the governor’s mansion.’”
McMahan said Bryant agreed with the mission of the autism center and told Davis to “help Sen. McMahan if you can, but follow the law,” McMahan said.
After the meeting, McMahan texted Davis, “Thank you for all of the information. I’m so glad we took time to meet yesterday. That was very helpful. Also, I appreciated the governor’s positions.”
“Yes sir,” Davis responded. “We will continue to make good things happen. I am determine how we can bear help those who lost a job as well. So, if any of those 60 call you, please tell them to reach out to me as well.”
Soon after the meeting, Lott said, the lawmaker demanded Webb fire Debbie Hood or lose her center’s funding.
“You can’t tell me he didn’t get those instructions at that meeting,” Lott said.
McMahan denied discussing anything about Debbie Hood with Bryant.
Following the alleged threat, Webb relayed the news to Debbie Hood, who after an emotional meeting agreed to voluntarily resign, Lott said. Jim Hood did not return calls to Mississippi Today.
Within weeks of Debbie Hood’s resignation, MDHS sent Webb an email on May 24, 2019 notifying her that Family Resource Center’s grant award would be increased by $1 million, according to an email obtained by Mississippi Today.
The state’s database of public expenditures reflects payments to FRC of $1.3 million in February of 2019 and $500,000 in June of 2019, as well as many other smaller payments. MDHS didn’t always send Webb’s nonprofit their funds directly, but New’s nonprofit sent Family Resource Center $500,000 on April 18, 2019, according to a ledger from the New nonprofit. Despite the proposed cuts and threats, FRC still received a total of $10.1 million in fiscal year 2019, expenditure reports show. MDHS also notified the nonprofit in December of 2019 that it had won an additional welfare grant for the following year, but the department never moved forward with the contract after arrests in February of 2020.
As many governors do, Bryant kept a reasonable distance, at least in public view, to the decisions of his agency directors.
“He (Bryant) has done a good job of semi-insulating himself so he can plead ignorance but like you say, it’s very disingenuous for a (former) state auditor to say he didn’t know where the money was coming from. Especially in a state as poor as Mississippi, it’s clear all that money was not coming from state coffers,” Lott said. “As far as him (Bryant) directing the way the funds were to be spent, I’m gonna say no doubt he did that, but I think he gave John Davis that direction. And then John Davis sent it downhill from there. And so Christi wasn’t directly privy to that.”
New and Webb mostly took their direction from Davis, meaning he may potentially have the most direct testimony about Bryant’s role in the misspending scheme. New has pleaded guilty to a favorable deal that could keep her out of state prison, and allow her to serve any time in the welfare case concurrently to her sentence in a separate federal case related to defrauding the Mississippi Department of Education, in exchange for her cooperation with prosecutors.
Davis is still pleading not guilty, and must decide to either cut a deal in coming months or go to trial, currently scheduled to begin on Nov. 28.
By Anna Wolfe, Mississippi Today.