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State withheld ‘Backchannel’ texts from New defense teams for years, lawsuit alleges

At the time State Auditor Shad White announced arrests in what he called a historic public embezzlement bust, which involved officials funneling welfare funds to a pharmaceutical startup, White had information that Gov. Phil Bryant was a “key team member” in that company, a new lawsuit alleges.

In the four years since, the complaint from a defendant in the case alleges that White and the Mississippi Department of Human Services has “actively concealed Bryant’s role” in the scandal.

Investigators gathered text messages revealing that during Bryant’s last year in office, the governor consulted Jake Vanlandingham, the CEO of the experimental concussion drug firm called Prevacus, and former NFL quarterback Brett Favre while hundreds of thousands of federal welfare funds flowed to their project. Texts show Bryant, who as governor oversaw the welfare agency, then agreed to accept interest in the company after he left his post.

The texts, first publicly surfaced by Mississippi Today’s investigative series “The Backchannel,” would prove to be crucial evidence in both the ongoing criminal and civil investigations.

But officials withheld the relevant texts from Nancy New, who was charged with fraud for funneling the funds to Prevacus, for over two years, a new court filing alleges. New, who claims she was acting on the governor’s direction, didn’t even allegedly have access to the documents when she pleaded guilty to the state charges in April of 2022.

“Most damning perhaps, OSA (Office of the State Auditor) failed to produce Vanlandingham’s phone and text messages to Nancy New and Zach New in criminal discovery,” reads a new third-party complaint against Bryant from New’s son Jess New. “Instead, OSA withheld evidence from the News until long after a plea had been entered in state court.”

In response, a spokesperson for the auditor’s office said it would have been the responsibility of the prosecutor, in this case the Hinds County District Attorney’s Office, which secured the initial indictments, to release discovery materials.

“The Auditor’s Office turned over all evidence to the Hinds County District Attorney’s Office in a timely manner well before any guilty pleas were entered,” the auditor’s spokesperson Fletcher Freeman said in a statement. “This is a desperate attempt to try and discredit not only the State Auditor’s Office but also the Hinds County District Attorney’s Office, which together stopped the largest public fraud scheme in Mississippi history.”

Hinds County District Attorney Jody Owens similarly said in an email that his office has a legal duty to serve all criminal defendants with discovery. “Despite Mr. New’s claims, the Hinds County District Attorney’s Office did not deviate from its discovery obligations in this case, and all material was timely disclosed pursuant to Mississippi law. Any claim to the contrary is simply false,” he wrote on Wednesday.

Jess New, a Jackson attorney and director of the Mississippi Oil and Gas Board, is a defendant in the extensive civil litigation MDHS has filed against 47 people or companies in an attempt to recoup the misspent funds. MDHS’s complaint alleges Jess New received welfare funds as a contractor for his mom’s nonprofit Mississippi Community Education Center and attempted to profit from personal interest in the pharmaceutical project. While his mother and brother Zach New have pleaded guilty to state charges, Jess New has not been charged criminally.

On Wednesday, Jess New requested the judge allow him to file a third-party complaint against Bryant, who is not a defendant of the civil suit. While other defendants have asked that Bryant be added to the suit, this is the first time a defendant has attempted to actually bring a complaint against Bryant.

“MDHS has labeled the use of welfare grants to fund Prevacus as ‘an illegal transaction,’ yet MDHS continues to refuse to include Bryant as a Defendant despite overwhelming evidence of Bryant’s principal role in the ‘illegal’ transaction,” reads Jess News’ complaint, filed by his attorney Allen Smith.

An attorney for Bryant, who has not been charged in the state or federal welfare scandal-related cases, did not respond to Mississippi Today’s request for comment on Wednesday.

A gag order in the case has prevented parties or their counsel from providing any information or clarification to the public. The complaint details Bryant’s entanglement with Prevacus starting with their introduction in late 2018 until the arrests in 2020, using much of the same written communication included in countless news reports and court filings.

What’s unique about Jess New’s filing this week is how it describes the events leading up to the arrests and the flow of information afterwards — raising questions about exactly what law enforcement knew when.

White began quietly investigating the welfare agency in mid-2019 when he learned about suspicious payments by then-MDHS Director John Davis to professional wrestling brothers Brett and Teddy DiBiase.

Investigators eventually unearthed checks from New’s nonprofit to a concussion drug firm called Prevacus and subpoenaed Vanlandingham for documents in late December of 2019.

“On January 23, 2020, Vanlandingham responded by forwarding emails and documents to OSA that expressly mention Bryant and indicate his involvement with Prevacus since 2018,” Jess New’s complaint reads. 

The email was dated Dec. 29, 2018 — just three days after Bryant attended a dinner for Prevacus and four days before Davis and New met with Vanlandingham and Favre “at Bryant’s direction,” the lawsuit alleges, to commit the funding.

“Governor Bryant is very supportive of future relations including drug clinical trials and manufacturing in the State of Mississippi,” Vanlandingham’s email reads. “I would like nothing more than to work with you all and Brett to bring benefit to Southern Miss University as well.”

The lawsuit alleges Vanlandingham attached a document listing “key” Prevacus “team members,” which included Bryant. In another email he produced to the auditor’s investigator, Vanlandingham told his investors that a “great deal of this has been funded with the help of folks in Mississippi including the Governor.”

“Bryant is a necessary party to this lawsuit, but the State of Mississippi, through MDHS and OSA, have actively concealed Bryant’s role. Bryant’s joinder as a Defendant is essential to Jess New’s ability to adequately defend himself,” Jess New’s complaint reads. “MDHS seeks to improperly blame Jess New for grant funds that Bryant directed to Prevacus. Jess New is entitled to show the jury that Bryant directed these grant funds to Prevacus while Governor in order to benefit himself, personally, and his business associates.”

In mid-January of 2020, while Vanlandingham was dealing with the subpoena from the auditor’s office, he was simultaneously making arrangements with Bryant to give him “a company package for all your help.” Bryant had just left office; texts indicate he was waiting until that date to enter into business with Prevacus. Shortly after, Bryant joined a new consulting firm and by Feb. 4, 2020, he was confirming a meeting date and location with Vanlandingham.

The same day, a Hinds County grand jury handed down indictments against the welfare officials. Equipped with at least some documents indicating Prevacus’ connection to welfare funds involved Bryant, White made his arrests the next day.

In response to the arrests, then-U.S. Attorney Mike Hurst’s office issued a release revealing that White had not included the FBI in his investigation, despite the scheme involving federal funds. White, a Republican, had previously worked on Bryant’s gubernatorial campaign and was appointed to his position by Bryant to fill a vacancy. White explained that he went to the Hinds County District Attorney’s Office, run by a Democrat, to avoid the appearance of political influence and for the ability to act quickly compared to the federal authorities.

But the arrests also resulted in another thing: Bryant ending talks with the company at the center of the scandal, texts show.

When news broke of the arrests, Bryant texted Vanlandingham to ask about the charges. The scientist told the former governor he’d been subpoenaed and “just gave them everything.”

“Not good…” Bryant wrote.

Five days later, White visited the local FBI offices to turn over his investigative file. Within hours, he also publicly named Bryant as the whistleblower of the case. To explain, White said that Bryant had relayed the initial intel about suspected fraud — the small tip regarding Davis and the wrestlers — in mid-2019.

The same morning, Bryant texted Vanlandingham, “I was unaware your company had ever received any TANIF funds. If some received anything of benefit personally then Legal issues certainly exists. I can have no further contact with your company. It is unfortunate to find ourselves at this point . I was hoping we could have somehow helped those who suffer from Brain Injuries. This has put that that hope on the sidelines.”

White’s office retrieved this and other texts from Vanlandingham’s phone after executing a search warrant on his Florida home on Feb. 19, 2020.

Defense attorneys for the News wouldn’t see these texts, according to the latest lawsuit, until Mississippi Today published them more than two years later.

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