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‘Whipping child’: Nancy New asked highest officials for help before arrests in welfare scandal

In the days and weeks leading up to their arrests in early 2020, Nancy New and her son Zach New sought help from Mississippi’s highest officials to stop what they described as their persecution.

Private text messages obtained by Mississippi Today show the News reacting with a combination of hubris, a sense of betrayal and even confusion over their plight. 

Credit: Graphic by Bethany Atkinson

The News had been in charge of spending tens of millions of federal welfare dollars in Mississippi, but the state didn’t hire their nonprofit to provide tangible resources to the poor. Instead, it was to run a private referral center, while the state would use the nonprofit as its piggy bank for projects it couldn’t find funding for elsewhere. 

In many cases, these programs occurred out in the open. The welfare agency’s partnership with a Christian ministry run by WWE wrestlers was written into plans shared with the federal government. A $5 million lease agreement that paid for construction of a new volleyball stadium under the guise that people in poverty would attend courses at the facility was included in board meeting minutes and approved by the Institutes of Higher Learning and the attorney general’s office. And Nancy New’s financing of a private pharmaceutical firm was explained in text messages that retired NFL quarterback Brett Favre sent to the state’s highest official, then-Gov. Phil Bryant.

That could help explain why the News seemed surprised to find themselves the subject of a probe that officials eventually called the largest public embezzlement bust in state history. In Nancy New’s many roles, she was often carrying out the vision of Gov. Bryant and his wife, Deborah Bryant. 

In her panic to shut down the investigation, Nancy New secured a meeting with then-U.S. Attorney Mike Hurst, according to the text messages and a source with knowledge of the meeting. She seemed to hope that the federal prosecutor could provide her information about the probe. 

“It has passed [sic] time to turn the other cheek,” Nancy New wrote to her two sons the evening of Jan. 25, 2020. “First, though, we have [to] make it through this and get this stopped, get cleared of their harassment, etc. then we will go after them all. It will obviously take a lot of money and time but we may need to go on and file once we find out what Mike Hurst says.”

These never-before-published text messages shed light on the incredulous attitudes of the defendants and their last attempts to save themselves before the scandal broke. After Mississippi Today’s “The Backchannel” series published in April, the News pleaded guilty to several counts including bribery, fraud, wire fraud and racketeering under a favorable plea deal that allows them to avoid any time in state prison as long as they cooperate with the ongoing investigation.

Still, the pleas were a massive fall for a family that had been so politically connected. 

Nancy New was such a close friend to Deborah Bryant that on the same day she plotted with her sons to “go after” her detractors, she lent some of her clothes to the First Lady to try on. Nancy New arranged delivery of the items to the house of the governor’s daughter, Katie Bryant Snell, in text messages with her son Zach New days before their arrests. In explaining the messages, Bryant’s public relations consultant told Mississippi Today that Deborah Bryant had told Nancy New she was getting ready for a trip and had nothing to wear. Close enough to share clothes, its unclear what the Bryant family may have discussed with the News about the ongoing investigation. Zach New and Bryant’s son-in-law Stephen Snell were also included in a friendly group message where the men mostly discussed sports.

Credit: Graphic by Bethany Atkinson

At that time, the News were aware they were being investigated. They knew their nonprofit’s finances were in disarray. But they didn’t know they were about to be accused of embezzling more than $4 million in federal welfare dollars to use for their private school company and to make investments in Favre’s pharmaceutical venture called Prevacus.

Then-U.S. Attorney Hurst didn’t know it either, because even though the scandal involved federal funds and eventual charges of racketeering – which usually signals the kind of organized crime that the FBI investigates – the Office of the State Auditor made the initial arrests before involving the federal authorities. The auditor’s office carried out the preceding eight-month investigation on its own and turned to a local district attorney to indict.

The auditor who initially investigated the welfare case, Shad White, is a Bryant appointee and former campaign manager with higher political aspirations.

While the auditor was closing in on the News, Bryant was preparing to accept shares in Prevacus, according to text messages Mississippi Today first reported, the company to which Nancy New had illegally funneled welfare funds.

Hours after leaving office in mid-January 2020, Bryant promised to “get on it hard” in making connections for Prevacus. Within weeks, Bryant officially joined the consulting firm his daughter and former chief of staff Joey Songy recently formed.

Right up until the arrests, Bryant was consulting Prevacus and helping it secure an important investor who was one of the new firm’s clients.

The texts also show Favre had told Bryant that Prevacus was working with welfare officials and receiving funds from Mississippi. Bryant backed out of the deal after the New arrests.  

Prosecutors say the investigation is ongoing, but three years after it began, they have yet to publicly scrutinize the former governor’s deal with Prevacus. 

Though dozens of people received money they shouldn’t have, and dozens more played some role in funneling the money away from the poor, the auditor’s office and Hinds County District Attorney’s Office selected six people to charge criminally. Neither state nor federal authorities have arrested anyone else related to the scheme.

“Doug, Families First and we, are truly being railroaded,” Nancy New sent in a message in late January to Doug Davis, U.S. Senator Cindy Hyde-Smith’s chief of staff.

Credit: Graphic by Bethany Atkinson

In 2016, Mississippi Department of Human Services selected Nancy New’s nonprofit, Mississippi Community Education Center, and another nonprofit called Family Resource Center of North Mississippi to head up the rapid expansion of an anti-poverty program called Families First for Mississippi. With that came a cash flow of tens of millions of dollars in grant funds that they would use to carry out official state plans under then-welfare director John Davis, appointed by Phil Bryant. 

This included funding religious initiatives and rallies featuring famous athletes who were earning millions of dollars from the welfare department. Despite being included in official state plans shared with the federal government, these programs are now considered central to the biggest welfare spending scandal in state history. The money came from a ‘90s-era federal welfare program with lax oversight and a reputation for being a slush fund. Soon, the spending spun out of control.

In mid-2019, John Davis’ deputy Jacob Black and other employees gathered information about how John Davis was paying retired WWE wrestler Brett DiBiase for work he didn’t conduct and possibly double dipping the welfare department for a program run by Teddy DiBiase Jr. 

Black himself was instrumental in creating many of the questionable grants and the auditor recently served him a civil demand to repay the state $3 million. But Black was also the original source of the tip that Shad White has credited with toppling the scheme. Black took the tip to Bryant, who took the information to Shad White, according to MDHS officials, Bryant staffers and other sources. 

Shad White has maintained that Bryant was the whistleblower of the scandal, crediting the former governor for toppling the scheme.

Within a few months, the auditor’s examination of John Davis’ welfare spending led them to the New nonprofit. The auditor raided Mississippi Community Education Center’s offices in October 2019 and the Mississippi Department of Human Services restricted funding to the nonprofit, jeopardizing vendors who were relying on their reimbursement.

“Our lives and office have been turned upside down for over 3 months now and we deserve answers,” Nancy New’s other son, Jess New, local attorney and director of the Mississippi Oil and Gas Board, said in a text.

While he was never included in criminal charges, Jess New had his hand in business operations at the nonprofit and other MDHS offshoots John Davis was attempting to create, according to a recently filed lawsuit. The civil lawsuit, filed by MDHS, seeks $2.6 million in damages from Jess New, which is included as part of the $19.4 million the suit is asking from his mother. 

In early January 2020, the owner of Prevacus received a subpoena from the auditor’s office for documents related to the stock he offered the News in exchange for their grant funding, according to text messages and documents Mississippi Today obtained. On Jan. 15, 2020, Gov. Tate Reeves took office. 

In the next few weeks, the News scrambled to get information about the investigation and why they weren’t receiving payment from MDHS. They thought Phil Bryant and his newly appointed welfare director, Christopher Freeze, made the call to freeze their nonprofit’s funding before he left office. 

“PB and CF made the decision to freeze the money. Definitely looks like the organization and lord knows who else will be charged for something…..no idea what,” Jess New wrote on Jan. 25, 2020.

“Geez all the hard work just to be thrown under the bus,” Zach New responded.

Jess New told his brother that Christie Webb, the operator of the Family Resource Center, the other nonprofit that was spending welfare money wildly, had reached out to ask Congressman Trent Kelly to release their funding from MDHS.

Kelly’s representative Susan Parker told Mississippi Today in a statement that his office has “no knowledge of what happened between the Mississippi Department of Human Services and the Family Resource Center beyond published reports.”

“After discovering there was an ongoing investigation into the Family Resource center, our office refrained from getting involved in this issue,” she wrote.

The north Mississippi nonprofit has since lost its MDHS funding altogether.

The News had also reached out to Brad White, who was heading up Reeves’ transition as his chief of staff. Zach asked his brother, “BW against us?”

“No he’s just in the middle,” Jess New responded. “They know it’s a f’ed up situation and PB’s the issue.”

Brad White told Mississippi Today that, to the best of his recollection, two groups reached out to the Reeves transition team, including people on behalf of judges who were using some of the funds to help children in the court system. The two nonprofits who ran Families First, Nancy New and Webb’s nonprofits, had been at odds with each other in the last year. The two nonprofits were also responsible for the programmatic side of a judicial initiative called Family First, which aimed to revamp the state’s foster care system by providing more preventative services. The initiative, headed up by Deborah Bryant, crumbled during the investigation.

“I know enough about things from my time at the auditor’s office that you don’t get involved in anything remotely involved with an investigation,” Brad White said. “I think it was like, ‘I wish you the best, and there’s nothing I can do.’”

Brad White said both the New contingent and the judges wanted help in unfreezing their funds, but that he told them the transition team could not help with that and that the new administration would follow any recommendations or guidance from the state auditor’s office on the case.

The News were left speculating what exactly they were in trouble for, who was against them and why their funding was cut off.

“Because we’re being investigated is why. We need someone to investigate the investigators and this BS investigation,” Jess New texted his mother on Jan. 26, 2020. “It’s a witch hunt and blatant harassment.”

In the following days, Nancy New took her associate David Kelly, a consultant for Oxford-based low-income real estate developer Chartre Consulting, to meet with Hurst. 

New’s organization had promised to provide classes and resource referrals to the residents of Chartre’s properties. The partnership allowed New’s nonprofit to increase the headcount of people served through Families First, but the program struggled to persuade residents to truly participate, Chartre Consulting owner Clarence Chapman told Mississippi Today. The services amounted to Families First hosting events where they gave away free hot dogs.

“It didn’t penetrate as much as we would have liked, but that’s just the nature of our residents and that income level. But they (Nancy New’s nonprofit) worked hard to get participation and I wish they’d still have this underway where it could benefit our residents,” Chapman said.

He sees the News as victims of Bryant and Davis’ vague plan to turn the state’s welfare system into a resource referral network instead of providing direct aid.

“It’s a shame the way the regulations are written to let the governor use the money like that and then poor Nancy, who was a very respectable person, has been abused by the system,” he continued. “She got way over her head and didn’t realize what she was dealing with and is the whipping child for a bunch of different reasons here and it’s destroyed her health and her finances. And it’s sad, because she’s a good person … She appears to be used as a conduit to spread money and do what others wanted done with it who had the authority to do that.”

Someone with knowledge of the meeting said that Hurst, two assistant U.S. attorneys and an FBI agent met with Nancy New and David Kelly, and New’s attorney attended by phone. David Kelly initially agreed to an interview with Mississippi Today and then stopped responding to calls and messages.

If Nancy New chose to meet with Hurst in an attempt to avoid prosecution, it didn’t work. Instead, it tipped off federal authorities to White’s investigation and caused them to reach out to the auditor for more information. 

Then, Jess New got some new information.

“Don’t think PB suspended our funds….I’ll explain later,” he texted on Feb. 3, 2020, the day before a Hinds County grand jury handed down the indictments, referring to Phil Bryant. “Still may not hurt to reach out to him for any help.”

Credit: Graphic by Bethany Atkinson

The post ‘Whipping child’: Nancy New asked highest officials for help before arrests in welfare scandal appeared first on Mississippi Today.

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