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The following announcement was issued by The Mississippi Department of Human Services:
The Mississippi Department of Human Services (MDHS) today filed a civil complaint against 38 parties alleged to have been responsible for or to have been recipients of misspent TANF funds identified in the forensic audit conducted by MDHS.
“Governor Tate Reeves tasked me with correcting the path of MDHS,” said Bob Anderson, Executive Director of MDHS.
“As part of that process, MDHS has been working hard to restore trust and put in place numerous internal controls to ensure that misspending is not repeated in the future,” Anderson stated. “The rest of the task involves recovering and returning to the taxpayers the millions of dollars in misspent funds which were intended to benefit Mississippi’s needy families. We begin that task today with the filing of this civil complaint.”
Lastly, Anderson emphasized that, “This is our initial complaint, as in any civil lawsuit, as discovery proceeds, we anticipate that additional parties and additional claims may be added or changed as the matter moves forward.”
MDHS has posted the findings of the independent forensic audit and steps taken to correct the issues on the agency website. To view the independent audit, please visit: https://www.mdhs.ms.gov/forensicaudit
Suspected fraud can be reported MDHS online any time submitting the MDHS Fraud Tip Form at https://www.mdhs.ms.gov/report-fraud/, calling the Fraud Tip Line during normal business hours at 1-(800)-299-6905, or email at fraud@mdhs.ms.gov.
As this is an active litigation, MDHS will not comment further on this case.
***
WWE Hall of Famer Ted DiBiase Sr, former WWE star Ted DiBiase Jr. and former WWE developmental talent Brett DiBiase are among the defendants in the lawsuit.
Brett DiBiase admitted in December 2020 in court that he was guilty of making fraudulent statements for the purposes of defrauding the government. Back in May 2020, findings were released from an audit into the Mississippi Department of Human Services after arrests were made this past February in one of the largest embezzlement scandals ever in the history of that office, a scandal that saw direct connections the DiBiase wrestling family.
Brett DiBiase was among those criminally indicted as part of the scandal, which saw the former director of the state welfare agency and five others charged in one of the biggest embezzlement scandals in the history of the office. As PWInsider.com reported at the time, it was alleged that Brett was given funds to go to a drug treatment facility in Malibu. Those funds were earmarked for Mississippi's welfare programs. DiBiase admitted that was true in court. He agreed to pay $48,000 in restitution with his sentencing deferred.
The Associated Press later ran a follow-up story on the DiBiase family connection based on a revelation that WWE Hall of Famer Ted DiBiase Sr.'s non-profit religious organization, Heart of David Ministries, had reportedly received more than $2.1 million in welfare from the state of Mississippi after his son Brett began working for the State. The organization had received just $5,000 in grants in 2013, but pulled in $271,000 in welfare money, the same year Brett was hired as a senior official at the Mississippi Department of Human Services. DiBiase’s group received as much as $900,000 one year. According to the article, Heart of David Ministries spent all $2,126,739 it had received.
DiBiase Sr. was paid $84,517 as president of the organization. Heart of David Ministries pledged in a 2018 contract to “establish a network of partnerships, services and resources throughout Mississippi communities for faith-based and self activities" but there is no word on how the money was actually used. At the same time it was receiving money from the State of Mississippi, 98% of welfare requests were being turned down by the State. The Ministry was no longer receiving any aid from the State, according to the AP. According to the AP article at the time, a woman who answered the door at the home of Ted DiBiase Sr. in Clinton, MS called the Clarion Ledger (the newspaper which initially broke the news) past reporting “fictitious” but declined to comment.
The Mississippi Community Education Center also paid Brett DiBiase’s brother, former WWE star Ted DiBiase Jr., to provide training to human services employees in late 2018 and early 2019. In August 2020, the United States Federal Government sought to seize DiBiase's $1.5 million Madison, MS home. While DiBiase Jr. was not accused of a crime, federal agents did step in to prevent him from selling his home a week before that sale was to be completed.
The May 2020 findings from the investigation reads as follows:
May 4, 2020
Auditor’s Office Questions Over $90 Million in Spending of Welfare Grants and Other Funds
JACKSON – Millions of dollars of grants from the Mississippi Department of Human Services (DHS) were misspent, converted to personal use, spent on family members and friends of staffers and grantees, or wasted according to an audit released today by State Auditor Shad White.
“This completed audit of DHS for the previous year shows the most egregious misspending my staff have seen in their careers at the Office of the State Auditor,” said White. “When you read this one-hundred-plus page audit, you will see that, if there was a way to misspend money, it seems DHS leadership or their grantees thought of it and tried it.”
The audit of DHS came as a part of the Office of the State Auditor’s yearly Single Audit of federal money flowing through state agencies.
The audit of DHS showed massive sums were funneled to grantees like the Mississippi Community Education Center (MCEC) and the Family Resource Center of North Mississippi (FRC), two non-profits. Those grantees were given over $98 million in DHS grants over the last three years, mostly from the program Temporary Assistance for Needy Families (TANF).
The audit’s formal finding is that over $94 million of that grant money has been “questioned,” meaning auditors either saw clear misspending or could not verify the money had been lawfully spent. Examples of questioned spending included:
• MCEC and FRC used TANF money to hire lobbyists with TANF money, which is unallowable, often with no paperwork describing the work the lobbyists were hired to do.
• MCEC awarded contracts to and hired former DHS Director John Davis’s family members, sometimes paying them up front in lump sums.
• MCEC and FRC paid large sums to wrestlers Ted Dibiase, Ted Dibiase, Jr., and Brett Dibiase for work that was not performed, for unreasonable travel costs, or with little proof the programs helped the needy.
• MCEC and FRC used TANF money to fund religious concerts with no proof they benefitted the needy.
• MCEC made multiple donations with TANF money—like donations to the American Heart Association, the Mississippi Highway Patrol, booster clubs, pageants, universities—and provided no proof the donations were used to help the needy. FRC also made unallowable donations.
Among the grantees, MCEC was particularly dependent on TANF funding and engaged in extensive misspending. From 2016 to 2019, MCEC was given over $60 million in grants from DHS, while raising just under $1.6 million from other sources. Examples of questioned spending at MCEC included:
• MCEC paid Victory Sports Foundation TANF money for fitness programs for Mississippi legislators and other elected officials/staffers at no charge.
• MCEC purchased three vehicles with grant funds, each for over $50,000, for Nancy New (Director of MCEC), Zach New, and Jess New. MCEC also paid salaries, cell phone bills, and other costs for a variety of members of the New family.
• MCEC made many unallowable sports-related expenditures—like sponsoring a college baseball tournament—for services that could not be proven to benefit the needy. Some sports-related spending was for services that were not actually performed.
• MCEC transferred over $6 million to a private school and organization owned by Nancy New and also purchased curricula and supplies with TANF funds for the school.
• MCEC paid a speeding ticket for Nancy New with TANF funds.
• MCEC issued a $3,000 check to the bookkeeper of MCEC with a handwritten note saying the payment was actually for John Davis.
• MCEC paid a variety of consultants, including Jess New, for no clear deliverables or where there was no proof the spending met TANF requirements.
• Zach New took a loan out against his MCEC retirement plan and repaid the loan with TANF money.
• MCEC paid for extensive unallowable advertising, like using TANF money to advertise at the NCAA basketball tournament and a college football bowl game. TANF money was also used to purchase tickets to a college football game.
• MCEC paid excessive rent well above market value to a holding company owned by Zach and Nancy New. Sometimes the rent paid for spaces that were not used for TANF-related purposes.
The unallowable spending was achieved through a variety improper activities, like: DHS Director Davis limiting monitoring of subgrantees; forged documents; subgrantees providing summaries of expenditures that did not match actual expenditures; a limited or nonexistent RFP process for selecting subgrantees; fraudulent accounting entries that misstate actual payees; a failure by DHS staff to report obviously improper transactions to law enforcement; and others.
Auditors have recommended current DHS leadership take steps to remedy these problems. “DHS staff should immediately move to seize any property that was purchased by grantees with taxpayer money, as that property belongs to the taxpayers,” said White. “That property does not belong to the Auditor’s office, so we cannot do this for them, but it should be marked as DHS property, and DHS should use their legal authority and move quickly to seize it.”
The audit also suggested DHS conduct an internal investigation into current and former DHS staff who may have played a role in the fraud.
“Thank you to our team of professional auditors for their incredible work,” said White. “The doggedness and attention to detail shown by Stephanie Palmertree, Michael Torres, Jason Ashley, and their team of CPAs led to this critical report. Their work is the first step to restoring public trust in DHS.”
The Single Audit report is now forwarded to the federal government, who will determine the consequences for DHS. Those consequences could include cuts to future grants from the federal government or penalties.
While this Single Audit report concluded the Auditor’s office’s audit of DHS, the criminal investigation of this matter by the Auditor’s office and federal authorities continues. “This audit should be a wake-up call to everyone in government. The old way of doing things, where you do whatever your boss or a person who controls a lot of money tells you to do, or you ignore the law around how to spend money because you think no one is looking—those days are over,” said White.
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