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The United States Department of Justice issued the following press release this afternoon:
A federal indictment was unsealed today in Mississippi charging a former professional wrestler with misappropriating millions of dollars in federal safety-net funds intended for needy families and low-income individuals in Mississippi.
According to court documents, Theodore Marvin DiBiase Jr., 40, of Madison, along with co-conspirators John Davis, Christi Webb, Nancy New, and others, are alleged to have fraudulently obtained federal funds – including from The Emergency Food Assistance Program (TEFAP) and the Temporary Assistance for Needy Families (TANF) program – that they misappropriated for their own personal use and benefit.
Davis was the executive director of the Mississippi Department of Human Services (MDHS). As part of the alleged scheme, after federal funds were issued to MDHS, Davis directed MDHS to subgrant the funds to two nonprofit organizations, Family Resource Center of North Mississippi Inc. (FRC) and Mississippi Community Education Center (MCEC), which were operated by Webb and New, respectively. Davis then allegedly directed Webb and New to award sham contracts to various individuals and entities purportedly for the delivery of social services, including at least five sham contracts that were awarded to DiBiase’s companies, Priceless Ventures LLC and Familiae Orientem LLC.
As further alleged in the indictment, under these sham contracts, FRC and MCEC provided millions of dollars in federal funds from MDHS to DiBiase and his companies for social services that DiBiase did not provide and did not intend to provide. DiBiase allegedly used these federal funds to buy a vehicle and a boat, and for the down payment on the purchase of a house, among other expenditures.
DiBiase is charged with one count of conspiracy to commit wire fraud and to commit theft concerning programs receiving federal funds, six counts of wire fraud, two counts of theft concerning programs receiving federal funds, and four counts of money laundering. If convicted, he faces a maximum penalty of five years in prison for the conspiracy count, a maximum penalty of 20 years in prison for each wire fraud count, and a maximum penalty of 10 years in prison for each count of theft concerning programs receiving federal funds and for each count of money laundering.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Darren J. LaMarca for the Southern District of Mississippi, Special Agent in Charge Jermicha Fomby of the FBI Jackson Field Office, Special Agent in Charge Tamala Miles of the Department of Health and Human Services Office of the Inspector General (HHS-OIG), Special Agent in Charge Dax Roberson of the Department of Agriculture Office of Inspector General (USDA-OIG), and Special Agent in Charge James E. Dorsey of the IRS Criminal Investigations (IRS-CI) Atlanta Field Office made the announcement.
The FBI, HHS-OIG, USDA-OIG, and IRS-CI are investigating the case.
Trial Attorney Adrienne E. Rosen of the Criminal Division’s Money Laundering and Asset Recovery Section, Trial Attorney Della Sentilles of the Criminal Division’s Fraud Section, and Assistant U.S. Attorneys Dave Fulcher and John Meynardie for the Southern District of Mississippi are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
***
Additional from Mike:
Local ABC affiliate WAPT has picked up the story of DiBiase's indictment at this link, as has local CBS affiliate WKBN Channel 27.
Today's indictment in the latest development in the Mississippi welfare scandal that PWInsider.com has previously covered in regard to WWE Hall of Famer Ted DiBiase and his family, among others.
Former WWE developmental talent 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 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 but instead used illegally and improperly. 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 of the $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 Heart of David Ministries was receiving money from the State of Mississippi, 98% of welfare requests were being turned down by the State. 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 at that time 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.
Ted DiBiase Sr. has not, as of this writing, been charged in any way.
All three DiBiase family members are facing charges in a Mississippi Department of Human Services civil lawsuit, which demands they return over $5 million in welfare funds they received.
The situation involving the investigation has also sparked a lawsuit filed against WWE personality Pat McAfee by NFL great Brett Farve, according to reports by The UK Daily Mail and NBC Sports' Pro Football Talk. The lawsuit stems from alleged "defamatory allegations" that McAfee, Mississippi Auditor Shad White and NFL Hall of Famer Shannon Sharpe made in regard to Farve being connected to the same Mississippi welfare scandal.
A Farve spokesperson told The Daily Mail, "Shannon Sharpe and Pat McAfee tried to further their careers by making baseless defamatory allegations against Brett Favre."
The Daily Mail article notes:
"Sharpe, a Hall of Fame tight end with the Broncos and Ravens, called Favre a 'sleazeball' on his FS1 show in September while accusing the retired quarterback of knowingly stealing $1.1 million in Mississippi welfare funds in exchange for speeches that he never made. McAfee, a former Colts punter who now hosts a popular SiriusXM podcast, accused Favre of 'stealing from the poor people of Mississippi.' "
Farve stated he did not know the origin of the money paid to him and returned the $1.1 million, but, according to the article, did not return the $228,000 in interest he made from the payment. The article noted that Farve's lawsuit quoted McAfee as stating about Farve:
"Every time his name gets brought up, we have to mention that he tied the hands of the poor people and took money right out of their pockets."
"[Favre is] certainly in the middle of stealing from poor people in Mississippi right now."
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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