February 27, 2020; Mississippi Today
Oh, what a tangled web has been woven in Mississippi. It looks as though $65 million in federal welfare or TANF (Temporary Aid for Needy Families) dollars may have been siphoned away, with over $4 million ending up in investments or the bank account of a nonprofit CEO.
At the heart of this scandal is a nonprofit known as the Mississippi Community Education Center (MCEC). The nonprofit has a five-year lease agreement with the University of Southern Mississippi that says that the nonprofit “serves as a statewide family and community outreach initiative and requires access to facilities in the University’s area.”
Hattiesburg, Mississippi, is a college town of 46,500 people with a poverty rate that is double the state average (the census estimates a poverty rate of 32.5 percent). MCEC’s budget is highly dependent on government funding. In 2016, the Center expanded its services under founder and politically connected private education contractor Nancy New.
“The organization’s expansion,” writes Anna Wolfe in Mississippi Today, “began shortly after John Davis, a longtime Mississippi Department of Human Services official, became the agency’s director in 2016. That year, expenditure reports show, the department began issuing multi-million-dollar lump sum payments.” As C. J. LeMaster writes for a local media station, WLOX, funding for MCEC jumped from $2.5 million in 2016 to nearly $13 million in 2017 and nearly $27 million in 2018.
While other area nonprofits provided needed direct assistance to low-income residents in the area, New’s did not. They did, however, provide some parenting and fatherhood classes, motivational speaking events with retired athletes, and health and wellness programs such as boot camp-style fitness classes. They also contracted with another of New’s companies, New Learning Resources Online, to provide online diploma programs. They also provided $5 million for a volleyball stadium on campus called the Wellness Center, which appears to be of limited benefit for the low-income residents the nonprofit was supposed to be serving.
As of February 2020, Davis and New are facing charges with four others in connection with a conspiracy to steal more than $4 million in grant funds meant to serve the poor in Mississippi. (They have pled not guilty). LeMaster details some of the indictment’s allegations, filed in the First District state court in Hinds County on February 4th.
The court documents detail six transfers—starting January 18 and ending October 7—totaling $2.15 million, which went toward investment opportunities in Florida.
Shortly after the first transfer, investigators believe then-DHS Director John Davis conspired with Nancy New to embezzle more funds, transferring an unreleased amount from MCEC into bank accounts owned by Rise in Malibu, a drug treatment facility, to pay for former professional wrestler Brett DiBiase’s opioid treatments.
Documents indicate Davis had already conspired with DiBiase and former DHS employee Latimer Smith in November 2018 to pay $48,000 to DiBiase for a professional services contract.
During that time the News transferred another $2 million from MCEC to New Learning, Inc., a for-profit institution managed by [Nancy New and her son, Zachary].
New herself has been indicted on ten counts, two involving conspiracy, six involving embezzlement, one count of mail fraud, and one count of making fraudulent statements. Also receiving indictments were Davis; DiBiase; Ann McGrew, a former accountant for MCEC; Zachary New, assistant executive director for MCEC and son of Nancy New; and Gregory Latimer Smith, a former employee of the state department of human resources. Zachary and Nancy New face the highest penalties of the six indicted: if convicted on all counts, they face up to 170 years in prison and potential fines of $220,000 each. The other four face maximum sentences in the 10-25-year range. A tentative trial date for Nancy New has been set for September 28th.
As for MCEC’s programming, it remains a mystery as to how or whether the $65 million that MCEC received in federal funds resulted in any benefit for Hattiesburg’s underserved community. “They didn’t really offer programming on campus,” Meghan Burke, former media coordinator for MCEC’s Hattiesburg office from 2017 to 2019, wrote in a Facebook message to a Mississippi Today reporter. “They only went in to teach a few classes like financial literacy to college students but that was it.”
Others in the nonprofit community echoed this, indicating no knowledge of any programming for low-income residents on the campus.
Unfortunately, the state has few records to account for what happened to the rest of the funds. In 2018, the state gave almost $44 million to a statewide program called “Families First for Mississippi” that was run by only two agencies: MCEC and the Family Resource Center of Northeast Mississippi.
The state has frozen funds to both organizations. But this move leaves many questions regarding where low-income residents in Hattiesburg can turn for state support. A message on the website of the MCEC offers limited information to clients as to their options.—Carole Levine