Mississippi state auditor says state’s DHS wasted tens of millions of grant money

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State Auditor Shad White speaks of the contents of a 104-page audit of the Mississippi Department of Human Services released Monday, May 4, 2020, that shows how welfare grant funds flowed from DHS into two nonprofits, which then frequently spent the cash in inappropriate or questionable ways, at a news briefing in Jackson, Miss. More than $94 million in welfare money spending was “questioned” by auditors. Some funds were used to buy luxury cars, sponsor a college baseball tournament and hire family members. (AP Photo/Rogelio V. Solis)

JACKSON, Miss. — The Mississippi Department of Human Services wasted millions of dollars of federal welfare grant funds through misspending, personal use and spending on family members, friends of staffers and grantees and one legendary NFL quarterback, Mississippi’s state auditor announced Monday.

“This completed audit of DHS for the previous year shows the most egregious misspending my staff have seen in their careers,” state auditor Shad White said in a statement. “If there was a way to misspend money, it seems DHS leadership or their grantees thought of it and tried it.”

The findings were part of an annual audit the office conducts of federal money flowing into state agencies. The eight-month long investigation showed that the department gave more than $98 million to two grantees, both non-profits: The Mississippi Community Education Center and the Family Resource Center of North Mississippi.

Of the $98 million, $94 million was “questioned,” meaning it was either definitively misspent or auditors were unable to determine if it was legally spent. Most of the money, given over three years, from 2016 to 2019, came from the Temporary Assistance for Needy Families program, White said.

As part of the revealing report, White recommended current DHS leadership take steps to remedy these problems. In response, DHS Executive Director Bob Anderson announced Monday that the department had hired a financial firm to do a forensic audit “to look at all aspects of the agency so we can move forward and put the past behind us.”

Among the “questioned” spending is a series of payments made to NFL Hall of Fame quarterback Brett Favre by the Mississippi Community Education Center, which had multiple contracts with the state DHS to spend money through the Temporary Assistance for Needy Families program.

The audit shows that Favre Enterprises was paid $500,000 in December 2018 and then $600,000 in June 2018 in return for speeches at multiple events. The auditor’s report, however, states that “upon a cursory review of those dates, auditors were able to determine that the individual contracted did not speak nor was he present for those events.”

White tweeted Wednesday that Favre has begun paying the money back, and Favre himself tweeted later Wednesday that he would be “refunding the full amount back to Mississippi.”

“I love Mississippi and I would never knowingly do anything to take away from those that need it most,” Favre said.

Some of the other more glaring expenditures the audit found include lump sums of money, sometimes distributed ahead of time, were paid to former DHS Director John Davis’ family members for contracts awarded. Davis retired from the department last summer, weeks after Gov. Phil Bryant first alerted White about alleged fraud.

The audit also showed the MCEC and FRC paid large sums of money to three professional wrestlers for “work that was not performed, for unreasonable travel costs, or with little proof the programs helped the needy.”

Additionally, the audit found MCEC Director Nancy New used grant funds to buy three cars, each over $50,000, for herself and her family. New also used grant money to fund a private school she owned, to pay for a speeding ticket and to pay for her and her family’s cell phone bills, the statement said.

CNN has reached out to both Davis and New for comment.

The new report comes just three months after Davis, New and four other individuals were arrested and indicted by a grand jury for a range of violations including fraud and embezzlement, according to a February statement from White. Hinds County District Attorney Jody Owens, who will oversee the case, said all of the defendants pleaded not guilty and none are currently being held in jail.

At the time, White said the funds’ loss “exceeds any embezzlement scheme in the records of the Auditor’s office. Records are kept for all cases from the last twenty years.”

White on Monday called the audit “a wake-up call” and said the report has been forwarded to the federal government, which will determine the consequences for the Mississippi DHS.

White said the auditor’s office and federal authorities are conducting a criminal investigation.

“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,” he said.

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