Former Mississippi DHS director arrested in multimillion-dollar fraud scheme
POSTED 5:27 PM, FEBRUARY 5, 2020, BY WREG STAFF, UPDATED AT 05:32PM, FEBRUARY 5, 2020
FEBRUARY 06, 2020
The former director of the Mississippi Department of Human Services was arrested along with five others in connection with a scheme to illegally obtain millions in public funds from the Temporary Assistance for Needy Families program, the state’s auditor said Wednesday.
Special agents from the office of State Auditor Shad White arrested John Davis, the former Director of the Mississippi Department of Human Services (DHS); former DHS employee Latimer Smith; Dr. Nancy New, owner and Director of the Mississippi Community Education Center (MCEC) and New Learning, Inc.; Zach New, Assistant Executive Director of MCEC; Anne McGrew, accountant for MCEC; and Brett DiBiase.
According to a statement from White’s office:
“Davis and Smith created invoices to pay DiBiase TANF funds for teaching classes about drug abuse, but DiBiase was in a luxury rehabilitation facility for his own drug use in California at the time and did not perform the services. Davis and Smith created documents and arranged payment knowing DiBiase was not performing the work he was hired to perform.
Nancy New and her son, Zach New, stand accused of using the News’ non-profit, MCEC, to pay for DiBiase’s drug treatment using TANF funds. At Davis’ direction, MCEC used TANF money received from DHS to pay for DiBiase’s opioid treatment at the Rise in Malibu facility. The documentation submitted by the News claimed this was to pay DiBiase for conducting training classes that never, in fact, took place.
The two also stand accused of transferring millions in TANF funds to their private businesses. They then converted funds to their personal use and concealed the conversion through various fund transfers, fraudulent documents, at least one forged signature, and deceptive accounting measures.
Finally, Davis and the News are accused of creating a fraud scheme to take TANF funds to pay for personal investments in medical device companies (Prevacus, Inc., and PreSolMD, LLC) in Florida.”
If convicted on all counts, the accused face hundreds of years in prison.