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Monday, September 2, 2024 | Back issues
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‘Mississippi Swindle’: New book traces welfare scandal that rocked Magnolia State 

In Mississippi, millions in welfare dollars went to dubious causes, prompting calls for reform and eight arrests to date. In a new tell-all book, Mississippi State Auditor Shad White details how the scandal unfurled.

(CN) — Between 2017 and 2020, some $77 million in Mississippi welfare funds were misspent. In a state with some of the lowest welfare payouts, money intended for needy families was instead funneled to unrelated causes.

The ensuing state and federal investigations have so far led to eight indictments — though as the statute of limitations closes, critics complain that some high-profile Mississippians have not been charged. That includes former NFL star Brett Favre, who state authorities say misdirected millions, including for speaking engagements that Favre was supposed to give but that never actually happened. Through a representative, Favre declined to comment for this story.

Such is the subject of “Mississippi Swindle: Brett Favre and the Welfare Scandal that Rocked America,” a forthcoming book from Penguin Random House. Written by Mississippi State Auditor Shad White, it comes out today, Tuesday, Aug. 6.

“Mississippi Swindle” tells the true story of how White’s office uncovered the fraud, leading to a slate of criminal and civil cases. That legal fallout is still ongoing, but “we’re effectively at the end of the investigation,” White said in a phone interview last week. “At this juncture, prosecutors have all the information that they're likely going to have.”

Prosecutions continue even as the book hits shelves. Just last month, a Florida neuroscientist pleaded guilty to a federal wire-fraud charge after authorities said he used Mississippi welfare money on a pharmaceutical startup — as well as on gambling debts and other personal expenses.

Highlighting the seriousness of the case, some conspirators now face prison sentences of more than 35 years. That includes John Davis, the former director of the Mississippi Department of Human Services who pleaded guilty to conspiracy and theft of federal funds, and Nancy New, the founder of an educational nonprofit who pleaded guilty to misspending public money.

Then there’s Favre, who once played for the Green Bay Packers and other NFL teams. The former quarterback hasn’t been criminally charged even as critics place him at the center of the scandal — though he is being sued by White and other state officials seeking to recover lost welfare funds. 

Working with New, state officials say Favre helped get millions to a volleyball facility at the University of Southern Mississippi, where his daughter once played. They say he also helped get $2.1 million to Prevacus, a pharmaceutical startup focused not on needy families but on creating an anti-concussion drug for football players. Favre has denied wrongdoing, even suing White for defamation — but critics say evidence shows he knew something was amiss. “If you were to pay me,” he texted New at one point, “is there anyway [sic] the media can find out where it came from and how much?” 

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)

Even before its release, "Mississippi Swindle” was already causing drama in Mississippi political circles. Besides the defamation suit from Favre, White is also being sued by state Attorney General Lynn Fitch, who argues that her office — not his — is responsible for recovering misspent funds.

Fitch, a fellow Republican, likewise told White she wouldn’t defend him against Favre’s lawsuit, which accuses White of misrepresenting Favre’s knowledge of the fraud. In a statement posted to her website, she accused White of "repeated miscalculations" and "a book rushed to print."

Despite the criticisms and legal challenges, the state auditor remains undeterred. “I'm not going to be bullied into shutting up,” White told Courthouse News. “I think if anybody thinks they're going to tell me to stop telling the truth about what happened to taxpayer funds down here, they've misread their audience.”

In his interview, White said he first began writing the book out of frustration, concerned the state might sweep the scandal under the rug. 

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The case gathered steam as White found an ally in Jody Owens, the Democratic district attorney of Hinds County. It soon reached the highest echelons of Mississippi power, including former Governor Phil Bryant himself. The Republican has not been charged, but reports suggest he is facing a federal investigation.

White’s book grapples with what he casts as Bryant’s ambiguous role in the scandal. Uncovered texts and emails suggest he considered taking a stake in a company that wrongfully took $2.1 million in welfare funds. At the same time, it was Bryant who first flagged questionable spending to the state auditor’s office. The former governor also declined to comment for this story.

“One could say [Bryant] was the whistleblower,” White said. “Others will say since he was the governor, he bears responsibility for everything, including the actions of Davis. People will have to come to their own judgments.” 

The funds stolen in Mississippi came from the Temporary Assistance for Needy Families (TANF) program, launched in 1996 as a replacement to Aid to Families with Dependent Children or AFDC. The change happened as part of the Personal Responsibility and Work Opportunity Act, signed into law by then-President Bill Clinton as part of his promise to “end welfare as we know it.”

While AFDC funds were distributed by the feds, TANF instead awards block grants to states, which then administer programs locally. Critics say that’s caused big drops in who gets money. Since TANF replaced the AFDC, the percentage of families with children in poverty who receive the funds has fallen from 68% to 21% nationwide.

The changes gave states more control over how the $16.5 billion-a-year program is spent — leading to different outcomes in different parts of the country. Among the states with the lowest payouts is Mississippi, where just four out of 100 eligible families receive TANF benefits.

A 2020 study from the nonprofit Center on Budget and Policy Priorities showed TANF access at historic lows, with funds reaching just over one million families. Under former AFDC guidelines, the money allocated in 2020 could have instead reached more than 3.4 million. 

Instead of providing direct financial assistance to families in poverty, TANF money has increasingly gone to childcare and employment services or even to fill budget holes in social programs, said Nick Gwyn, an expert at the Center who has studied these changes.

“The money has been less and less spent on basic assistance, and more and more spent on a variety of other activities,” Gwyn said in a phone interview. And sometimes, as in Mississippi, the money has gone to questionable nonprofits.

Mississippi Attorney General Lynn Fitch waves to the crowd at a Trump for President rally in Jackson, Miss., Thursday, June 6, 2024. (AP Photo/Rogelio V. Solis)

In late 2023, the U.S. Department of Health and Human Services proposed a rule revision to rein in some of that flexibility. Under the proposal, states would have to provide more documentation and justification on how they’re spending TANF money. HHS is also reevaluating TANF performance metrics, including by following up on families who have used the program.

Following a bipartisan request from Congress, the Government Accountability Office is also studying TANF. A spokesperson said the agency would soon “issue a series of reports,” likely by next year. That’s all welcome news for watchdogs like Gwyn, who says that “greater oversight is needed in terms of TANF spending.”

“Mississippi may be the most egregious example of that kind of misspending of TANF funds, [but] there's a broader national problem with less and less of TANF funds going to the program's most basic purpose, and that is providing assistance to the families,” Gwyn said. “I do think there's a strong case to be made for an increased federal presence, ensuring that these dollars are focused on where they're most needed.” 

Back in the Magnolia State, State Auditor White said the state DHS is beefing up its fraud investigation unit. The state legislature also passed a bill requiring evidence of fraud to be turned over to the AG’s office and state auditor. And yet in spite of the scandal or perhaps because of it, Mississippi TANF money still isn’t flowing to needy families in considerable amounts. The state is currently sitting on a $98 million surplus. White and others have proposed an earned income tax credit to improve access. 

In the meantime, White hopes his book and the case will encourage others with knowledge of government fraud to bring complaints forward. “Audits don’t typically uncover fraud,” he said. “Fraud is usually investigated due to whistleblower tips.” 

“In this case, it was only when a whistleblower came forward that real red flags were raised,” White continued. The tip allowed auditors to “dig deep and start looking” — and “the more rocks we turned over, the worse and worse it got.”

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