Mississippi Welfare Fraud: Guilty Pleas, Favre, and Recovery

The Mississippi welfare fraud scandal is the largest public corruption case in the state’s history: between 2016 and 2019, officials steered tens of millions of federal dollars meant for the poorest families into pet projects, personal enrichment, a college volleyball stadium, and payments to celebrity associates. Eight people have been criminally charged, seven have pleaded guilty, one was acquitted at trial, and a civil lawsuit targets 38 defendants. The federal government has signaled it may claw back more than $100 million from the state.

How the Money Was Diverted

The fraud ran through Mississippi’s administration of Temporary Assistance for Needy Families, the federal block grant that gives states broad discretion to fund programs serving low-income households. Under Governor Phil Bryant, the Mississippi Department of Human Services had eliminated competitive bidding for subgrants as early as 2012, stripping out a layer of oversight.¹ That left MDHS Director John Davis free to send lump-sum payments to handpicked nonprofits, chiefly the Mississippi Community Education Center, run by Nancy New and her son Zachary New.²

MCEC was supposed to spend the money helping needy families. Prosecutors and auditors say it instead became a pass-through for luxury vehicles, real estate, a horse ranch mortgage, appearance fees for professional athletes, and construction projects unrelated to poverty relief.²³⁴

State Auditor Shad White’s office opened the investigation in the summer of 2019 after receiving a tip about a possible kickback scheme. The first indictments came down in February 2020.⁵

Who Pleaded Guilty

Seven defendants have entered guilty pleas on state and federal charges. Most are cooperating with federal prosecutors, which is why sentencing has been pushed back repeatedly as the broader investigation continues.⁶

John Davis, the former MDHS director, pleaded guilty in September 2022 to five counts of conspiracy and 13 counts of fraud against the government in state court, plus one count each of conspiracy and theft of federal funds in federal court. He was sentenced to 32 years in state custody. Under a joint plea agreement, a federal sentence of no more than 15 years is meant to supersede the state term, but his federal sentencing has been delayed repeatedly.⁷

Nancy New pleaded guilty to four counts of bribing a public official, two counts of fraud against the government, six counts of wire fraud, and a RICO violation in state court, plus one count of wire fraud in federal court. She faces up to 99 years on the state charges, with 25 years to serve. In January 2026 she agreed to forfeit her home as part of her federal sentence. She is awaiting both federal and state sentencing. Zachary New pleaded guilty in 2022 to four counts of bribery, two counts of fraud against the government, and five counts of wire fraud in state court, plus conspiracy to commit wire fraud in federal court. He faces up to 75 years, with 17 to serve, and is awaiting sentencing.⁷

Brett DiBiase, a former MDHS deputy administrator and son of wrestling figure Ted DiBiase Sr., pleaded guilty to state and federal charges including conspiracy to defraud the government and making a false statement. He was ordered to pay $48,000 in restitution and is awaiting sentencing.⁸ Christi Webb, former director of the Family Resource Center, pleaded guilty in March 2023 to one count of theft concerning programs receiving federal funds; her sentencing has been postponed repeatedly.⁷ Jacob VanLandingham, founder of the pharmaceutical startup Prevacus, pleaded guilty in July 2024 to one count of wire fraud tied to a $400,000 transfer he allegedly used for gambling and personal debts. He faces up to 20 years.⁹

Anne McGrew, the MCEC accountant, pleaded guilty to one count of conspiracy in 2021. Prosecutors described her as the “linchpin” whose cooperation built cases against higher-level defendants. On May 4, 2026, she became the first person sentenced in the scandal, receiving one year in prison followed by four years of house arrest.¹⁰

The One Trial: Ted DiBiase Jr. Acquitted

Only one criminal case has gone to trial. Ted DiBiase Jr., a retired professional wrestler, faced 13 federal counts including conspiracy, wire fraud, theft of federal funds, and money laundering. Prosecutors alleged he received more than $3 million through shell companies for contracts on which he performed no real work, spending the money on a truck, a boat, a Disney trip, and a $1.5 million lakeside home.¹¹

His defense cast John Davis as the mastermind who manipulated younger people to serve his own ends, arguing that DiBiase was a legitimate contractor who trusted others to handle the money properly.¹² On March 20, 2026, after roughly four hours of deliberation, the jury acquitted him on all counts.¹³ Auditor White responded that the acquittal did not erase the guilty pleas of the other defendants and that the focus would shift to civil recovery.

Brett Favre and the Volleyball Stadium

The most publicly scrutinized piece of the scandal involves $5 million in TANF funds used to build a volleyball facility at the University of Southern Mississippi, championed by retired NFL quarterback Brett Favre, whose daughter played on the school’s team. Federal regulations bar using TANF money for construction, so the parties disguised the project as a “lease” between the USM Athletic Foundation and Nancy New’s nonprofit.¹⁴

Text messages introduced in court filings show Favre lobbying Governor Bryant for help with the project as early as April 2017; Bryant replied that he was “all in.” A July 2017 meeting at USM attended by Favre, Davis, New, and others produced a commitment of $4 million in TANF funds for the stadium, according to MCEC filings.¹ By December 2017, MCEC had transferred $5 million to the USM Athletic Foundation. Favre separately received $1.1 million through MCEC for promotional speeches that state auditors say he never gave.¹⁵

Favre repaid the $1.1 million in two installments in 2020 and 2021, though Auditor White maintains Favre still owes interest.¹⁶ The civil lawsuit also seeks to hold Favre responsible for the $5 million stadium expenditure and $1.7 million that went to Prevacus, in which he was an investor. In August 2023, the Mississippi Supreme Court denied Favre’s bid to be dismissed from the case, allowing the litigation to proceed.¹⁷ Favre has not been charged with a crime. His attorneys have maintained he did not know the money came from welfare funds.

Phil Bryant’s Alleged Role

Former Governor Phil Bryant has not been charged with a crime and is not a defendant in the state’s civil recovery lawsuit. Court filings and text messages, however, describe deeper involvement than he has publicly acknowledged. A December 2023 MCEC filing alleged that Bryant “directed, approved, facilitated, and/or furthered” the use of federal grant funds for both the USM volleyball stadium and the Prevacus venture.¹⁸

Text messages show Favre asking Bryant in December 2018 to help secure funding: “It’s 3rd and long and we need you to make it happen!!” Bryant replied, “I will open a hole.”¹⁹ Other messages show VanLandingham offering Bryant stock or a “company package” after he left office in January 2020. Bryant expressed interest, then cut contact after Davis and New were arrested the following month.²⁰

Bryant denies instructing anyone to use TANF funds for the stadium or Prevacus and says he alerted the state auditor once he learned of potential misappropriations. He has filed defamation suits against Mississippi Today, its reporters, and The Arena Group, former publisher of Sports Illustrated. In April 2026, the Mississippi Supreme Court unanimously reversed a lower court’s dismissal of the Mississippi Today suit, finding that Bryant’s complaint adequately alleged actual malice, and sent the case back for further proceedings.²¹

Civil Recovery So Far

In October 2021, Auditor White issued demand letters totaling more than $96 million, including interest. The largest, $96.3 million, went to John Davis as the official who authorized the disbursements. Other significant demands included $68.2 million against the MCEC board, $15.5 million against the Family Resource Center board, and $3.9 million against Ted DiBiase Jr.³

MDHS filed a separate civil lawsuit in 2022 naming 38 defendants, including Favre, the DiBiase family, and the USM Athletic Foundation. Recoveries have been modest. Eight defendants have settled for a combined total of roughly $750,000, less than one percent of the $79 million the state claims was lost. The remaining defendants are still in litigation, and Hinds County Circuit Judge Faye Peterson has issued a suppression order barring parties from discussing the case publicly.²²

The Federal Penalty

In December 2024, the U.S. Department of Health and Human Services assessed a penalty of $100.88 million against Mississippi for misspent TANF funds during fiscal years 2016 through 2019. Of that amount, $12.5 million was categorized as fraud, waste, or abuse; the rest reflected “unallowable” spending because of missing documentation or noncompliance with federal rules.²³

MDHS Director Bob Anderson disputed the penalty in a February 2025 letter, arguing the federal government lacked sufficient information and that the state was still trying to obtain expenditure records from subgrantees through ongoing civil litigation.²⁴ By October 2025, the Administration for Children and Families rescinded the penalty letter entirely, giving MDHS more time to produce documentation. The agency said it would issue a new penalty letter once it had analyzed the records; no timeline was given.²⁵ Once a final penalty is set, the federal government plans to reduce Mississippi’s $86.5 million annual TANF block grant until the debt is satisfied, and the state will have to replace that funding with its own money.²³

What It Cost Families Who Needed the Money

The scandal unfolded while cash assistance was collapsing for the families TANF exists to serve. Under Bryant’s administration, Mississippi’s TANF approval rate dropped from 35 percent to 2.8 percent, and by 2015 only 190 adult applications for cash assistance were approved statewide. By April 2021, just 140 adults in the entire state were receiving TANF cash assistance. In 2017, the legislature adopted the HOPE Act, adding verification requirements that further restricted access. The state also transfers $30 million in TANF funds annually to the Department of Child Protective Services under a federal court order, shrinking the pool available for direct family assistance even further.²

As of 2026, six defendants await federal sentencing, the civil recovery suit continues with tens of millions still outstanding, and the federal penalty remains unresolved. If the full repayment eventually lands, it will come out of the same program that was supposed to help low-income Mississippians in the first place.

1
Mississippi Free Press. Mississippi Welfare Scandal Timeline
2
U.S. House Committee on Ways and Means. Written Testimony of Jarvis Dortch
3
Office of the Mississippi State Auditor. Auditor Demands Repayment of Misspent Welfare Money
4
U.S. House Committee on Ways and Means. Ways and Means Republicans Demand Answers on Welfare Fraud
5
U.S. House Committee on Ways and Means. Written Testimony of Shad White
6
Mississippi Today. Federal Welfare Scandal Investigation Update
7
WLBT. Where Things Stand With Other Defendants in the State’s Largest Welfare Fraud Scheme
8
Clarion Ledger. Former WWE Wrestler Ted DiBiase Jr. Trial in Welfare Fraud Case
9
Mississippi Today. Jake Vanlandingham Guilty Plea in Welfare Scandal
10
Mississippi Today. Accountant Sentenced in Welfare Misspending Case
11
Clarion Ledger. Ted DiBiase Jr. Found Not Guilty in Mississippi Welfare Fraud Trial
12
Mississippi Free Press. Ted DiBiase Jr. Found Not Guilty of Crimes Over Millions in Mississippi Welfare Funds
13
Mississippi Today. Ex-Wrestler Not Guilty in Welfare Trial
14
Mississippi Today. Phil Bryant, Brett Favre, and the Welfare Scandal
15
NBC News. Brett Favre Can’t Be Removed From Lawsuit Over Misspent Welfare Money
16
Clarion Ledger. MS Supreme Court Vacates Favre Lawyer Sanctions in Welfare Fraud Case
17
Mississippi Today. Supreme Court Blocks Brett Favre’s Escape From Welfare Fraud Lawsuit
18
Mississippi Today. Court Filing Alleges Phil Bryant Directed Welfare Spending
19
NBC News. Anna Wolfe, the Pulitzer, and the Mississippi Welfare Scandal
20
Mississippi Free Press. Ex-Gov. Phil Bryant Sues Over Sports Illustrated Story on Welfare Scandal
21
Clarion Ledger. Mississippi Supreme Court Revives Phil Bryant Defamation Lawsuit
22
Mississippi Today. Welfare Agency Settlements in Fraud Lawsuit
23
Mississippi Today. Feds Ask Mississippi to Repay $101 Million in Misspent Welfare Money
24
Magnolia Tribune. MDHS Challenges Federal Penalty Over Misused TANF Funds
25
WLBT. Feds Rescind Penalty Requiring MDHS to Repay $101 Million in Misspent TANF Funds