Millions earmarked for the needy in the nation’s poorest state instead went to projects that benefited the well-to-do, the state alleges, including a volleyball stadium at Mr. Favre’s alma mater.
As he became further enmeshed in a scheme that diverted federal welfare money to build a volleyball stadium that cost more than $5 million at the University of Southern Mississippi, the former football star Brett Favre texted a question to the head of a nonprofit doling out funds meant to go to welfare recipients in the nation’s poorest state.
“If you were to pay me,” he wrote in 2017 of a $1.1 million proposal for promotional efforts that would actually be funneled toward building the stadium, “is there any way the media could find out where it came from and how much?” Several years of text messages about the project came to light when they were filed in court last week and were first published by Mississippi Today, the small nonprofit news site that has consistently led reporting on the story.
Far more than that payment has been exposed in a billowing scandal that has stretched considerably beyond Mr. Favre. A motley assortment of political appointees, former football stars, onetime professional wrestlers, business figures and various friends of the state’s former Republican governor all stand accused of pocketing or misusing money earmarked for needy families.
On Thursday, John Davis, who served as executive director of the Mississippi Department of Human Services under former Gov. Phil Bryant, pleaded guilty to both federal and state charges of embezzling federal welfare funds. Millions of dollars were transferred to friends and relatives, court documents say.
According to a lawsuit filed by the state in May, around $5 million was diverted to Ted DiBiase, a flamboyant retired wrestler once known as “The Million Dollar Man,” and two of his sons, as well as various entities connected to them, including a ministry. Much of the money went to fictitious services, bogus jobs, first-class travel arrangements and even one son’s stay at a luxury rehab center in Malibu, Calif., that cost $160,000, the suit claims.
Similarly, the state claims that Marcus Dupree, a former high school football phenom and professional running back, who was paid to act as a celebrity endorser and motivational speaker, did not perform any contractual services toward the $371,000 he received to purchase and live in a sprawling residence with a swimming pool and adjacent horse pastures in a gated community.
Mr. Favre, who earned more than $140 million in his Hall of Fame career, was paid $1.1 million for speeches he never gave, the suit said. He also orchestrated more than $2 million in government funds being channeled to a biotechnology start-up in which he had invested, according to the suit.
None of the three have been charged with crimes and all have denied wrongdoing. But even the most cynical observers in Mississippi have been dumbfounded by the brazenness of the activity in the allegations and how deeply it reflected the inequities baked into the history of a state with the nation’s highest poverty rate.
“The profiteering off the poor is ongoing,” Representative Bennie Thompson, a Democrat, said. He added, “It is like Robin Hood in reverse — you take from the poor and give to the rich.”
The accusations about fraudulent grants were all laid out in the lawsuit filed in May against 38 individuals and organizations, which sought the repayment of more than $24 million. Rather than helping the poor, the federal welfare program known as Temporary Assistance for Needy Families, or TANF, appeared to become a slush fund for pet projects and personal gain.
The state alleges that the money was siphoned off for services that were often never provided and in any case, would have failed to meet both federal and state regulations governing their dispersal. The case follows a state audit released in May 2020 suggesting that as much as $94 million of TANF funds might have gone astray.
Six people were arrested in February 2020 on charges of misusing public funds in what the state auditor, Shad White, has described as one of the largest public corruption cases in Mississippi’s history. Most of them have pleaded guilty; Jody E. Owens II, the Hinds County district attorney, said a joint inquiry by federal and state investigators could produce charges against more people.
Lawyers for the senior Mr. DiBiase and Mr. Dupree did not respond to requests for comment. Michael T. Dawkins, the lawyer representing Mr. DiBiase and his Heart of David Ministries, said in court papers that his clients had acted legally.
After the charges first emerged, a lawyer for Mr. Dupree, J. Matthew Eichelberger, released a letter saying his client had earned the money.
Bud Holmes, Mr. Favre’s lawyer, did not return a request for comment. Both he and Mr. Favre have said repeatedly that the football legend was not aware that the funds came from a federal welfare program.
When it comes to basic assistance, Mississippi ranks 47th among U.S. states in the amount of money it spends, said Aditi Shrivastava, a senior policy analyst with the Center on Budget and Policy Priorities in Washington. Figures compiled by the center indicate that the median maximum benefit nationally, which few people are paid, was $498 monthly in July 2021, compared with $260 in Mississippi.
Experts said the fraud was rooted in changes enacted in such programs in 1996, when cash benefits paid to poor families were replaced by block grants issued to states. They are supposed to distribute the money according to four federal guidelines that emphasize moving poor families toward steady employment, but in practice states and governors are given broad leeway.
Ironically, the Mississippi Legislature also added a fifth guideline, “to prevent fraud and abuse.” That was directed at recipients of the aid, but the state now alleges that the malefactors turned out to include the public officials running the program.
Nancy New and her son Zach New, who ran a nonprofit educational organization called the Mississippi Community Education Center, pleaded guilty last spring to charges of misusing TANF funds.
The text messages that were revealed in court documents suggested that former Gov. Bryant, working with Ms. New, helped Mr. Favre obtain federal money for a state-of-the-art volleyball facility to be built at Mr. Bryant’s and Mr. Favre’s alma mater, the University of Southern Mississippi, where Mr. Favre’s daughter played the sport.
“Can we help him with his project?” Mr. Bryant wrote in a July 2019 text to Ms. New, noting that he had just talked to Mr. Favre.
In 2020, the state auditor’s report said the university received $5 million for a bogus lease to use all its athletic facilities — including the volleyball center, which was not yet built — for programs for the poor.
The money, paid by the Mississippi Department of Human Services via the News’ nonprofit organization, actually went toward construction, the audit said. Last April, Mr. New pleaded guilty to transferring $4 million from TANF funds, which the federal government bars from using for “brick and mortar” projects, to the university.
The texts released last week seemed to indicate that the $1.1 million welfare contract to promote the center’s programs — work that was never performed — was another way to divert money to the stadium.
In the August 2017 text conversation about concealing the source of the money meant for the facility, Ms. New assured Mr. Favre that she understood he was “uneasy,” but that that kind of information was never publicized. The next day, she wrote: “Wow, just got off the phone with Phil Bryant! He is on board with us! We will get this done!”
William M. Quin II, a lawyer for Mr. Bryant, said the text messages did not support the argument that the governor had encouraged and coached Mr. Favre and state officials on how to obtain the grant. “The allegation is patently false,” he said in an emailed statement, dismissing the text messages as “cherry-picked.” Mr. Bryant has not been charged with any wrongdoing.
The volleyball stadium was not actually part of the lawsuit. Last July, after J. Brad Pigott, a former U.S. attorney hired by the state to help recoup the lost millions, began subpoenaing information about what had happened at the university, he was dismissed. Mr. Favre has repaid the state $1.1 million — though the state auditor has said he still owes $228,000 in interest.
Organizations that help the poor have long worried that block grants awarded by governors can be an invitation for abuse, said Oleta Garrett Fitzgerald, the director of the southern regional office of the Children’s Defense Fund.
“There was a danger of that money becoming a slush fund well before this debacle,” she said.
In Mississippi, she and others said, the problem is compounded by the fact that the state’s Republican governors and legislatures of recent years have been ideologically opposed to government programs designed to help the poor. “They probably thought that it was funny to be using money that was supposed to go — in their minds — to people who didn’t deserve it,” she said of the accused officials.
Mississippi is one of 12 states that has refused to expand Medicaid and has regularly turned down federal money meant to improve medical treatment, housing and child care, among other issues, Mr. Thompson, the congressman, noted. At the end of 2020, Mississippi had $47 million in unspent TANF funds, Ms. Shrivastava said.
At the University of Southern Mississippi, faculty members say the school prides itself in admitting first-generation students from the kind of families the money was meant to help. “No one is very happy about it,” Denis Wiesenburg, the faculty senate president and a professor of marine science, said of the recent unwanted attention. “We recognize that it has tarnished the reputation of the university.”
The scandal has seeped out over years now, largely because of the dogged reporting by Mississippi Today. But that does not dull the anger of those most affected.
Carol Burnett, the executive director of the Mississippi Low-Income Child Care Initiative, a nonprofit organization, said people were appalled that tens of millions of dollars that should have gone toward initiatives like improved public transportation or child care for the working poor were apparently handed out to rich political cronies instead. “They see this money that is intended to help people like them that is so misused and redirected to people who do not need help,” she said. “It is infuriating.”
Jenny Vrentas contributed reporting.