The Mississippi Department of Human Services is suing 38 persons or businesses for squandering welfare funds meant to alleviate poverty in the country’s poorest state.
The lawsuit shows officials’ and contractors’ flagrant disregard for either successful public expenditure or the individuals they were intended to help — behaviours that point to a state government that is cynical about anti-poverty programmes.
The long-awaited civil lawsuit, which seeks to recoup nearly $24 million in federal funds misappropriated in a sprawling scandal that began almost three years ago, names Brett Favre, former running back Marcus Dupree, former linebacker Paul Lacoste, and retired WWE wrestler Ted “The Million Dollar Man” DiBiase Sr. and his two sons among those named.
But two entities who received welfare funds through activities referenced in recent criminal pleas — University of Southern Miss Athletic Foundation and tech company Lobaki Inc. — do not appear as defendants in the May 9 filing.
Nancy New admitted to defrauding the government when she paid Lobaki $365,000 to run a virtual reality program. Her son and the nonprofit’s assistant director, Zach New, pleaded guilty to wire fraud for transferring $500,000 to the construction of the physical virtual reality center. He disguised the expenditures as “lease” payments. Zach New also admitted to defrauding the government by transferring $4 million for the construction of the volleyball stadium at University of Southern Mississippi, which was also disguised as a lease.
Nancy New and her son Zach New, who ran a nonprofit that received tens of millions under contracts with the Mississippi Department of Human Services, pleaded guilty in April to several charges bribery and fraud charges related to how they used their nonprofit’s public funding. Much of the money was illegally funneled to other nonprofits or contractors, which were considered “second tier” recipients of the welfare department. The latest civil lawsuit pursues some, but not all of these recipients.
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