The Mississippi Department of Social Services continued to fund nonprofits linked to accused welfare fraudsters Nancy and Zach New, even after investigators alerted the agency to the couple’s alleged wrongdoing, according to the report. annual state auditor.
The nonprofit Mississippi Community Education Center and Families First for Mississippi, owned by mother and son, continued to receive disbursements from a Temporary Assistance to Needy Families (TANF) block grant from the MDHS, even after the agency learned of serious fraud allegations involving nonprofits.
MDHS paid Mississippi Community Education Center $ 19,404 two days before state auditor’s office arrest the News and former Executive Director of Social Services John Davis as part of the largest embezzlement program in state history.
The News reportedly embezzled $ 4.5 million of public money, most of it from TANF grants. The couple were indicted in federal court in March on 17 counts of Conspiracy to Commit Wire Fraud, Wire Fraud, Aggravated Identity Theft and Money Laundering Conspiracy and charged with embezzling $ 4.5 million of public money.
READ MORE: Confused by the Mississippi embezzlement scandal? Here is a timeline of events
Knowledge of Continuous Payments to News comes a year after State Auditor Shad White’s office discovered MDHS distributed in questionable manner $ 94 million money from TANF.
The federal TANF program, commonly referred to as social assistance, provides states with flexibility in the operation of programs designed to help low-income families with children achieve economic self-sufficiency.
The New nonprofits received $ 9.4 million MDHS from the time the auditor’s office began investigating them in July 2019 until February 4, 2020, two days before Nancy and Zack New were charged, according to spending data from the Department of State of social services.
“Our office met with MDHS executive staff in late summer 2019 to discuss a forensic audit with the department – the findings of which would point to potential criminal activity,” the auditor’s office said in a statement.
In a letter responding to the auditor’s findings, MDHS Executive Director Robert Anderson acknowledged that the agency received a letter from the state auditor’s office in December 2019 alerting the MDHS to “serious findings” regarding use of TANF grant money.
In a teleconference Tuesday, White said members of his office informed the MDHS of the investigation by December.
The Mississippi Community Education Center, received more than $ 1.4 million between December 2019 and February 4, 2020, according to an MDHS spending review. Once the MDHS learned of the investigation, it could have stopped payments due to suspected fraud, according to the auditor’s office.
While thousands of dollars in TANF grants were transferred from the state to the Mississippi Community Education Center from 2016 to 2020, at the same time, almost all low-income applicants who applied directly for the same benefit were rejected. With an acceptance rate of 1.42%, MDHS had the highest rejection rate for welfare claimants of any state in the country in 2017.
In January, the MDHS began requiring applicants for TANF grants to submit proposals on how they intend to use the money, Anderson wrote in the response letter.
No more suspected fraud
In its report, the state auditor’s office said former MDHS executive director John Davis created a “tone at the top” that did not embrace “ethical values ââor an atmosphere of integrity.” , resulting in a lack of supervision.
Davis was arrested in February 2020 through the auditor’s office, he used public money to enrich himself and his friends. Davis resigned from MDHS in July 2019, around the time the state auditor’s office began investigating him and MDHS spending.
Because of Davis’ tenure, some legitimate MSDH fraud advice was ignored last year, according to the auditor’s office. According to the auditor’s report, reports of employees of a TANF recipient tampering with timesheets, using company vehicles for personal business, tendering processes are not followed and federal grant money being used to purchase personal items for employees and their families.
The auditor’s office declined to name the organization involved in the alleged fraud.
In May 2020, Anderson, the current executive director, appointed the agency’s first chief compliance officer, Sandra Griffith, to help tackle any future fraud.
However, much of MSDH’s leadership has repeatedly denied any knowledge of an ongoing welfare fraud when asked by auditors’ officers last summer, according to the report. Those who acknowledged the reports called the fraud “minor.”
Stephanie Palmertree, director of finance and compliance at the state auditor’s office, said payments continued to the anonymous TANF beneficiary, but the MDHS is investigating the allegations.
MDHS is awaiting the results of a forensic audit that will report on all TANF transactions from 2016 to 2020. The audit is expected to be completed in the fall.
This story can be updated.
Lee O. Sanderlin is an investigative and political reporter covering the state of Mississippi. Got a tip for the story? You can call him at 601-559-3857, send him to LSanderlin@gannett.com, or message him on Twitter @LeeOSanderlin.