7 baffling things about Mississippi's welfare fraud scandal case

by Geoff Pender, Mississippi Today
August 2, 2022

It's now been three years and counting since investigations began into the largest public fraud case in Mississippi history — a case that involves powerful public officials, former pro football stars and pro wrestlers, and tens of millions of dollars.

And to date, authorities have provided scant information on those investigations, and judges have tried to stifle those involved. Most public information about the case has come from investigation and reporting by Mississippi Today, often to the chagrin of state officials.

THE BACKCHANNEL: Full coverage of Mississippi's welfare scandal

State officials have assured that federal authorities will run the case to ground, and that punches are not being pulled on any powerful or famous people involved in the theft or misspending.

But to date, to quote former Gov. Phil Bryant about his own role in the scandal, “It doesn't look good,” and there appear to be many incongruities about the case and investigations.

Brad Pigott fired from case

State leaders can't get their stories straight on why attorney Brad Pigott was dismissed from leading the state's lawsuit to try to recover millions in stolen or misspent welfare dollars.

First, Mississippi's welfare agency chief said officials were blindsided by Pigott's subpoena of communications between the USM Athletic Foundation, former Gov. Phil Bryant and others over $5 million in welfare money spent on a USM volleyball stadium. But then emails showed Pigott gave them a draft of the subpoena 10 days before he filed it.

Gov. Tate Reeves, who said he signed off on Pigott's dismissal, first said Pigott, as a semi retired sole practitioner, wasn't up to leading such a lawsuit (despite having done so for a year). Then later he said Pigott also had a “political agenda” and was seeking the media spotlight.

Pigott said it was because he was looking into the roles of Bryant, the USM Athletic Foundation and other powerful and connected people or entities Reeves and others didn't want him looking at.

READ MORE: Welfare head says surprise subpoena led to attorney's firing. Emails show it wasn't a surprise

READ MORE: Gov. Tate Reeves says ousted welfare scandal lawyer had ‘political agenda,' wanted media spotlight

Feds weren't initially called in

State Auditor Shad White spearheaded the initial investigation and charges with a local district attorney — for eight months — without contacting federal authorities. Federal investigation experts said this seems odd, given the case involved tens of millions of federal dollars, and federal authorities have more resources to fully investigate and prosecute such a case.

At the time the auditor and Hinds County DA charged six people in early 2020, the then-U.S. attorney for Mississippi complained he was surprised by the move and only learned of it from media reports.

Subsequent reporting by Mississippi Today that former Gov. Phil Bryant — a close friend and former boss of White — was set to accept stock from a company involved in the fraud scheme in the days before White made arrests. Announcement of the arrests prevented the deal from going through, a Mississippi Today investigation showed. Did the decision to bring charges stymie or delay federal intervention, or give others involved a chance to take cover?

White has said that after the initial arrests, his office and the DA turned everything over to the FBI and have been working closely with federal authorities.

READ MORE: Phil Bryant had his sights on a payout as welfare funds flowed to Brett Favre

READ MORE: Former auditors question whether Shad White was too close to investigate Phil Bryant

Auditing firm was limited in what and who it could examine

The Mississippi Department of Human Services and auditor's office hired prominent national accounting firm Clifton Larson Allen for up to $2.1 million for a forensic audit to get to the bottom of where the money went.

But CLA was limited in what and whom it could examine. In its findings, it noted it was not given access to the former welfare director's computer hard drive or financials and it was limited in whose emails it could examine — initially just those of the welfare director, then later a few more lower level employees. CLA noted in its reports that it perhaps would have found more misspending had it not been severely limited in where and at whom it could look.

READ MORE: ‘It doesn't look good': At 3-year mark, more questions than answers in Mississippi welfare fraud scandal

Bryant as the ‘whistleblower‘

Since the 2020 arrests, White has called Bryant the whistleblower in the case — though the fraud tip White says Bryant turned over to his office pertained to a small portion of the larger welfare scheme.

But more recently, communications obtained by Mississippi Today between Bryant and others — including Bryant agreeing to accept stock from a company involved in the scheme — cast doubt on the idea of Bryant being the whistleblower.

Here's a text exchange between Bryant and the company's owner around the time of the alleged whistleblowing:

“Is this your company mentioned in the second paragraph (of a news article on arrests)?” Bryant wrote.

The company's owner said yes, that he'd been subpoenaed and “just gave them everything.”

“Not good…” Bryant wrote.

READ MORE: Q&A with former Gov. Phil Bryant about Prevacus, welfare scandal

No Attorney General case

Attorney General Lynn Fitch has been mostly silent about the largest public fraud case in state history, and her involvement appears to have been limited to signing off on a civil case attempting to recoup misspent money.

Asked recently whether she had any interest in leading a state investigation into the case, Fitch said: “Certainly the AG's office is very engaged, but that's pending litigation and I cannot comment … We are very invested in it. I just cannot comment any further.”

Auditor White initially said he took the case to the notoriously understaffed and backlogged Hinds County district attorney's office for expediency — to quickly halt the fraud and misspending.

More recently, White said he brought in the Hinds DA, a Democrat, to bring bipartisanship to an investigation that might involve powerful Republicans.

READ MORE: Alleged scam: Nancy New's school claimed to treat hospitalized kids

Many known recipients not included in civil recovery case

MDHS is suing 38 people or companies trying to “claw back” $24 million of the at least $77 million in stolen or misspent federal welfare money.

But those not named in the lawsuit to date have been the subject of much discourse. The lawsuit, for example, doesn't address the largest purchase made in the scheme — $5 million in welfare money spent to build a volleyball stadium at USM, with the payments disguised as a lease. Reeves shied away from committing to recoup those funds, saying he didn't know if the payments were illegal, despite the fact that a defendant in the criminal case has already pleaded guilty, admitting that he defrauded the government by paying welfare money to the USM athletic foundation.

One defendant in the case recently filed a subpoena for Bryant's communication and records involving the volleyball stadium, and has claimed Bryant directed her to spend welfare dollars, including to pay former NFL star Brett Favre $1.1 million in welfare money for speeches he allegedly never gave.

READ MORE: State files lawsuit to recoup $24 million in welfare funds from Brett Favre, WWE wrestlers and 34 other people or companies

READ MORE: Gov. Reeves justifies omitting volleyball stadium from welfare lawsuit, equivocates on legality of expenditure

Never-ending gag order and lack of public information

The initial auditor/Hinds DA case has been the subject of judicial “gag orders” for nearly two years — aimed at preventing defendants, attorneys and prosecutors from speaking to the media about the criminal charges.

Most recently, gag orders were extended to include Auditor White and the new welfare director talking about former welfare Director John Davis, who faces criminal charges. The two opposed this, saying such an order amounts to unconstitutional prior restraint and would “severely interfere” with their responsibilities as public officials.

It is unclear whether there will ever be a state-level trial in the case, or when these gag orders might be lifted. The gag orders have appeared to be only mildly effective.

Federal authorities have given no public information about any investigation into the welfare fraud and refused even to confirm they are investigating, although state officials said the feds are.

READ MORE: Auditor, DHS head object to broad gag order in welfare theft case

READ MORE: In welfare scandal, judge weighs public interest versus the right to a fair trial

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.