State subpoena targets Gov. Bryant's communication with USM Athletic Foundation

by Anna Wolfe, Mississippi Today
July 13, 2022

Attorneys are wrangling Mississippi's former governor into the welfare department's massive civil lawsuit, which one attorney called a “no-holds-barred death match.”

The attorney for the state agency is subpoenaing the University of Southern Mississippi Athletic Foundation for any of its communication with former Gov. Phil Bryant and his wife Deborah Bryant.

The Mississippi Department of Human Services filed a civil lawsuit in May accusing dozens of people — including retired NFL quarterback and famed USM alumnus Brett Favre — of misspending or wrongly receiving welfare funds.

But the complaint did not name the athletic foundation, even though it received $5 million in welfare funds to build a new volleyball stadium at USM — one of the more egregious revelations in a sprawling $77 million welfare scandal that broke in 2020. The complaint doesn't mention the volleyball building at all.

A subpoena filed Monday may signal the state's intent to add the USM scheme to the civil complaint and explore whether the Bryants are culpable. The subpoena also asks for any communication between USM athletic foundation board members or employees and Favre, nonprofit founder Nancy New, her sons Zach New and Jess New, former welfare department director John Davis and retired wrestler Ted “Teddy” DiBiase Jr. 

READ MORE: Gov. Phil Bryant directed $1.1 million welfare payment to Brett Favre, defendant says

The private attorney the welfare agency contracted to bring the civil suit, former U.S. attorney Brad Pigott, also filed a notice Monday with an initial list of people he's calling to testify, which does not include Bryant.

In order by date, the deposition schedule includes: Zach New, Jesse New, Nicholas Coughlin, Adam Such, Nancy New, Christi Webb, Paul LaCoste, Jacob VanLandingham, Brett Favre, Teddy DiBiase Jr., Brian Smith, Ted DiBiase Sr. and Heart of David Ministries, and Austin Smith.

THE BACKCHANNEL: A character guide for Mississippi Today's investigative series

Nancy and Zach New have pleaded guilty to several criminal charges, including bribery and fraud. In his plea, Zach New admitted to defrauding the government by disguising payments to the athletic foundation, which were used to construct the volleyball facility, as a “lease.” The News received a favorable plea deal that may keep them out of state prison, as long as they cooperate with the ongoing investigation. Davis is also still facing several charges.

Favre was the fiercest proponent of the project at USM, his alma mater and where his daughter played on the volleyball team. He connected with Nancy New, Deborah Bryant's friend, who was receiving tens of millions in no-bid grants from the welfare department to provide services to needy families. 

“She has strong connections and gave me 5 million for Vball facility via grant money,” he later told his business partner, according to text messages Mississippi Today obtained and published in its investigative series “The Backchannel.”

New and her nonprofit, Mississippi Community Education Center, perpetuated this scheme within the state's view and with its support. To get away with using block grant funds to build a volleyball stadium, the News entered a $5 million lease agreement with the athletic foundation to use the university's athletic facilities for welfare programming. The money would be used to build the volleyball stadium, which they called a “Wellness Center.” The plan was for the nonprofit to set up offices in the campus building, where it claimed it would educate needy families. 

The Institutes of Higher Learning and the attorney general's office signed off on the project, IHL board meeting minutes reflect.

The New nonprofit made two $2.5 million payments to the foundation, one in November and another in December of 2017, according to the state auditor's office. 

Also in December of 2017, the nonprofit paid Favre's company Favre Enterprises $500,000, the auditor found. New said in a recent court filing that Gov. Bryant directed her to make those payments to Favre for “speaking at events, keynote speaking, radio and promotional events, and business partner development.”

The nonprofit paid Favre another $600,000 in June of 2018 for a total of $1.1 million.

About a year later, Favre began telling the welfare officials that he “owed” the same amount, $1.1 million, that he had apparently committed to the USM volleyball facility. 

“Hey brother Deanna and still owe 1.1 million on Vball,” Favre texted Davis, the welfare director, in March of 2019, referring to his wife, Deanna Favre. “Any chance you and Nancy can help with that? They don't need it at the moment.”

Three months later, the state auditor's investigation into Davis and the welfare department's spending would begin, and the grant money for Favre's volleyball stadium never came. 

Around the same time, Favre was also working with welfare officials to move grant funds to a pharmaceutical startup called Prevacus, a company at the center of the initial criminal charges against the News. Favre was investing in Prevacus himself — around $1 million of his own money, he told Men's Health magazine in 2019 — and expected to strike it rich.

“You and Nancy stuck your neck out for me with jake and Prevacus,” he texted Davis, referring to Prevacus founder Jake Vanlandingham.

The former governor was also working with Favre on the Prevacus project. While Favre told Bryant by text that the company was working with Nancy New and Davis and receiving funds from Mississippi, Bryant denies knowing Prevacus had received public funds, saying he didn't read his texts carefully enough.

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

Favre was desperate for funding on two fronts, according to his text messages. He was expecting for New to fund additional construction on the volleyball facility as well as another pharmaceutical product, a cream to prevent concussions, that Vanlandingham cooked up.

“Hey Governor we are in a little bit of a crunch,” Favre texted Bryant in mid-July 2019. “Nancy New who is wonderful and has helped me many times was gonna fund this pregame cream that we can be selling really soon. Well she can only do a small portion now. Jake can explain more but bottom line we need investors and need your direction.”

“Will get with Jake..” the governor responded, “will help all I can.”

Bryant then agreed to accept stock in Prevacus and lobby on its behalf after he left office, before the 2020 arrests derailed his arrangement, Mississippi Today first uncovered in “The Backchannel” series.

Bryant's involvement in the volleyball project has not been officially scrutinized, until now.

Bryant told Mississippi Today in April that he was aware of Favre's USM volleyball vision.

“That volleyball thing kept coming up, and popping up, and then it'd go away,” he said. 

In the fall of 2019, after the auditor's investigation had begun, Bryant hosted a meeting at his office with Favre, Nancy New and Bryant's newly appointed welfare director Christopher Freeze.

“I remember Brett coming one time,” Bryant said. “I wanted to find out where this project was. ‘What is going on with that volleyball project at Southern Miss?' So I said, ‘Look, Brett wanted to meet. Let's call him in. Let's get Chris in there. Tell me about this.'”

Bryant told Mississippi Today that New asked for more funding to put into the volleyball project and he denied her request.

Today, the building is finished and USM volleyball matches are happening there. Services for needy families, however, are not.

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