Robbing the poor to enrich the rich
10th October 2022 · 0 Comments
In the famous fairy tale, highway hero Robin Hood robs the rich and gives to the poor. Everyone cheers on the actors playing the role.
But in reality, reverse Robin Hoodism is baked into everyday life’s political and social construct. Far from the virtuous King Richard, politicians are not only robbing the poor through unfair tax policies, but they are allowing other robber barons, big corporations, and the wealthy to steal from the poor to enrich themselves.
For example, Trump’s permanent tax cut for the rich gave us inflation. Major corporations like Amazon are paying no taxes, while retailers are gouging consumers. The Fed is raising interest rates to allegedly cool the economy but, in reality, is making it harder for low-to-moderate-income people to buy homes and cars.
But the most egregious case of robbing the poor to enrich the rich made headlines in Mississippi, where politicians, nonprofit operators, wealthy business people, and sports stars used Mississippi’s welfare money – Temporary Aid to Needy Families (TANF) – as a private slush fund.
While 150,000 Mississippians in Jackson, the state capital, can’t drink the city’s water or shower with their mouths open, Mississippi drew headlines last month for what State Auditor Shad White called “Mississippi’s largest public fraud scheme.”
White announces that Mississippi’s former director of human services, John Davis, nonprofit officials, business people, and sports figures conspired to embezzle millions of dollars meant for services to poor Mississippians. Davis pled guilty to state and federal charges in the conspiracy to use welfare funds for personal gain.
Davis and colleague Latimer Smith, Mississippi Community Education Center (MCEC) employees Nancy New, Zach New, and Anne McGrew — the employees directing federal money inappropriately —and retired pro wrestler Brett DiBiase were arrested in 2020.
“The funds illegally obtained in this case were intended to help the poorest among us. The funds were taken by a group of influential people for their own benefit, and the scheme is massive. It ends today,” White said in 2020.
The individuals were arrested, tried, and convicted of welfare fraud, embezzlement, and conspiracy, among other charges, for misusing $77 million in welfare funds for programs that had nothing to do with federal TANF goals of lifting the country’s poorest citizens out of poverty. The rich and well-connected were indeed robbing poor Mississippians.
Former NFL Hall of Famer Quarterback Brett Favre, a Mississippi native, took $1.1. million in TANF (Temporary Assistance to Needy Families) to build a Volleyball Stadium at his alma mater, the University of Southern Mississippi, where his daughter played volleyball. He also tried to get funding for a new football stadium at USM and funds to invest in a private venture.
Favre doesn’t qualify for welfare. He made $140 million during his football career and invested in business ventures. Favre was not criminally charged, probably because he denies knowing the money was for welfare recipients. But he was ordered to pay the money back. He reportedly still owes $228,000 in interest.
However, Favre’s denial is suspect. His texts to Nancy New suggest otherwise.
Mississippi Today published copies of text messages between Favre, New, and then-Governor Phil Bryant. Favre allegedly asked New, “If you were to pay me, is there any way the media can find out where it came from and how much?” Text messages between Favre and Bryant show Bryant helping Brett Favre secure welfare funding for the USM volleyball stadium. Bryant has not been criminally charged, either.
Now, a friend of Bryant’s wife, Deborah, claims to have been directed to disburse the funds by former Governor Bryant, a claim the former governor denies.
“Just left Brett Favre,” Bryant texted New in July 2019. “Can we help him with his project ?We should meet soon to see how I can make sure we keep your projects on course.”
Favre shuttled the illegal money through his charity, “Favre 4 Hope,” whose purpose is to raise and distribute money to help “disadvantaged and disabled children and breast cancer patients,” according to a summary filed with the state of Mississippi.
CBS Sports reports Favre was paid $500,000 in December 2017 and $600,000 in June 2018 for appearances and speeches at multiple events he did not attend. Favre said he filmed commercials for the nonprofit organization, and that’s why he was given the money. But the state auditor found Favre’s contract called for the football star to give three speeches and record a radio advertisement.
New’s texts show that Bryant, Favre, New, Davis, and others worked together to channel at least $5 million of the state’s welfare funds to build the new volleyball stadium, Mississippi Today reports.
Unlike Favre and Governor Bryant, former MDHS Director John Davis, 54, didn’t escape criminal charges. He and the News are among the fall guys of the plot to misuse welfare funds. The higher political positions and fame can insulate wrongdoers from accountability and prosecution.
Davis was the conduit for the welfare money he passed to the New’s nonprofits. “Davis and his co-conspirators fraudulently obtained and misused millions of dollars in federal funds – including funds from two programs, Temporary Assistance for Needy Families (TANF) and The Emergency Food Assistance Program (TEFAP) – for their personal use and benefit,” the U.S. Justice Department confirmed two weeks ago.
Davis funneled the money through Nancy and Zachary New’s MCEC nonprofit. They allegedly received $4.5 million in public funds. The News also operated three private schools, ostensibly with TANF funds, that offered services to children with autism or dyslexia.
The News greased Davis’ palms in the quid pro quo arrangement. The AP reported the mother and son acknowledged spending welfare money on lavish gifts that included first-class airfare for Davis.
Nancy and Zachary New pled guilty to multiple charges of bribery of a public official, fraud against the government, mail fraud, and racketeering. Neither has been sentenced for state or federal charges yet, but they face decades in prison for their crimes.
Davis pled guilty to conspiring to defraud the State of Mississippi and received a 32-year sentence in state court. He’ll be sentenced on federal charges, which carry a penalty of up to 15 years, in February 2023.
Favre wasn’t the only unqualified welfare recipient. The MDHS filed a civil lawsuit in May 2022 against 39 defendants who got welfare money from the News for work they didn’t perform or weren’t qualified to do.
Farve got so comfortable using welfare funds – robbing the poor to enrich elites – that he kept recommending people and projects to New.
The retired football player got New to fork over millions in welfare money to buy stock – for herself, her son, Davis, and others – in a company that allegedly was developing a nasal spray to treat concussions. The lawsuit said Favre was the most significant individual outside investor and stockholder of Odyssey Health, a Florida-based company trying to develop a concussion drug. The suit said that in December 2018, Favre urged Prevacus CEO Jake VanLandingham to ask Nancy New, the owner of a Mississippi nonprofit, to use welfare grant money to invest in the company.
There’s not enough space to include graft and corruption in the lawsuit. The scope of the embezzlement scheme is stunning and massive.
Mississippi’s TANF program was a slush fund used to enrich the rich.
On top of that, while New was doling out thousands of dollars in TANF grant money from 2016 to 2020, her MCEC nonprofit, at the same time, was rejecting almost every low-income applicant who directly applied for the same benefit. With an acceptance rate of 1.42 percent, MDHS had the highest rejection rate for welfare applicants of any state in the country in 2017.
The Center for Budget and Policy Priorities (CBPP) offers a scathing report on Mississippi’s TANF program: “Mississippi, which for over 50 years provided the nation’s lowest cash assistance benefits to families with children, has increased the maximum Temporary Assistance for Needy Families (TANF) grant by $90, so a family of three with no other income will now receive $260 per month. The increase will help all children receiving TANF, especially Black children, who make up over three-fourths of Mississippi children receiving TANF.
Though Mississippi has the nation’s highest child poverty rate, its TANF program does an abysmal job of assisting families experiencing poverty, according to the Center’s analysis.
Louisiana is no better. The sportsman’s paradise has the second highest poverty rate – 19.2 percent in the nation after Mississippi’s 20.3 percent. Yet, Louisiana has more people living below the poverty line than Mississippi. 845,230 Louisianans live below the poverty line compared to 564,439 Mississippians. The CBPP suggests that TANF policies in many states that keep benefits low and severely limit program access are rooted in historical racism, especially in the South.
The one bright spot in comparing the former confederate strongholds is that Louisiana’s TANF cash benefit went from $240 per month to $484 per month for a family of three in January 2022.
State decisions to keep benefits low have a disparate racial impact: 55 percent of the nation’s Black children live in a highly low-benefit state, compared to 41 percent of Latino children and 40 percent of white children.
But let’s keep it real. Who can live on those small stipends, even with a job? How is this “temporary” assistance supposed to get low-income people off welfare, provide job resources (without funding training), and eradicate poverty? It can’t. States would be better off using a Universal Basic Income of $1,000 per month to lift people out of poverty. Pilot programs using UBS shows the program works.
The U.S. government should reform the TANF program by setting reasonable financial allotments and ensuring that states like Mississippi and Louisiana are not leaving more than 50 percent of its fund unspent. Now that’s a crime in search of accountability.
This article originally published in the October 10, 2022 print edition of The Louisiana Weekly newspaper.
