Audit receives $ 69M from ‘doubtful, doubtful’ expenditure on needy households

Audit receives $ 69M from 'doubtful, doubtful' expenditure on needy households

TANF is Temporary Assistance for Needy Families. The program is designed to provide monthly cash assistance and other support services for needy families with children under the age of 18.

Another $40.6 million in expenses have been deemed questionable because those involved would not cooperate with auditors.

The audits were conducted by CliftonLarsonAllen LLP, out of Maryland, and cover the time that John Davis was the agency’s executive director.

Meanwhile, a second report identified $12,424,995 in transactions “with evidence of possible fraud, waste, and/or abuse.”

Story Highlights

  • Friday, the department released the first two parts of a three-part audit that looked into the agency’s TANF transactions that occurred between January 1, 2016, and December 31, 2019.

  • The report indicated that $27,874,191 in transactions were not allowed because funds went to programs that did not serve qualifying families exclusively, the transactions did not comply with TANF spending rules, or because insufficient documentation was provided on how the funds were spent.

It was commissioned by MDHS and is what agency officials say is “part of their commitment to transparency.” The investigation took about 10 months to complete.

“No real surprises there. It confirms a lot of the numbers that were in the single audit that the state auditor’s office did last year, but clarified a little bit of what some of the actual numbers were in terms of unallowable costs,” said MDHS Executive Director Bob Anderson. “We will have a third part of the audit, an internal controls portion… and that is a few days from being actually posted on our website.”

Last year, the Mississippi State Auditor released a report saying that Human Services misspent more than $90 million in funding and that massive sums were funneled to grantees like the Mississippi Community Education Center (MCEC) and the Family Resource Center of North Mississippi. Auditor Shad White said the reports corroborate what his office worked on the last two years. “It shows what we have known for some time: there was a tragic amount of welfare money misspent here,” he said.

This independent forensic audit commissioned by DHS corroborates my team’s work over the last two years, and it shows what we have known for some time: there was a tragic amount of welfare money misspent here. — Shad White (@shadwhite) October 1, 2021

The reports come more than a year and a half after six people were arrested in connection with the largest public embezzlement scheme in Mississippi history. At the time, those arrested had been accused of embezzling more than $4 million in TANF funds.

Several individuals, including those associated with MCEC, refused to cooperate with auditors. Former MDHS Executive Director John Davis, meanwhile, was pinpointed for being involved in numerous questionable transactions, including some involving his own family members.

Nancy and Zach New were eventually indicted on federal charges and are accused of using TANF funds awarded to MCEC to, among other things, invest in Prevacous and PresolMD pain creams. Those arrested included mother and son Nancy and Zach New, with MCEC, Ann McGrew, a former accountant for MCEC, Davis, former MDHS employee Gregory Smith and former professional wrestler Brett DiBiase.