Auditor: DHS withheld info on possible fraud for months after arrests in $4M embezzlement case
JACKSON, Miss. (WLBT) - A report from the state auditor’s office released this week details allegations that the agency involved in last year’s massive embezzlement scandal withheld information about additional fraud allegations for months, despite repeated questions from investigators.
Investigators discovered that DHS executive management didn’t tell the state auditor’s office about ongoing fraud from another organization receiving taxpayer money after the state agency got a tip in February of last year.
When the auditor’s office finally discovered the potential fraud in August and approached DHS about it, leaders downplayed the tip, saying the fraud was minor.
State Auditor Shad White said they then discovered that the subrecipient was accused of falsifying timesheets and using grant money to buy personal items.
“That’s frustrating to us. We’re the chief law enforcement entity that’s responsible for making sure that public money in Mississippi is spent legally and appropriately. And so those folks in other agencies, if they see money being stolen, or they know of potential fraud, they have a duty to come and report that to us, especially when we ask,” White said. “If we ask, they have a duty to not lie, they have a duty to tell us what they know. And we were not getting that information, unfortunately.”
While neither White nor DHS would name the subrecipient in this case, Mississippi Today has confirmed it is 100 Black Men of Jackson.
Below is a statement from 100 Black Men President, Ricky Jones:
“We recently learned of allegations against the 100 Black Men of Jackson. We believe these allegations are unfounded. This organization has been a leader in this community for mentoring, education and health and wellness to the young men we serve. We will not let these allegations deter us from our mission and we will continue serving this community as we have done for 30 years.”
DHS spokesperson Danny Blanton said the organization named in the audit is no longer a subgrantee with the agency nor receiving funding, adding the last payment was made in October 2020.
DHS’ withholding of information from the agency came days after the high-profile arrests of Nancy New, former executive director John Davis and others in connection to one of the largest reported embezzlement schemes in Mississippi history.
The audit also revealed that DHS kept giving money to two nonprofit organizations at the center of that scandal -- the Mississippi Community Education Center and Family Resource Center -- even after investigators told the agency about possible fraud within those organizations.
“In fact, they made those additional payments just a few days before the auditor’s office arrested six individuals, including Nancy New, including Zach New, including John Davis, who is the former director of DHS,” White said. “It’s disappointing for us to see that that money got pushed out the door, even after people at DHS were alerted to these concerns.”
White did not disclose the amounts. Blanton declined an on-camera interview, saying he was not available.
Additionally, DHS declined to make executive director Bob Anderson available for an interview, citing scheduling issues.
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