Things are not looking so good for Nancy New, the Greenwood native and founder of what was until a few months ago known as North New Summit School in her hometown.
New is being squeezed on both criminal and civil fronts for her involvement as an alleged ringleader in what has been described as one of the largest misuses of public funds in Mississippi history.
This past week, State Auditor Shad White, who is pursuing the civil side and assisting in the criminal prosecution of New, issued a formal demand for $68.2 million against Mississippi Community Education Center, the nonprofit organization owned by New through which the majority of questionable spending was allegedly funneled by former Department of Human Services director John Davis. Only Davis is being asked to pay back more, $96.3 million including interest, as White goes after both those who doled out the welfare funds and those who received them.
White is feeling emboldened by a recent independent audit that largely supported his agency’s earlier findings of massive abuses in the way the state handled block grants that were supposed to help the poorest of the poor but instead went to people or projects that were either ill-conceived, grossly mismanaged or fraudulent.
One high-profile example was the $1.1 million that New’s organization paid Brett Favre for motivational speeches that the NFL quarterbacking legend never delivered, according to the auditor’s investigation. After promising to pay all of it back a year ago, Favre only came through with the first $500,000, and now White wants the rest from him plus interest.
The pair of criminal cases against New are also picking up steam, following the long-awaited guilty plea of Anne McGrew, New’s head financial officer.
McGrew had tried to plead guilty more than eight months ago, but for reasons still unexplained, the presiding judge in the state case rejected McGrew’s guilty plea.
It’s now been accepted, with McGrew promising to testify against other co-defendants, including New and her son, Zach New. Zach New helped his mother run both the nonprofit Mississippi Community Education Center and the for-profit New Learning Resources Inc., the umbrella company for the group of highly acclaimed New Summit schools, which had catered to kids with learning or social challenges.
When prosecutors are pursuing charges of financial fraud, they often get to the higher-ups through those who keep the books and know intimately the details of the money trail. McGrew has already said in court records that she assisted the News to illegally move money from one corporation to the other.
McGrew could be a star witness not only in the state case alleging embezzlement of welfare funds but also a separate but similar fraud prosecution brought by federal authorities over how government education funds were used by the News.
The only seeming hope that Nancy New can avoid prison or the poorhouse is to show that the federal and state regulations were so nebulous that, even as absurd as some of her spending was, such as $5 million for a new volleyball facility at her college alma mater, the expenditures were within the government’s loosey-goosey rules.
If so, it’s the welfare reform movement that perhaps should be under indictment.
Dating back to the mid-1990s, during a time when Democrat Bill Clinton was president and Republicans held the majorities in Congress, welfare reform was supposed to wean people off a life of government dependency. A key element to the change in approach was to replace direct cash assistance to needy families with block grants to the states so they could devise programs to help the poor become permanently self-sufficient.
In theory, it sounded just fine. As Mississippi’s experience with welfare spending shows, however, the grants were wide open to waste certainly and fraud potentially.
One person at the Department of Human Services, John Davis, was given nearly limitless authority to decide how tens of millions of dollars in grant money was awarded. If that one person was either incompetent or corrupt, not only would massive amounts of taxpayer money be squandered, but the poor would be worse off. Welfare reform, executed this way, would increase poverty, not relieve it.
Nancy New could have a tougher time, though, with the federal case, which may go to trial first and happen as soon as November. Unlike the accounting complexity of block grant money and multiple levels of subgrantees, the federal case is more straight-forward. It accuses New and her son of receiving millions of dollars in state education money and then lying about the teachers who were supposed to be paid with that money and the students who were supposed to be served by it.
If that allegation is true, there’s not much room for interpretation.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
