Family Resource Center says it protested questionable payments involving DiBiase wrestling family
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Oct. 17—TUPELO — The Family Resource Center of North Mississippi protested a former state agency chief's alleged scheme to enrich certain retired wrestlers using money intended for the needy, according to statements by current leadership at the organization.
Last week, State Auditor Shad White demanded that the Tupelo-based FRC repay $15.5 million in federal grant money, primarily from the Temporary Assistance for Needy Families program, commonly called TANF.
But the FRC was not the auditor's only target. He issued repayment demands involving more than $77 million in misspent funds to multiple nonprofit organizations, several current and former state employees, and a number of private individuals, such as former football star Brett Favre.
These demands are civil in nature, not criminal. But Former Mississippi State Department of Human Services Executive Director John Davis is one of six people charged over what prosecutors have described as one of the biggest public embezzlement schemes in Mississippi history.
Of those six, two have pleaded guilty and are expected to testify for the prosecution.
No one at the FRC has been criminally charged, and leadership at the organization now says that the nonprofit did not sit idly by once it became clear that Davis was directing the FRC to steer TANF-funded contracts for potentially corrupt purposes.
Davis ultimately retaliated against FRC after its executive director would not give contracts to retired wrestler Brett DiBiase, according to current FRC board member Casely Lott.
"They did take action. (FRC) terminated the services, and when John Davis continued to ask them to award additional subcontracts to them, (FRC executive director) Christi Webb refused, and that's when her funding got cut," Lott said.
Lott has been on the FRC board about a year and was not involved with the organization when the alleged misspending occurred. With Webb declining to speak with the Daily Journal, Lott has answered questions and issued statements on behalf of the organization. He also provides legal counsel to FRC at no charge.
Audit links FRC misspending to John Davis influence
FRC and the Mississippi Community Education Center acted for several years as partner organizations to operate the Families First for Mississippi initiative. MDHS, when under the leadership of Davis, gave significant amounts of TANF money to both nonprofits, which were in turn to award their own grants and contracts as needed, supposedly to further the Families First program.
However, with Davis and leadership at MCEC now facing criminal charges, prosecutors are painting a different picture. They say Davis funneled TANF money toward these two nonprofits and then directed how it was to be spent, using MCEC and FRC — whether knowingly or not — as front organizations to enrich multiple individuals associated with him.
MDHS, under its current leadership, recently released a forensic audit of four years of TANF spending. This audit, performed by a Maryland accounting firm, details some of the relationships between Davis and contractors paid with TANF money.
FRC, for example, hired Davis' brother-in-law, Brian Smith, and paid him $100,000 over a 10-month period using public grant money, with MCEC also directing additional public money to him.
Austin Smith — Brian Smith's son and Davis' nephew — also received about $216,000 in payments from FRC as both an employee and an independent contractor, plus additional public money from MCEC and MDHS itself.
The forensic audit says that FRC hired Austin Smith, in part, to create a coding academy, though neither his educational background nor his professional experience suggest that he was qualified to do this kind of work.
Austin Smith's professional background included managing two restaurants, operating a canoe rental company and working for his father's landscaping business.
Lott took issue with the forensic audit's characterization of Austin Smith's qualifications.
"He was exceptionally gifted in computers and technology and was undoubtedly capable of teaching a coding class with training," said Lott. "He trained statewide in Smart Sheets and did an excellent job."
In another instance, FRC contracted with Nicholas Coughlin of NCC Ventures for nearly $50,000, under the influence of Davis. However, auditors found that "there was no evidence that NCC Ventures completed any of the items in the scope of work."
Lott suggested otherwise and described as only a "paperwork issue" the lack of evidence for any work performed by NCC Ventures.
"A lot of it, the records were old, and they just don't have them anymore," Lott said.
The NCC Ventures contract covered a period from November 2017 to April 2018.
DiBiase accounts for a chunk of questioned payments
Retired wrestler Ted DiBiaise and his sons Ted DiBiase Jr. and Brett DiBiase play a significant role in allegations against Davis. These men variously worked for MDHS, contracted with MDHS, and contracted with FRC and MCEC.
Payments to the Dibiases often went through companies or nonprofits operate by the DiBiase family, including Heart of David, Priceless Ventures and Familiae Orientem.
FRC on one occasion paid a lump sum of $250,000 to Ted Dibiase without so much as a written contract.
In another instance, FRC paid $130,000 in one lump sump to Brett DiBiase under an independent contractor arrangement, but Brett DiBiase never provided monthly activity reports documenting any work performed.
"At a minimum, this is a poor business practice," auditors wrote of the full pre-payment.
Brett DiBiase has pleaded guilty to making false statements and is expected to testify as a state witness.
Brett DiBiase plays a key role in the criminal case against Davis. Prosecutors says MDHS paid him for work that he never performed because of a stint in a rehab facility, with Davis and other conspirators allegedly acting to conceal the details of what happened.
Dispute over DiBiase contracts prompted retaliation, FRC leaders claim
Lott detailed claims that largely support the picture sketched by prosecutors: Davis repeatedly pressured FRC to award contracts to various members of the DiBiase family and retaliated aggressively when FRC stopped cooperating.
According to Lott, Davis in 2018 asked FRC to award Brett DiBiase $1.2 million as a TANF sub-grant.
FRC declined to do so and instead eventually agreed upon a different arrangement involving the $130,000 contract, which was paid in advance.
FRC was later asked to fund another sub-contract for $250,000 but refused. FRC likewise refused to issue a contract to a company linked to Ted DiBiase.
In response, Davis allegedly threatened to strip MDHS funding from FRC and suggested he "would fund who he wanted to."
Ultimately, FRC says Davis did withdraw funds that had been awarded to FRC but not yet spent, leading to layoffs, salary cuts and facility closures throughout the nonprofit's operations.
However, with respect to the Brett DiBiase contract highlighted by forensic auditors, Lott disagreed that FRC was unwise to fully pay the contract in advance, at least based on the information available at the time.
"Hindsight is 20/20, and I think once FRC and Ms. Webb had reason to believe that they wouldn't provide services as promised, then they acted appropriately," Lott said. "But (FRC) took them at their word and at face value, that they would do what they contracted to do."
