MDHS adds Southern Miss Athletic Foundation to welfare fraud lawsuit, names Brett Favre

The University of Southern Mississippi Wellness Center in Hattiesburg was funded in part by welfare money. The state is looking to recover those funds through a new lawsuit.
The University of Southern Mississippi Wellness Center in Hattiesburg was funded in part by welfare money. The state is looking to recover those funds through a new lawsuit.

The University of Southern Mississippi Athletic Foundation is one of 10 parties the Mississippi Department of Human Services is seeking to sue in an expanding lawsuit that it hopes will recoup millions of dollars of welfare funds lost in the largest public fraud in state history.

Southern Miss is linked to the alleged fraud scheme through one of its most notable alums, former Golden Eagles quarterback and pro football hall of famer Brett Favre, who is mentioned directly in the amended complaint to the lawsuit.

Through his attorney, Favre recently asked the judge presiding over the case to remove him. The proposed new complaint by MDHS would reduce the complaint against Favre by $1.1 million, due to him voluntarily repaying certain funds, but it leaves nearly five times that amount in the complaint related to Southern Miss.

“Additionally, claims against Brett Favre have been reduced by $1.1 million due to the repayment of those unallowable costs. This agency will continue to be receptive to offers from other parties simply to repay the TANF funds which they should not have received," MDHS Executive Director Bob Anderson said in a news release.

The department is still seeking $5 million in funds intended for the Temporary Assistance for Needy Families program that it alleges Favre knowingly and improperly funneled to Southern Miss for the construction of a new volleyball facility.

Former NFL quarterback Brett Favre speaks with reporters prior to his induction to the Mississippi Hall of Fame in Jackson, Miss., Saturday, Aug. 1, 2015.
Former NFL quarterback Brett Favre speaks with reporters prior to his induction to the Mississippi Hall of Fame in Jackson, Miss., Saturday, Aug. 1, 2015.

More:What $5 million in welfare money bought Southern Miss volleyball

"Favre has not, however, repaid the $5m in TANF funds that he orchestrated for MCEC to pay to the (USM Athletic) Foundation to satisfy his personal guarantee to fund construction of the volleyball facility," the complaint reads.

Favre’s attorney, Eric D. Herschmann, has repeatedly said the retired football star's inclusion in the lawsuit, and the accompanying investigation by State Auditor Shad White, has been a baseless attempt to get attention and distract from others who did commit fraud.

“MDHS’s proposed amended complaint, in which MDHS has dropped its original $1.1 million claim against Brett Favre, while adding new groundless allegations about him, is as frivolous as its original complaint," Herschmann said Monday. "Again, MDHS omits facts key to these new allegations—including that the Mississippi Attorney General signed off on the transfers of funds from MDHS to another state entity, the University of Southern Mississippi, all with the full knowledge and consent of the Governor and other State officials.

"That a private citizen, like non-lawyer Brett Favre, could have any liability under these circumstances is baseless.  Accordingly, we will oppose, on Brett’s behalf, MDHS’s motion to amend the complaint to the extent it adds these new groundless allegations. "

The University of Southern Mississippi volleyball team takes on South Alabama at the Wellness Center in Hattiesburg, Miss, Saturday, Sept. 24, 2022. Texts entered recently into the state’s ongoing civil lawsuit over the welfare scandal reveal former Gov. Phil Bryant, Bret Favre and others worked together to channel state welfare funds to build the state-of-the-art volleyball stadium.
The University of Southern Mississippi volleyball team takes on South Alabama at the Wellness Center in Hattiesburg, Miss, Saturday, Sept. 24, 2022. Texts entered recently into the state’s ongoing civil lawsuit over the welfare scandal reveal former Gov. Phil Bryant, Bret Favre and others worked together to channel state welfare funds to build the state-of-the-art volleyball stadium.

Hershmann also previously wrote that “false insinuations concerning Favre's supposed involvement” have shifted attention away from MDHS, “which in fact is responsible for allowing this scandal to occur.”

The amended complaint also makes clear MDHS officials' view that Favre knew the breadth of the scheme, citing text messages published by Mississippi Today where Favre asked then-Mississippi Community Education Center head Nancy New if the media would find out where the funds for the volleyball stadium originated. New later plead guilty to misusing public funds.

Text messages between Brett Favre and Nancy New
Text messages between Brett Favre and Nancy New

"Favre knew that this was a sham designed to allow MDHS to cover Favre’s commitment to fund construction of the volleyball facility. Therefore, Favre expressed to Nancy New concern that the media never discover the source of these payments on his behalf," the complaint reads.

In addition to the Southern Miss Athletic Foundation, nine other parties have also been added to the lawsuit. They include N3 Holdings, JTS Enterprises, Lobaki, Inc., Lobaki Foundation, William Longwitz, Jacob Black, Garrig Shields, Inside Capitol, LLC and William, Weiss, Hester and Co., PLLC.

N3 Holdings is a Jackson-based corporation operated by Nancy New's son Jess New. Jess New currently serves as executive director of the Mississippi State Oil & Gas Board. Jess New has not responded to a request for comment.

JTS Enterprises is a Brookhaven-based corporation operated by Brian Smith, brother-in-law of former MDHS Executive Director John Davis. Brian Smith has not responded to a request for comment.

Lobaki Inc. is a Jackson-based virtual reality company. The Lobaki Foundation is an affiliated charity whose mission is "To use virtual reality technologies to educate children in lower income regions of the country and help under-privileged children advance their knowledge." Lobaki CFO Kevin Loud has not responded to a request for comment.

Longwitz is a former Mississippi state senator and county court judge. He is currently a practicing personal injury and maritime attorney listed with Morris Bart's firm, which is based in New Orleans. Inside Capitol LLC is a now-dissolved lobbying firm he founded in 2017. The law firm has not responded to a request for comment.

Black is a former MDHS employee, having served as deputy executive director, deputy administrator, senior attorney to the executive director and child support staff attorney between 2014 and 2020. Black was sent an over $3.6 million demand letter from the auditor's office in May. He has not responded to a request for comment.

Shields is also a former deputy executive director at MDHS. Shields has not responded to a request for comment.

William, Weiss, Hester and Co. is a Jackson-based accounting firm. The firm has not responded to a request for comment.

Logan Reeves, a spokesperson for State Auditor Shad White, said their office is still reading over the newly proposed complaint and they do not have an official comment at this time.

Reeves did note that White is not party to the suit in the way MDHS and the Mississippi Attorney General are. He also said the auditor's office is interested in learning why Favre's repayment of the $1.1 million, which was originally paid to the football star for speaking obligations and advertisements that he never performed, did not include interest. MDHS dropped that complaint against Favre without seeking interest on that payment.

Reeves called the $1.1 million "the one pot of money that was all Favre" in the lawsuit, since MDHS had previously sought that money from Favre directly before dropping it in the most recent complaint. Reeves also said the auditor's demands, which encompass a broad number of individuals, corporations and nonprofits, had not tabulated the $5 million in volleyball stadium funds under Favre, but rather under Davis and the Mississippi Community Education Center.

In the MDHS news release, Anderson said the expansion of the lawsuit is just the latest step in his efforts to reform MDHS, the department he was appointed to lead in 2020.

“Governor Tate Reeves tasked me with correcting the path of MDHS,” Anderson said. “As part of that process, MDHS has been working hard to restore trust and put in place numerous internal controls to ensure that misspending is not repeated in the future. The rest of the task involves recovering and returning to the taxpayers the millions of dollars in misspent funds which were intended to benefit Mississippi’s needy families."

This article originally appeared on Mississippi Clarion Ledger: Mississippi welfare fraud lawsuit grows to include more names, Favre