Nonprofit founder who helped officials raid MS welfare fund becomes witness for the feds

Federal authorities in Mississippi have added another defendant to their witness list in their prosecution of the still unfolding welfare scandal: Christi Webb, former director of the nonprofit Family Resource Center of North Mississippi.

Webb pleaded guilty Thursday to one count of theft concerning federal funds, the latest criminal charge within the scheme that began with state arrests in 2020.

As one of the leaders of a state-sanctioned initiative called Families First for Mississippi, Webb was a key figure in some of the diversion of $77 million in federal anti-poverty funds away from poor families under the administration of former Gov. Phil Bryant. Most of the money came from a flexible federal block grant called Temporary Assistance for Needy Families, or TANF.

As part of her plea, Webb has agreed to cooperate with prosecutors in their ongoing probe into widespread corruption inside the welfare program overseen by Bryant and his appointed welfare director John Davis. Davis pleaded guilty to state and federal charges in September.

Bryant has not faced any charges, although text messages uncovered by Mississippi Today illustrate Bryant’s involvement in various parts of the scheme, including the promise to “open a hole” for former NFL legend Brett Favre’s pharmaceutical venture, which eventually received $2 million in stolen welfare funds. Bryant has denied any wrongdoing.

Bryant has denied any wrongdoing, saying he did not carefully read his text messages to understand what Favre was requesting.

Webb has already made allegations that the former governor manipulated welfare spending during his time in office, Mississippi Today first reported. Webb was a supporter of former Attorney General Jim Hood, Gov. Tate Reeves’ Democratic opponent for governor in 2019, and had hired his wife to run one of the nonprofit’s local family resource centers.

That election year, a local lawmaker threatened Webb on behalf of Bryant, Webb told Mississippi Today through her attorney Casey Lott, who currently sits on FRC’s board.

Lott said the north Mississippi Republican lawmaker told Webb, “FRC will never receive another dollar from the state if you don’t fire Debbie Hood.”

“He explicitly said, ‘I’m the governor’s messenger,” Lott said.

Federal authorities have remained silent about who they are targeting in their ongoing investigation. But state officials including State Auditor Shad White, who originally investigated the case, and Hinds County District Attorney Jody Owens, who secured the first indictments, say they intend to investigate “everybody top to bottom.”

“John Davis is critical because the ladder continues to move up,” Owens said after Davis’ guilty pleas.

Webb pleaded guilty to a bill of information, which occurs when a defendant waives a grand jury indictment. The single count against Webb, the first criminal charge she has faced, mirrors the bill of information Davis pleaded guilty to in September.

So far, all the charges that the U.S. Attorney’s Office have filed in the welfare scandal revolve around money that flowed from the state welfare department through private nonprofits to retired professional wrestlers Teddy DiBiase Jr. and Brett DiBiase.

Lott said Webb ran her welfare grant in accordance with guidance from her attorneys and the welfare department’s state plan.

“The US attorneys will say, ‘Well, the state plan is not consistent with the TANF guidelines.’ Well, that’s a state problem. That’s not a Christi Webb problem. She didn’t create that plan. The state created that plan intentionally broad so they could use it as their slush fund,” Lott said Friday.

Lott, who had been representing Webb pro bono until recently, said he would not have advised Webb to take the plea and that he only stopped representing her after the U.S. Attorney’s Office argued he had a conflict of interest. Because she could not afford one, Webb was represented in her plea by federal public defender Abby Edwards.

Officials have never alleged that Webb received misspent funds personally. The other nonprofit founder originally arrested in the scandal, Nancy New, was accused of personally benefiting from the scheme because she funneled money to her for-profit school and agreed to accept stock in the pharmaceutical company she funded.

Forensic auditors estimated that Family Resource Center, which Webb had served as director from 2005 until stepping down as director this week, misspent at least $11.5 million worth of welfare funds from 2016 to 2019. Her federal criminal charges only cover a fraction of that — $700,000 in TANF funds and nearly $500,000 in federal emergency food assistance funds that Webb funneled to companies owned by retired professional wrestler Teddy DiBiase Jr.

By agreeing with the information, Webb admits that Davis directed her to award sham contracts to DiBiase Jr., though Davis knew the wrestler was unqualified to provide welfare-related services.

“As a result, Webb, through FRC, intentionally misapplied federal funds to various individuals and entities for social services that were not provided,” the bill of information reads. “… As a result of the actions of Webb, Davis, Person 1 (Nancy New), Person 2 (Teddy DiBiase Jr.), and others, millions of dollars in federal safety net funds were diverted from needy families and low-income individuals in Mississippi from at least 2016 to at least 2019.”

The charge comes with a maximum sentence of up to 10 years.

Webb’s federal criminal exposure was foreshadowed in the September bill of information against Davis. In it, federal authorities included Webb, Nancy New, Teddy DiBiase Jr. and one other resident of Hinds County as unnamed co-conspirators.

Teddy DiBiase Jr.’s brother, Brett DiBiase, a resident of Clinton, a town in Hinds County, pleaded guilty to new federal charges against him earlier this month. Brett DiBiase was also the first person to plead guilty to state charges in 2020. In addition to hundreds of thousands from the nonprofits, Brett DiBiase received a $48,000 contract directly from the welfare department for opioid addiction education training he did not conduct because he was himself checked into a luxury rehab facility. Officials also paid $160,000 in welfare funds to the rehab facility for Brett DiBiase’s treatment, auditors found.

The DiBiase brothers are the sons of famous retired WWE wrestler Ted “The Million Dollar Man” DiBiase Sr., whose Christian ministry Heart of David also allegedly improperly received $1.7 million in welfare funds.

Mississippi Department of Human Services is suing all three men, as well as Webb, Davis, New and dozens of others, in its large civil case that attempts to claw back the misspent money.

Teddy DiBiase Jr. and Nancy New have never been charged federally with crimes related to the welfare scandal, though federal agents did attempt to seize DiBiase’s house in 2020 during their investigation. The U.S. Attorney’s Office also charged Nancy New and her son Zach New in 2021 with defrauding the Mississippi Department of Education as part of a separate scheme related to their for-profit private schools.

In early March, Teddy DiBiase Jr. and his wife Kristen DiBiase agreed with the federal government for the U.S. Marshal Service to sell their home, a nearly 6,000-square-foot, $1.5 million lakeside property in the Madison community of Reunion. After paying the remaining mortgage and any taxes on the house, the federal government will hold the assets pending the conclusion of the forfeiture case.

The court document that spells out the agreement of the sale says one reason for the sale is to prevent foreclosure. Teddy DiBiase Jr. and his LLCs collected over $3 million in revenue from the welfare fund during the scandal, much of which from Webb’s nonprofit.

The admission that Webb intentionally misapplied federal welfare funds is a departure from statements Webb made through Lott in recent months.

“The DiBiase’s and their organizations contracted to provide services to needy families,” Lott said in a written statement in September. “The problem is they didn’t hold up to their end of the bargain. And once they refused to do everything Christi asked them to do, she refused to award any additional subgrants to those organizations. This enraged John Davis. He yelled and cursed Christi and other FRC employees for not sending them money anyway. He threatened to cut their funding if Christi didn’t do what he told her to do. And when she stood her ground and did the right thing, he followed through with his threat. Christi is the only one who ever told John Davis ‘no,’ and she was punished for it. She was forced to lay hundreds of people off. Those innocent people who were providing much needed services to the North Mississippi community lost their job because Christi stood up to John Davis and did the right thing. So, to say she’s a ‘co-conspirator’ is absurd.”

Around the time of this squabble in March of 2019, Davis told Teddy DiBiase Jr. he had communicated with Gov. Reeves, then lieutenant governor, about the situation with Webb, according to text messages Mississippi Today obtained.

“Tate Reeves just called me said he wanted me to know they don’t give two shits about the BC or Christi to keep doing what I’m doing. Boom,” Davis texted Teddy DiBiase Jr. in March of 2019. Phone records show Davis also saved Reeves number two days after this text. (Mississippi Today could not confirm what BC in his text stands for, but two sources believed it could be a typo).

Reeves’s office told Mississippi Today in September that the governor did not recall calling Davis and “doesn’t really know” Webb.

Webb pleaded guilty before U.S. District Court Judge Carlton Reeves, the same judge that oversaw the pleas of Nancy and Zach New, Davis and Brett DiBiase.

Webb’s sentencing is set for June 16, but like the others, her sentencing could be delayed until the prosecution is closer to a conclusion. No one criminally charged within the welfare scandal has been sentenced and none is currently incarcerated.