State agency targets Family Resource Center with lawsuit over misspending claims
May 9—TUPELO — State officials have filed a lawsuit seeking to recover more than $3.8 million from the Family Resource Center, a nonprofit organization based in Northeast Mississippi that finds itself embroiled in allegations that it "squandered" federal grant money intended to help the poor.
The lawsuit, filed Monday in Hinds County Circuit Court by the Mississippi Department of Human Services, was lauded by state government leaders as the latest effort to remedy an allegedly far-reaching scheme of corruption that investigators claim infected the state's anti-poverty programs for several years.
"Our purpose with this suit is to seek justice for the broken trust of the people of Mississippi and recover funds that were misspent," said Gov. Tate Reeves and Attorney General Lynn Fitch in a joint-statement released on Monday.
The FRC and its executive director, Christi Webb, allegedly misspent money from the federal Temporary Assistance for Needy Families Program. According to the lawsuit, they did so "for their enrichment."
In a written statement released to the Daily Journal on Monday, FRC board member and legal counsel Casey Lott reiterated previous claims by the organization that it has done nothing wrong.
"Mrs. Webb and other employees of the North Mississippi Family Resource Center have always adamantly denied any intentional misspending of TANF funds or any other wrongdoing," Lott said.
In statements and interviews last year, Lott said FRC "did what they were instructed to do by the state of Mississippi."
Lott has also claimed that Webb protested some of the payments she was directed to make by then-MDHS leadership.
However recipients of TANF grants, including FRC and other organizations and people named in Monday's litigation, were themselves required to spend TANF money according to federal guidelines, according to the MDHS lawsuit, which is being handled by former U.S. attorney Brad Pigott.
The lawsuit also asserts that FRC, Webb and other named defendants either knew, or should have known, the relevant restrictions that governed use of the TANF program.
Beginning with a state auditor's investigation in 2019, and continuing through multiple criminal and civil probes, officials have claimed that significant portions of these TANF dollars were not spent in accordance with federal guidelines.
For example, the litigation filed Monday repeats prior allegations identified by investigators that FRC and other organizations funneled lucrative contracts to family members and friends of former MDHS Executive Director John Davis, sometimes for services that were never actually performed.
The lawsuit claims, for example, that Davis' brother-in-law was paid by FRC and other organizations "without regard for whether or not he was performing any actual services for either organization."
In all, 38 organizations were named in Monday's civil lawsuit. In addition to Webb and the FRC, the Northeast Mississippi Football Coaches Association is a named defendant.
Beyond Northeast Mississippi, targets of the civil litigation included former football star Brett Favre, former MDHS Executive Director John Davis, and Nancy New, who ran the Mississippi Community Education Center, a nonprofit that also received significant funding through the TANF program.
New and her son, Zach New, pleaded guilty in April to criminal charges linked to their use of TANF money, according to reporting by Mississippi Today.
Criminal charges remain pending against Davis.
No FRC employee, including Webb, has been charged with any criminal wrongdoing.
Bob Anderson, who was appointed by Gov. Reeves to head MDHS in the wake of the TANF scandal, pointed to Monday's litigation as the latest step to right the agency.
"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," Anderson said in writing. "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. We begin that task today with the filing of this civil complaint."
