State adds USM volleyball project to effort to recoup misspent welfare funds
Published 10:58 am Friday, December 9, 2022
After months of national coverage about how former NFL quarterback Brett Favre solicited welfare money to build a volleyball stadium at his alma mater, the state of Mississippi has filed civil charges attempting to recoup the money.
The lawsuit alleges that Favre “understood that grant funds provided by MDHS could not be used for brick-and-mortar construction” — the first time Favre has officially faced this charge.
The new allegation comes just one week after Favre filed a punchy motion to dismiss the welfare department’s civil charges against him.
Mississippi Department of Human Services filed its initial civil suit, the agency’s response to a multi-million dollar fraud and embezzlement scandal, in May. The initial complaint targeted Favre for $1.1 million he received under a “vague, illusory promise that Favre make appearances or record PSAs” and $2.1 million the athlete helped secure for a pharmaceutical venture.
But the complaint did not initially include the University of Southern Mississippi Athletic Foundation, which took $5 million in welfare money to build a volleyball stadium — billed as a “wellness center” — on its campus.
The amended complaint, filed Monday, adds the athletic foundation and sheds more light on the roles of Favre and other state officials in the scheme, including university officials who are not included as defendants. Former welfare director John Davis and nonprofit founder Nancy New have both pleaded guilty to several fraud and bribery charges in connection with the welfare scandal.
“Despite the Foundation’s expressing worries about ‘rais[ing] negative concerns’ and being ‘scared to death,’ Brett Favre urged Nancy New that it was necessary for the Foundation to ‘utilize you guys [John Davis and Nancy New] in every way,’” the filing reads.
While the new complaint increases Favre’s potential liability by $5 million, it removed the $1.1 million claim against Favre in the initial complaint because he repaid that amount to the state in 2020 and 2021.
The new filing also adds a lobbyist, two former MDHS attorneys and a virtual reality company as defendants in the lawsuit.
It does not mention former Gov. Phil Bryant or the discussions the governor had with Favre about finding funding for the volleyball stadium or Prevacus, the company purportedly developing a drug to treat concussions.
“Governor Bryant was both aware of and supported MCEC’s payments to Prevacus at issue in this lawsuit, as well as its $5 million payment to Southern Miss in connection with the construction of a wellness center,” Favre alleged in his most recent motion.
The lawsuit still names fitness trainer Paul Lacoste and his organization Victory Sports Foundation, which received $1.3 million under what former MDHS leader Davis described as “the Lt. Gov’s fitness issue,” referring to then-Lt. Gov. Tate Reeves. Now governor and in control of the suit, Reeves is also not mentioned in the amended complaint.
In the new complaint, MDHS added the following new defendants:
- USM Athletic Foundation.
- N3 Holdings, the company that Nancy New and her sons Zach and Jess New owned and allegedly used to personally invest in Favre’s pharmaceutical start-up companies called Prevacus and PreSolMD.
- Lobaki, Inc. and Lobaki Foundation, a virtual reality company that received welfare funding to prop up a VR training academy.
- JTS Enterprises, the company formed by Brian Jeff Smith, John Davis’ brother-in-law, through which he received welfare funds.
- William Longwitz, former lawmaker and lobbyist who received nearly $320,000 in welfare funds to lobby on behalf of New’s organization.
- Inside Capitol, LLC, Will Longwitz’s lobbying firm.
- Jacob Black, former MDHS attorney.
- Garrig Shields, former MDHS attorney who left the agency to work for New’s nonprofit.
- William, Weiss, Hester and Co., PLLC, the accounting firm that conducted regular audits of the New nonprofit.
The initial complaint sought to claw back a total of about $24 million. The new complaint asserts that the two nonprofits through which most of the money was misspent — Mississippi Community Education Center and Family Resource of North Mississippi — breached their agreements with MDHS and should have to return their entire awarded amounts, $39.3 million for MCEC and $38 million for FRC. Neither nonprofit has assets totaling anywhere near those amounts.
Former U.S. Attorney Brad Pigott, the private attorney MDHS first hired to bring the suit, planned to include the volleyball project in the complaint, but Reeves’ office instructed him to remove it before filing. In July, after Pigott subpoenaed the athletic foundation for its communication with former Gov. Bryant, among other individuals, Reeves’ appointed welfare director Bob Anderson fired the attorney. At that time, Reeves said the agency was still considering more potential defendants to add to the suit, including the athletic foundation.
“Governor Tate Reeves tasked me with correcting the path of MDHS,” Anderson said in a statement Monday. “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. We continue that task with this motion to file an amended civil complaint.”
The amended complaint alleges that in April of 2017, Favre made a “handshake agreement” with USM, where his daughter played volleyball, to personally guarantee the funds to construct a new facility for the team. He then contributed $150,000 worth of autographed merchandise and began soliciting donations from various people and companies, including the Kohler family.
“Favre, however, was unable to convince his friends and connections to donate enough money to meet his obligation to fund the construction of the volleyball facility, and he did not want to pay the costs out of his own pocket,” the complaint reads.
Favre’s attorney Eric Herschmann rejected the assertion that the athlete personally committed funds to the project, pointing to emails from USM’s athletic director at the time, Jon Gilbert, that say Favre agreed to fundraise for the project.
In July of 2017, Gilbert introduced Favre to nonprofit founder Nancy New, Favre said in his recent filing.
New, who sat on the athletic foundation board alongside Favre, and another nonprofit operator Christi Webb had just become the recipients of a massive cash flow from the welfare department. At the time, New’s nonprofit Mississippi Community Education Center already had existing leases with USM, including for a large suite at the football stadium, where the nonprofit could invite guests to watch the games.
Shortly after connecting with New, Favre met at USM with her, Gilbert, Davis, MDHS attorney Garrig Shields and former WWE wrestler Teddy DiBiase to discuss using MDHS funds on the volleyball construction.
“John Davis discussed his plan to ‘do good things for USM’ and ‘give them 4 mil’ with Christi Webb and Nancy New, both of whom enthusiastically agreed. John Davis suggested that Nancy New tell Jon Gilbert that the facility should be named after Favre,” the complaint reads. “The Foundation told Brett Favre that they were ‘very leary [sic] of accepting such a large grant,’ and suggested ‘trying to find a way for John [Davis] to allocate money to an entity that could then give to us that would pay for brick and mortar.’ Brett Favre also told Nancy New he ‘passed [this] same info[rmation] to John [Davis] and of course he [John Davis] sent back we will find a way to make it work.’”
The lawsuit alleges attorneys Shields and Black were instrumental in crafting the sham lease agreement, as well as facilitating several other allegedly fraudulent purchases.
Black was one of the employees who gathered and brought information about Davis’ alleged fraud to Gov. Bryant in June of 2019.
Favre denies any wrongdoing in the volleyball project. Longwitz, Black, Shields and a spokesperson for USM did not return calls to Mississippi Today on Monday.
“While he had helped raise funds for the facility and thereby met Davis and New, Favre, as with the transfers complained of in the Complaint, did absolutely nothing wrong in connection with the Wellness Center,” Favre’s Nov. 28 motion reads. “During Favre’s fundraising efforts, in July 2017, the Southern Miss athletic director introduced Favre to New, a Southern Miss Athletic Foundation board member, as someone who could assist Favre with the fundraising. New was well connected with numerous Mississippi officials, including Davis and then-Governor Bryant, and close friends with Governor Bryant’s wife Deborah Bryant.”
Tom Duff, current president of the Institutions of Higher Learning Board of Trustees and one of the board members who signed off on the $5 million MDHS grant to build the volleyball stadium in 2017, told Mississippi Today last month that he believed USM should return the funds.
“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 in a statement Monday after the state’s latest filing. “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. “
Editor’s note: Mississippi Today Editor-in-Chief Adam Ganucheau’s mother signed off on the language of a lease agreement to construct a University of Southern Mississippi volleyball stadium. Read more about that here.