JACKSON - John Davis, the former director of the Mississippi Department of Human Services, pleaded guilty on Thursday to two federal charges and state counts of fraud or conspiracy in connection to how the agency he led for several years misspent millions of federal welfare dollars.
Davis, 54, acknowledged in court on Wednesday that he could have intervened to prevent the state’s welfare agency and other nonprofits in the state from sending federal dollars to the companies of retired professional wrestler Ted “Teddy” DiBiase Jr.
“I can only say I used very, very bad judgment, and I shouldn’t have done it,” Davis told the court.
Hinds County Circuit Judge Adrienne Wooten accepted Davis’ guilty pleas for 18 state charges of conspiracy and fraud and sentenced him to serve 92 years in the Mississippi Department of Corrections, with 58 of those years suspended.
Wooten sentenced Davis to serve 32 years in prison, but the reality is he will likely serve much less time than that because his state sentence can occur simultaneously with his federal sentence, and he will be eligible for parole with the state charges.
The state judge throughout various points of the state court hearing seemed baffled that the former agency leader continued to let money from Temporary Assistance for Needy Families Program flow to DiBiase for work that he was not completing.
“Why did you do this?” Wooten kept asking Davis.
Wooten also ordered Davis to pay restitution of more than $220,000, and he will serve out his sentence in the federal prison system, instead of state prison. He’s also agreed to cooperate with federal and state authorities and testify against other defendants.
Davis on Thursday morning also pleaded guilty to two federal charges of conspiracy and theft. U.S. District Judge Carlton Reeves accepted Davis’ pleas, which carry a maximum penalty of 15 years. Reeves is scheduled to sentence Davis in early February.
Both the state and federal judge ordered Davis released on bond, but Judge Wooten ordered Davis placed on house arrest, until he is sentenced by a federal judge in early February.
Davis’ guilty plea marks a notable moment in the sprawling investigation that involves millions of allegedly misspent federal dollars and that has entangled six criminal defendants so far and raised questions about how much influence a former governor wielded in the welfare program.
The scandal first came to public light around two years ago when State Auditor Shad White announced that his office had arrested six people in connection to allegations over misspending federal welfare dollars.
“Today marks an important day for justice for Mississippians in the massive welfare scheme that my office uncovered more than two years ago," White said in a statement. "District Attorney Jody Owens and his team did an incredible job putting a stop to the flow of money to the fraudsters who took from the poorest in the state."
Davis’ plea deal could have implications for a Northeast Mississippi nonprofit that state leaders have also purported misspent federal welfare dollars.
Documents related to Davis’ charges state there are four unindicted co-conspirators who participated in the scheme with Davis. It’s unclear who all the co-conspirators are.
Casey Lott, an attorney representing the Tupelo-based Family Resource Center of North Mississippi, told the Daily Journal on Wednesday that it appears Christi Webb, the director of the FRC, has been "vaguely identified" as one of the co-conspirators.
Lott disputed some of the claims attached in the federal complaint, and said it was "absurd" for federal prosecutors to claim Webb was conspiring with Davis. Webb was not identified as a criminal defendant.
“The DiBiases and their organizations contracted to provide services for needy families,” Lott said in a statement. “The problem is they didn’t hold up 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.
Davis is now the fifth person to plead guilty to criminal charges in connection to the massive welfare scandal.
Nancy and Zach New, leaders of a nonprofit who received welfare dollars, pleaded guilty to state charges in the welfare case and separate federal fraud charges they faced in connection to public school funding. The News have also agreed to cooperate with federal investigators.
Ann McGrew, an accountant for the News' nonprofit, has also pleaded guilty to conspiring to commit embezzlement in connection with the welfare case. As part of her plea deal, she has agreed to testify against other defendants.
DiBiase pleaded guilty to making fraudulent statements for the purpose of defrauding the government.