• Welfare embezzlement scandal: MDE reviews millions in education dollars directed to groups - Jackson Clarion Ledger

    The Mississippi Department of Education is reviewing millions of dollars it has directed to a nonprofit organization and private schools run by Nancy New, who was recently indicted as part of the largest embezzlement scheme on record in Mississippi, according to an agency spokesman.

    MDE has directed nearly $15 million to two organizations run by New over the past five years.

    Prosecutors say the embezzlement scandal is related to money doled out by the Mississippi Department of Human Services — not MDE — and there is no indication in publicly released records that education money given to those organizations is tainted.

    MDE spokesman Pete Smith said the agency is conducting a precautionary review, and there is not a timeline for when it will be completed. Smith said payments to private schools run by New will not be interrupted during this review.

    New was one of six people arrested and indicted last week as part of scheme that prosecutors say stole at least $4.15 million in welfare money.

    At the heart of the scandal is a nonprofit called the Mississippi Community Education Center, which New founded and runs.

    According to prosecutors, public money that went to the MCEC to help facilitate social programs was instead diverted to New, her son, medical device companies in Florida and a former professional wrestler.

    MDE has directed $2.6 million to the MCEC over the past five years, according to state records. 

    The backstory: Everything we know about the embezzlement scandal so far

    The wrestler: How an ex-pro wrestler became a top welfare official in Mississippi — and got indicted

    'Teachers, students didn't deserve this'

    New also runs several private schools through a company called New Learning Resources. The schools have a focus on special need students. Those schools include New Summit School in Jackson, North New Summit School in Greenwood, South New Summit School in Hattiesburg, Spectrum Academy in Jackson, and an online school called the New Learning Resources Online.

    New Learning Resources has received more than $12 million through MDE over the past five years, according to state records. That money is a mixture of private school vouchers, dyslexia scholarship students, and other state and federal money.

    New Learning Resources School District and MCEC have spent combined more than $90,000 on lobbyists at the Capitol over the past five years, records show. 

    During the 2019 campaign, then-Lt. Gov. Tate Reeves filmed a campaign ad at the New Summit School in Jackson, according to Mississippi Today, which also reported that the News contributed $5,000 to his campaign.

    Reeves addressed the campaign money and commercial at the Thursday news conference. He maintained the school does good work and its "teachers and students didn't deserve to be caught up in all of this."

    Where does MCEC get its money?

    A Clarion Ledger review of public tax documents and government expenditures show that much of MCEC's revenue in recent years was made up of welfare money from MDHS. 

    Over the past five year the organization has also gotten millions from the Community College Board and the Mississippi Department of Health. 

    MDH has already reviewed its current contracts with the MCEC in light of the embezzlement scandal, according to spokeswoman Liz Sharlot. Sharlot said the health department is currently paying the MCEC to educate communities on the dangers of tobacco use and vaping.

    "Every month, the coalitions must report all expenses and substantiate them with receipts. Contract deliverables have been successfully met by these two coalitions over the years," Sharlot said. "We have had no challenge with invoices and there are several layers of oversight."

    Similarly, Kell Smith, spokeswoman for the Mississippi Community College Board, said her agency is reviewing $4 million in funds given to the MCEC for early childhood programs.

    "Our financial monitoring includes detailed reviews for all programmatic funds and with third parties," Kell Smith said. "MCCB stands ready to provide any information to oversight authorities needed as part of any additional audit inquires related to MCEC."

    The MCEC has also gotten thousands of dollars from the state's Department of Rehabilitation Services and Department of Public Safety, as well as $350 from the Mississippi Arts Commission 

    MCEC bank account frozen

    As part of the criminal case against New, a judge approved the state auditor's request to freeze the MCEC bank account allegedly used in the embezzlement scheme.

    A staff attorney for Auditor Shad White wrote in a court filing that the account contains state money, which New and her son are continuing to misuse.

    MCEC said freezing this account was illegal and would be disastrous for the nonprofit.

    "MCEC’s inability to access its funds will affect its ability to pay employees and will disrupt the provision of vital social services and community based services in 42 Mississippi counties," the nonprofit argued in a court filing.

    Meanwhile, the embezzlement investigation is ongoing — and possibly widening. 

    White told reporters at a press conference that more indictments are possible, and on Sunday he announced he would be meeting with the FBI to discuss the investigation.

    "We moved quickly and quietly in the Auditor’s office to put a stop to the DHS scheme before any more money was taken, and now is the time to use every investigative resource available to uncover all the fraud that remains," White said.

    Contact Giacomo "Jack" Bologna at 601-961-7282 or gbologna@gannett.com. Follow him on Twitter @gbolognaCL.

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    February 12, 2020 at 04:00PM

    Welfare embezzlement scandal: MDE reviews millions in education dollars directed to groups - Jackson Clarion Ledger
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