Nancy New, scheduled to stand trial on April 5, told reporters she was directed to make payments to the founder of the drug company Prevacus. (Sarah Warnock/The Clarion-Ledger via AP)

Editor’s note: This investigation is the result of a collaboration between Mississippi Today and the Clarion Ledger. Anna Wolfe reported for Mississippi Today, and Giacomo Bologna reported for the Clarion Ledger.

Reporting by Mississippi Today and the Clarion Ledger raises questions about who knew that Mississippi welfare money was allegedly funneled to a biomedical startup company, who incited the deal and who stood to benefit.

When the state auditor held a press conference in February about an investigation into welfare embezzlement, only two people — Nancy New and her son Zach — were indicted for funneling $2 million to a Florida-based concussion drug company.

Now, Nancy New is saying someone else was behind the arrangement.

This story is the latest in an investigative series by Mississippi Today and the Clarion Ledger into a sprawling welfare scandal in which authorities say state officials and contractors illegally or questionably spent millions of dollars meant for poor Mississippians, ensnaring six people with criminal indictments.

Nancy New ran a private organization funded largely by block grants from the state’s welfare agency. Prosecutors say the nonprofit founder and her son committed a crime when they sent more than $2 million to Prevacus and PreSolMD, related companies that state leaders were trying to lure to Mississippi. She and her son Zach New pleaded not guilty.

Nancy New has not spoken publicly since she was indicted in February until reporters from Mississippi Today and Clarion Ledger approached her at her north Jackson home Friday, Nov. 6.

Nancy New, who is scheduled to stand trial on April 5, spoke with reporters for about 40 minutes. She declined to answer most questions. But when asked if she was directed to make payments to the founder of the startup, New responded, “absolutely.”

Nancy New repeatedly acknowledged that someone told her to direct the money for the development of concussion treatment therapies. She would not say who allegedly gave her that directive — or in what form it came.

When pressed on her relationship to the man behind Prevacus and PreSolMD, Florida neuroscientist Jake Vanlandingham, Nancy New responded, “Let me say this, I didn’t know the man.”

Vanlandingham had multiple meetings in Mississippi before Nancy New and her son allegedly sent him welfare money. Mississippi Today and the Clarion Ledger reached out to people who met with or were scheduled to meet with Vanlandingham, including former Gov. Phil Bryant, retired quarterback Brett Favre, the state’s top welfare officer John Davis, and former pro wrestler Teddy DiBiase Jr.

Bryant, Davis and DiBiase told reporters this week they did not instruct Nancy New to give money to Vanlandingham or his companies. Favre and his agent Bus Cook, both of whom are Prevacus investors, did not immediately respond to a request for comment.

Bryant, Favre and DiBiase have not been charged with any crime related to the welfare scandal. A grand jury indicted Davis on embezzlement charges — separate from the Prevacus payments — after DiBiase’s brother Brett allegedly used welfare money to pay for luxury drug rehab in Malibu. Davis has pleaded not guilty.

Emails show Davis was organizing meetings between Vanlandingham and Nancy New, including one he said Bryant and Favre requested, which was supposed to take place at Nancy New’s office in January of 2019, according to an email calendar Mississippi Today first reported in March.

But DiBiase, who worked closely with Davis, shed light on a separate meeting that took place at Favre’s home in either December 2018 or January 2019 — a meeting never previously published.

It was a pitch meeting, DiBiase said, according to his attorney, Scott Gilbert.

Gilbert said his client recalled meeting with six other people at Favre’s home in south Mississippi: Favre and Cook, Davis, Nancy New, Vanlandingham and a business associate of Vanlandingham.

“It was clear to Teddy (DiBiase) during this meeting that the Prevacus folks were pitching John Davis for state money as funding,” Gilbert said in a written statement. “This wasn’t an open forum where they were pitching to a bunch of potential investors. Had John Davis as executive director of DHS not attended, Teddy doesn’t think there would have been a meeting at all.”

At or around the time of the meeting, Prevacus created an investment pitch document that said the company expected to get $1.95 million from DHS.

This document — newly obtained by the Clarion Ledger and Mississippi Today — makes no mention of Nancy New or the nonprofit she ran at the time, the Mississippi Community Education Center.

In an interview this week, Vanlandingham said he inked a deal with the Mississippi Community Education Center and that he assumed the funds came at least in part from the Mississippi Department of Human Services, considering Davis’ involvement in meetings up to that point. Vanlandingham said the money was supposed to help his company prepare clinical trials of a nasal spray designed to reduce swelling caused by head injuries.

In his mind, Vanlandingham said, the nonprofit and Mississippi state government were essentially synonymous, and Davis, the state official, appeared to be Nancy New’s boss. 

That’s why he continued to list the state welfare agency as a possible future funding source in an additional pitch that Clarion Ledger first reported in April.

But in the May audit report, the state auditor said that the agreement with Prevacus was actually entered into by Nancy and Zach New in their individual capacities — a key distinction that bolsters the auditor’s allegation that the News actually stole the funds. 

Vanlandingham would not share the contract, and the auditor’s office maintains it is confidential as part of an ongoing criminal investigation. 

The scientist said when he discussed Prevacus with Bryant, conversations centered around how the state could partner with the company to relocate and manufacture its concussion drug at Tradition, a new medical complex on the Gulf Coast. The company organized a dinner with Bryant in December 2018, a month before the allegedly illegal payments began flowing to Prevacus.

Bryant previously said recruiting health care companies such as Prevacus was a key part of his administration’s economic development strategy. He has called Prevacus “a good prospect,” but has repeatedly emphasized he never instructed anyone to give welfare money to the company.

“In order to provide total clarity to ongoing and future media reports, as governor of the State of Mississippi neither I, nor any member of my immediate staff, directed, instructed or ordered the spending of Temporary Assistance for Needy Families (TANF) funding through the Department of Human Services,” Bryant said in a written statement this week.

Bryant appointed Davis to head the Human Services agency in 2016. It was under Davis’ tenure that the agency misspent tens of millions of welfare dollars, according to this year’s annual state audit. At times, the director allegedly had unilateral control of awarding federal grants that flowed through his agency. 

While the state audit questions $94 million in agency spending — such as on luxury vehicles, lobbying for other private companies and celebrity contracts for services that were never performed — only a fraction of this questioned spending has resulted in criminal charges. 

The alleged payments of $2.15 million in welfare dollars to concussion research firm Prevacus and its affiliate PreSolMD represent the largest alleged theft in the indictments, payments that continued through October 2019, after Davis left office.

Because the state has such wide latitude to spend federal welfare grants how it wants, many seemingly inappropriate purchases may not be illegal.

New told Mississippi Today and Clarion Ledger she’s been advised not to speak publicly or release new information about the case until the Mississippi Department of Human Services has completed a forensic audit of the agency and nonprofit’s spending during Davis’ administration. 

New leadership at DHS recently ordered a forensic audit of spending under Davis, which will produce a more detailed accounting of agency misspending and is expected to be completed in May.

New said she believes the forensic audit will significantly contradict the narrative of the 104-page state audit.

“I just have to say that I think there’s a lot more information to come and we’re just waiting our turn,” New said.

The post Key figure in welfare scandal said she was told to make payments to Florida drug company appeared first on Mississippi Today.