Nonprofit founder Nancy New handed restaurateur Jeff Good a check for $200,000 and then ghosted.

The idea was for their organizations to partner to create a food recovery and reclamation center. They would take food that groceries and restaurants didn’t want — what people picture as a bruised apple or an ugly carrot — and turn it into ready-to-eat meals for the hungry.

In late 2018 when they conceived the concept, one of Good’s businesses Soul City Hospitality was already leasing and investing in an empty, 16,000-square foot warehouse with that kind of project in mind.

And New, who held a multi-million dollar state contract to spend federal welfare dollars with virtually no accountability, had the cash.

New is now awaiting trial within what officials have called the largest public embezzlement scheme in state history and Good has nothing to show for the deal.

A recent independent audit of the Mississippi Department of Human Services labeled the $200,000 welfare payment to Soul City Hospitality as waste and abuse. It’s a sliver of the $12.4 million in such spending they identified. Officials have made no criminal allegations surrounding the Soul City deal.

Good, owner of three Jackson restaurants, told the accounting firm that after New handed him the check in February of 2019 to cover a one-year lease, “not a hammer was lifted.” His team received no more communication from New’s nonprofit, Mississippi Community Education Center. The nonprofit did not provide paperwork needed for permitting, Good said. New did not place staff in the warehouse. Nothing happened during the lease period.

The building wasn’t in operation then and hasn’t been since.

Good was aware that New and John Davis, then-director for the Mississippi Department of Human Services, had discussed funding the project, an email shows. The department administers several federal grants. But Good told the forensic accountant that he didn’t know the money Soul City received had come from a federal program called Temporary Assistance for Needy Families — the one known as welfare.

“The energy sap was incredible,” Good said of the fallout. “Just imagine the punch in the gut.”

The nonprofit’s inaction and eventual demise was just one setback in a years-long saga involving different iterations of the same food innovation idea.

Good formed Soul City Hospitality LLC in 2014 alongside David Watkins Jr. — son of the Jackson developer who restored the King Edward hotel and was a controversial player in the failed deal to revitalize Farish Street.

Their goal was to create better pathways for Mississippi farmers to get their products into the commercial marketplace.

On his LinkedIn page, Watkins says he’s served as the Local Food Systems Developer for Soul City Hospitality since 2012. Over nine years, the page says, he’s developed and overseen Soul City’s local food initiatives, but those amount to mostly plans: Plans to open a “food & health innovation center”; plans for a “food hub, a processor, a food incubator, and some ‘locally grown’ retail”; and plans for what they called the “Up in Farms Food Hub.”

“The initial cold storage renovation in the warehouse is almost complete, and Up in Farms will soon launch a small pilot. Stay tuned!” his bio reads.

Watkins previously worked as a digital media analyst for global policy think-tank RAND Corporation headquartered in Santa Monica. When Watkins came back from California to his hometown, Good said he started asking questions.

Watkins couldn’t understand the paradox of Mississippi’s food systems: Why businesses like Good’s restaurant, located in an agriculture state, didn’t sell more local food. Why a state known for having some of the richest soil also has some of the most hunger and worst nutrition.

It’s true that farming is Mississippi’s largest industry, employing 17% of the state’s workforce when you count its indirect jobs. But don’t mistake that for a large quantity of human food.

The crops growing in Mississippi farmland are mostly cotton and food for cattle — soybeans and corn.

The few local farmers who grow produce in Mississippi lack distribution and transportation channels, as well as the quality assurance and liability policies retailers need to feel confident in their purchases.

But Good and his partners wanted to see if they could solve the puzzle, he said, “to really try to make a change to the economics of the state.” His business secured a $3,000-a-month lease on the warehouse at the old farmer’s market on Woodrow Wilson in Jackson, property owned by University of Mississippi Medical Center.

The food hub project received a $100,000 grant from the USDA and a $315,000 construction grant from the Delta Regional Authority. Then-Gov. Phil Bryant announced the Delta Regional Authority grant, part of the States’ Economic Development Assistance Program, at a 2015 press event outside the warehouse.

Good and his partners also took out almost $700,000 in private debt to renovate the coolers, offices and production space, and in 2017, they opened the Up in Farms Food Hub.

The produce company, which Good said staffed about 20 people, lasted one season.

It failed.

You name the problem, Good said, they encountered it. Farmers couldn’t reap the supply they thought they could, either due to the weather or not having enough farmhands. A lack of cold storage meant food went rotten. They faced worm infestations.

Down the supply chain, Good’s team struggled to sell the produce to local grocery stores or restaurants, in part because of the inconsistency. Retailers generally want to rely on a slate of products, and Up in Farms couldn’t deliver.

“So what we learned is there’s a reason nobody does it. Because it’s really hard,” Good said.

The group shut down the operation and closed the facility in 2017, but they maintained the $489-a-month lease with UMMC (who had agreed to reduce the initial lease amount after the construction improvements).

Enter Nancy New.

The Up in Farms Food Hub “had not worked well,” the latest audit report states, “and, in the fall of 2018, MCEC had approached them with the desire to rent the warehouse space and collaborate to achieve the objective of MCEC.”

Mississippi Community Education Center had recently started receiving tens of millions of welfare dollars from Mississippi Department of Human Services to run a state-sanctioned program called Families First for Mississippi.

Under the leadership of then-Gov. Phil Bryant and his appointed welfare director Davis, multiple state agencies began sending people in need — the homeless, those applying for food stamps or seeking a job — to Families First.

But past employees told Mississippi Today that nonprofit leaders never provided the support, or in many cases the funding, necessary for the programs to succeed. Millions of their grant dollars flowed instead to pie in the sky projects run by the famous or politically connected, Mississippi Today’s reporting has revealed.

To begin the new food project, New and Watkins signed a $16,620-a-month sublease — 34 times what Soul City was paying for the lease with UMMC.

The parties agreed the funds would be used to pay off the debt Soul City already incurred in construction and to make additional upgrades to the facility, Good told Mississippi Today. Soul City would act as a facilitator. New’s nonprofit was supposed to supply a project leader. The partners also envisioned using the space for a small-business incubator, workforce training programs and nutrition education.

Watkins declined to speak with Mississippi Today for this story, saying Good would speak for the group.

The team’s project pitch listed dozens of other state agencies and organizations as partners, with their own planned roles once the project got off the ground: The Mississippi Department of Human Services Division of Workforce Development, USDA, Valley Foods, Unified Brands, UMMC Sanderson Department of Obesity Metabolic Diseases and Nutrition, UMMC Grant Writing Department, Community Foundation of MS, the Mississippi Department of Corrections, the Mississippi Development Authority, Hinds Community College, Refill Café, Mississippi Department of Ag & Commerce, Central Mississippi Planning and Development District, Mississippi State University, Up in Farms Food Hub, Southern Artisan Training Institute, Southern Christian Services (PALS), We Will Go Ministries, Midtown Partners Prosperity Center, WIN Job Center, Barksdale Reading Institute, Voice of Calvary, Hope Credit Union, New Way, Mississippi Center for Excellence, Springboard to Opportunities, Stewpot Community Services, Boys & Girls Club of Central MS, Hinds Behavioral Health Center, Methodist Children’s Homes, Henley-Young Juvenile Justice Center, Hinds County Human Resource Agency and others.

Auditors said that they found no emails from Davis about the Soul City project, but an email between the other private partners says there was a “meeting with John Davis at MDHS,” where “Nancy and John tossed around some funding ideas” for the project. The only state agency employee copied on this email was Mississippi Development Authority’s Joe Donovan, whom Good said has long helped him connect with business opportunities. Donovan used a personal email to talk about this deal. He did not return a call to Mississippi Today on Thursday evening.

Soul City Hospitality also represented that the state had approved the project for $1,000,000 in state bonds, which it would not have to repay, that could be drawn down for additional construction on the building.

Instead of making monthly payments on the farmer’s market property, New paid for a years-long sublease upfront.

“According to the interview conducted of the Soul City representative, Jeff Good, he was surprised when after the contract was signed, he was handed the check for $200,000,” the audit reads.

A memorandum of understanding drafted two months before the beginning of the lease shows the original plan was for Families First to make a lump sum payment of $523,000 that would pay off Good’s company’s debt.

“For Soul City, the financial arrangement would provide us with the debt relief we so desperately need: the promissory note holders paid back, and the bank debt covered via the sublease,” Good wrote.

Good said he didn’t remember this initial pitch, but that by the time an actual agreement between Soul City and New’s nonprofit was signed, it was the month-t0-month sublease discussed in the audit.

The audit says that even though the New nonprofit never took possession of the warehouse, Soul City did not return the lease payment because the business incurred costs as a result of the the deal: it’s monthly lease with UMMC, the debt service for previous improvements, and things like insurance, utilities and pest control.

The cash-up-front deal resembled a similar large lease payment Mississippi Community Education Center made with welfare money when New signed a $5 million sublease with the University of Southern Mississippi Athletic Foundation for the university’s athletic facilities.

The welfare money went to pay for the new volleyball stadium on campus — a project pushed by former NFL quarterback Brett Favre, who himself received $1.1 million from the nonprofit’s welfare grant and whose daughter played volleyball at the USM. (Favre promised to repay the money in 2020 but he has yet to return $600,000).

New justified the $5 million deal by stating in the lease, approved by the Mississippi Institutions of Higher Learning Board of Trustees, that her nonprofit would use the facilities to conduct programming to “benefit the area’s underserved population.” Even though the lease didn’t serve the poor, and was unallowable under federal welfare rules according to the forensic auditors, it was not included in the report as “waste, fraud or abuse.” They similarly did not address the payment to Favre.

Documents show Families First used the the property it leased at USM one time for a 2018 “Healthy Teens Rally,” one of the governor’s initiatives, and otherwise abandoned the concept.

The food hub lease also resembles a six-year, $9,500-a-month lease New signed on a horse ranch owned by the Marcus Dupree Foundation, which purported to provide “equestrian activities for underprivileged children,” Mississippi Today first reported. The recent audit also failed to address this purchase. The property appeared to be the private residence of Dupree, a former football player, and there’s no record of New’s nonprofit providing services there.

Likewise, shortly after signing the Soul City lease, New pulled away from the project to focus on opening a new Families First resource center inside the old renovated-hotel-turned-government-office on State Street (after director Davis had moved his executive office to a fancier building in the heart of downtown).

The resource center at the new office purported to address hunger. It conducted canned food drives, raised money to buy Turkeys for veterans around Thanksgiving, and housed a physical food pantry containing mostly canned green beans and corn.

The morning before Nancy New’s arrest, then-Families First operation coordinator Will Lamkin explained a hypothetical situation to Mississippi Today. Let’s say a visitor to the center was panicking because the gas company threatened to cut off their service over a $40 past due bill.

“Well, I can’t give them $40,” Lamkin said. “But I can give them $40 worth of food.”

In the same center, New’s staff created a mock farmer’s market, next to a fake bank and a second-hand clothes closet set up to look like a store.

Multiple former employees told Mississippi Today that Families First based its programming — such as these interactive displays mimicking life for the so-called productive citizen — off principles and beliefs about what people in poverty need, not scientific research or evidenced-based models.

Up in Farms, an offshoot of the Soul City Hospitality parent company, helped stock Families First’s mini market with fresh, plump produce for the September 2019 ribbon cutting, which provided ample photo ops. But the food bins mostly sat empty after that.

Up in Farms still has some presence in the food-justice space. Last year, it received a $75,000 donation from Dole Packaged Foods reportedly to run its Farm-to-Table Training Center and provide 1,000 meals to those in need. It has partnered to host mini farmer’s markets at the local Boys & Girls Club.

The Up In Farms website is currently down and it hasn’t posted to Facebook since 2018.

WAPT reported in June that Good’s restaurant company, Mangia Bene, was partnering with Dole and the Boys & Girls Club of Central Mississippi, who also gets welfare grants directly from the state, “to launch the Up In Farms Food Hub.”

The report said, “the goal of this proposed Woodrow Wilson location is to gather all the locally grown foods and produce and distribute it to people in need.”

Editor’s note: Managing editor Kayleigh Skinner’s husband Terry Sullivan was a staffer for the Up in Farms project before Mississippi Community Education Center’s involvement. Skinner took no role in the reporting, editing or publishing of this article.

Several members of Mississippi Today’s board of directors founded or hold leadership positions in some of the organizations listed as potential partners in the Up in Farms/MCEC partnership.

The post They took welfare money to turn ugly produce into meals, but fed no one appeared first on Mississippi Today.