Thread by @ayewolfe

Let’s dig into what Gov. Reeves said about the MDHS civil suit yesterday, less than a week after removing the attorney who crafted the litigation — the latest wrinkle in Mississippi’s welfare scandal.
 
This one is a bit wonky, but bear with me.
mississippitoday.org/2022/07/29/gov…

Both the Reeves admin and the attorney, Brad Pigott, say he was let go because he subpoenaed USM Athletic Foundation. The subpoena included their communication with NFL legend Brett Favre and former Gov. Phil Bryant, @MSTODAYnews first reported.
 mississippitoday.org/2022/07/13/phi…

In 2017, the foundation entered what attorneys call a sham lease to secure $5 million in welfare funds from a MDHS-funded nonprofit to build a volleyball stadium — a project inspired by Favre.
mississippitoday.org/2022/04/06/bre…

Welfare, or TANF, cannot be used for brick and mortar, hence dressing up the payment as a lease — a ruse that state officials and welfare grantees used more than once.
mississippitoday.org/2020/03/18/spo…

Much of this scandal spawned from the state’s extremely lax handling of these funds, and possibly incompetence, but to me, the cover of the lease shows they knew they weren’t supposed to use the money this way — that’s where the deceit comes in.

But this was a project with lots of eyes, approved by IHL and the AG, and the subject of meetings with the governor, which @MSTODAYnews first uncovered.
First here: mississippitoday.org/2020/02/27/wel…
Then here: mississippitoday.org/2020/03/05/the…
And here: mississippitoday.org/2022/04/06/bre…

Back to the civil suit: Reeves alluded that Pigott went too far by targeting an entity, USM Athletic Foundation, that is not included as a defendant in the complaint. But it was supposed to be until Reeves’ staff made Pigott take it out before filing. Why?

Reeves admitted yesterday that his office — not MDHS and the private attorney handling the case — chose who to sue. The governor said they decided to target only those included in 1 out of 4 forensic audit reports. The one that identified expenditures as “waste, fraud or abuse.”

So many egregious purchases — including $5m for the volleyball stadium, the Lobaki virtual reality center (both of which resulted in guilty pleas), the $1.1m Brett Favre contract, payments to high powered lobbyists, etc. — were not included in the particular audit Reeves cited.

That’s because some entities, namely the New nonprofit AND the auditor’s office, refused to turn over records to auditors, as my colleague @GeoffPender reported. “If other evidence had been made available, (it could) impact the findings in this report.” mississippitoday.org/2022/06/29/mis…

These unexamined purchases totaled $40 million. You can read more about that audit in my initial story back in October.
mississippitoday.org/2021/10/04/new…

In selecting defendants, Reeves said he made one exception for a company called Prevacus (and later clarified he also meant related figures Brett Favre and Jake Vanlandingham, as well as the affiliate PreSolMD), which was not named in the “waste, fraud and abuse” report.

Prevacus and PreSolMD were the pharmaceutical companies Brett Favre tried to get Mississippi officials to invest in, a story @MSTODAYnews broke all the way back in the infancy of this saga in February of 2020.
mississippitoday.org/2020/03/05/the…

Reeves said he included Prevacus as a defendant because it was the subject of a criminal indictment — reason enough to sue. To be sure, the story surrounding Prevacus presents possibly the biggest risk of exposure for Favre and former Gov. Phil Bryant.
mississippitoday.org/2022/04/04/phi…

Favre on several occasions suggested enticing Bryant with stock to bring him “on the team.” His projects soon started receiving millions in stolen welfare funds. Two days after leaving office, Bryant began consulting for Prevacus and agreed by text to accept a “company package.”

The addition of Prevacus is interesting in that it shows that MDHS is not shying away from suing entities that the feds may already be pursuing criminally.

But Prevacus isn’t the only entity named in criminal charges and likely the subject of ongoing investigations. The schemes surrounding USM Athletic Foundation and Lobaki, too, resulted in indictments, as I first pointed out in my May story on the lawsuit. mississippitoday.org/2022/05/09/mis…

@GanucheauAdam wrote about some other reasons Reeves might not want to stir the athletic board: mississippitoday.org/2022/07/26/mis…

Zach New is literally facing prison time because of the scheme, and yet the state isn’t (at least at this point) going after that expenditure, all for the stated reason that USM Athletic Foundation wasn’t named in an admittedly limited, incomplete report.
mississippitoday.org/2022/04/22/nan…

This isn’t the only caveat in Reeves’ “objective process” for selecting defendants. Many entities named in the “waste, fraud and abuse” report were NOT included in the civil suit, such as Through the Fire Ministries. mississippitoday.org/2022/04/07/mis…

(This was the ministry founded by the Christian musician Jason Crabb, of which then-First Lady Deborah Bryant was a fan).

(The welfare program purchased 4,000 of their children’s books about the Ten Commandments and a crab named Jase).

While the ministry received $43,000 in welfare funds from the two “Families First” nonprofits, the audit only examined the funds from FRC, not MCEC, for the reason I explained above, so the report only identified $25,000 worth of waste fraud and abuse associated with this group.

Every other entity that was named in the forensic audit but not in the civil suit — Beau Rivage, which received $598 in lodging for a training event, for example — were associated with fraud, waste or abuse in some amount less than $25,000.

Based on the caveats in the governor’s selection process, who they ended up suing, and over which expenditures, the “waste, fraud and abuse” explanation appears more of a pretext for excluding USM and the volleyball center scheme.

Reeves did say that they could add additional defendants later on and seemed annoyed that the civil litigation is taking place before criminal cases have wrapped up. “…most of the time in situations such as this, the civil case comes after the criminal case. This is the reason.”

Just as Pigott was gearing up to depose people in the fall — one of the public’s only shots at securing the truth in this whole debacle — some defendants have requested a stay in the case, which could halt the civil litigation for a very long time.

Just based on Reeves’ comments, it seems the state could support this route.

But perhaps most revealing was when Reeves was asked about his overall perspective on USM and the volleyball scheme: “I don’t know all the details as to how that came about. What I do know is that it doesn’t seem like an expense that I would personally support for TANF dollars.”

“I don’t even like the state building stadiums with general fund tax dollars. I’m not real excited about Jackson State building a football stadium,” Reeves said.

Using a nonprofit run by a friend of the governor as a passthrough, a black hole, to put federal funds (that were supposed to help poor people) towards a volleyball stadium to make Brett Favre happy is not something I would put in the category of “unwise use of government money.”

Just ask the News what it was. #TheBackchannel