Welfare scandal defendant sues Gov. Tate Reeves, claims he’s protecting himself and political allies

Published 5:00 pm Wednesday, October 11, 2023

A defendant in the state’s welfare scandal lawsuit sued Gov. Tate Reeves on Wednesday, claiming the governor is illegally controlling the lawsuit to protect himself and political allies including former Gov. Phil Bryant and Republican-leaning SuperTalk radio.

The lawsuit calls for an injunction removing Reeves from control of the state’s lawsuit regarding the welfare scandal and for the governor to repay the state millions of dollars for money spent on a private audit and private law firm.

The lawsuit also includes previously unreleased text messages about Reeves from officials with a drug company, Prevacus, championed by former NFL star Brett Favre. Authorities say the company illegally received welfare money. The lawsuit says the messages show Bryant — whom “Defendant Reeves refuses to sue” — persuaded Prevacus to support Reeves to continue the flow of welfare funds to the company.

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As Reeves was running for governor and Bryant was preparing to leave office, the head of the drug company, Jake Vanlandingham, texted, “Tate Reeves is our new guy,” to his company’s board members, and that he was going to meet with Bryant and Reeves, “Hoping to keep that non-dilute (funding) running our way!!” Non-dilutive is funding for a company where the company loses no equity.

One board member responded, “A very sweet deal. Who do we send campaign contributions to?” Vanlandingham, who is now a defendant in the state lawsuit, responded Reeves.

Another board member commented, “Let me get this process down correct. We get $2 million from MS Gov Office and we ear mark some of the funds to the next MS Gov. Campaign fund. America at its best.”

Vanlandingham responded, “Haha. Not the case.” A few days later, he messaged Favre that he was about to meet with Reeves and, “… we get more grant funds first week of July.” He later texted Favre that he “had a good talk with Tate Reeves.”


Reeves is ‘refusing to sue Bryant’ and SuperTalk radio

The lawsuit was filed by Austin Smith, the nephew of convicted former welfare chief John Davis and former manager of two programs targeted in state and federal investigations. The state is suing Smith for nearly $500,000. He’s one of 47 defendants from whom Mississippi is trying to claw back millions in misspent or stolen welfare money. Attorney Jim Waide, who is representing Smith, has previously claimed in court filings that Reeves and former Gov. Phil Bryant should be defendants in the state’s case.

The new lawsuit claims Reeves is refusing to sue Bryant, even though “there is overwhelming evidence of Bryant’s direct involvement” in both funding the drug company and providing $6 million in welfare funds for a volleyball stadium at Bryant’s and Favre’s alma mater, the University of Southern Mississippi. The lawsuit notes a separate criminal defendant in the scandal has alleged Bryant, who has not been charged by state or federal authorities, directed payments of over $1 million to Favre.

A Reeves governor’s office spokeswoman issued only a short response when asked about the lawsuit Wednesday: “The State of Mississippi is fighting to claw back every single dollar that was misspent in the scandal that occurred before Governor Reeves assumed this office.”

Reeves’ campaign later issued a separate statement: “It’s no surprise that some of the defendants who are being sued by the Reeves administration are unhappy because he is aggressively pursuing this case and working to claw back every misspent dollar. It’s another signal of how hard he is working to address this scandal from before his time in office.”

The lawsuit also claims Reeves is neglecting to sue Telesouth Communications Inc., which operates the SuperTalk radio network. It says that the network received $600,000 in welfare funds for advertising that was “made without the fair and open competition required by federal regulations.” The lawsuit refers to SuperTalk as “the Republican Party’s chief media advocate,” and not suing SuperTalk while suing “politically powerless defendants” such as Smith is an abuse of process, arbitrary government action and a denial of equal protection of the law.


Is Reeves in charge of investigating himself?

Reeves made clear last year that he was calling major shots in the state investigation and lawsuit to recoup millions in stolen or misspent welfare money. The Mississippi Department of Human Services, in charge of the welfare spending, reports to the governor’s office. Reeves had dismissed — for political reasons — the private attorney who had been handling the case for the state. The state auditor, who first uncovered the massive fraud and scandal, said this move by Reeves was a mistake.

After the state hired a Jackson-based law firm — a campaign donor to Reeves — to take over the suit, the governor vowed the state “will vigorously pursue this case … wherever it leads,” and will “eagerly cooperate with … criminal investigators” also probing the scandal.

Last year, Waide asked the state court to examine whether Reeves is controlling the case to protect himself and his supporters. He said Reeves should be a target of the welfare lawsuit, not in charge of it.

The new lawsuit filed this week claims Reeves, who oversees the state’s welfare agency, lacked legal authority to spend $2 million in welfare funds to hire a private accounting firm “to duplicate an audit already lawfully performed by the state auditor.” Mississippi Today reporting last year showed the MDHS director Reeves appointed pushed to limit who and what the hired audit could examine, and he tried to keep the state auditor and other law enforcement agencies out of the mix. A deputy state auditor referred to the audit as a “whitewash.”

The new lawsuit said Reeves also lacked authority to hire a private law firm to handle the state’s lawsuit to recoup money, and that the use of welfare money to pay the law firm violates federal law.


Reeves involvement in the welfare scandal questioned

The lawsuit also claims “Reeves may have been involved in” a transaction with his former personal trainer, Paul Lacoste, another defendant in the state lawsuit.

Mississippi Today reports have previously uncovered text messages that connect the governor to Lacoste. The texts show former welfare director John Davis, who has pleaded guilty to federal and state criminal charges in the scandal, directed a subordinate to send $1.3 million in welfare funds for “the Lieutenant Governor’s (Reeves’) fitness issue.”

Mississippi Today has also reported texts that show the governor’s brother, Todd Reeves, coordinated with state Auditor Shad White on damage control for former NFL star Brett Favre. An audit revealed the athlete had received $1.1 million in welfare funds for speeches the auditor said Favre never made. Todd Reeves also had arranged conversations with Gov. Reeves so that Favre could ask for the governor’s help in funding a volleyball stadium at the University of Southern Mississippi, a key focus of investigation to date into the welfare scandal.

Reeves last year said he dismissed the attorney who had been handling the case for the state. That lawyer, former U.S. attorney Brad Pigott, was removed from the case after he attempted to subpoena the University of Southern Mississippi Athletic Foundation’s communication with former Gov. Phil Bryant and others. Authorities say $5 million in welfare money was improperly diverted to build the volleyball stadium at USM.

Reeves’ staff had already forced Pigott to remove the university’s athletic foundation — whose board is made up of many of Reeves’ major campaign donors — from the civil suit.

Reeves said he ousted Pigott, who had worked on the case for about a year, because he wasn’t up to the task of such a large lawsuit and that Pigott had a “political agenda” and craved the media spotlight. Pigott said he was fired on Reeves’ orders because he sought communications between the USM foundation, Bryant, Bryant’s wife, Deborah, and Favre involving the stadium.


Should Reeves recuse himself?

John Pelissero is an author and expert on government ethics. He is a longtime political science professor and former provost at Loyola University Chicago and a senior scholar in government at the Markkula Center for Applied Ethics at Santa Clara University.

Pelissero said he believes Reeves “should recuse himself from being directly involved in this investigation” and making decisions such as which lawyers to hire or fire.

Pelissero said that even if there was no wrongdoing by Reeves, the basic tenets of government ethics would call for him to bow out of the mix because of questions about him and his brother, campaign contributions Reeves accepted from defendants and other issues.

“I would think the governor would recuse himself from being directly involved in this based on a couple of things … One, the governor is alleged to have steered some of the funds, these welfare funds, to other projects,” Pelissero said. “Two, he’s got a family member who has some involvement with one of the individuals being sued, that being the former quarterback.

“… There are two broad ethical categories here,” Pelissero said. “One is the question of whether there is a direct violation of law or policy … But the other ethical issue that arises is when there simply appears to be the possibility something unethical is going on. That perception can be just as corrosive to trust in government as a legal or policy violation.”


Attorney General hasn’t filed state charges in scandal

Attorney General Lynn Fitch’s office is ostensibly co-counsel in the case, and has signed off on hiring attorneys and other matters. But the state’s chief legal officer has publicly shown little interest in and had scant comment about the case. Fitch, notably, has not filed any state charges in what state Auditor Shad White called the “largest public embezzlement case in state history.” Since White first uncovered misspending four years ago, state criminal prosecution has been left up to the local Hinds County district attorney’s office, with Reeves and others vowing the state is cooperating with federal investigators.

Fitch did not respond to questions about Reeves’ making it clear he is in charge of the investigation and lawsuit, or whether she believes she or someone else should be in charge and Reeves not involved given questions about his possible conflicts. The new lawsuit contends that only Fitch has the authority to handle the suit and that her office should fund any private attorneys, who should be hired on a contingency fee basis.

In the past, Mississippi attorneys general have jealously guarded their authority to bring and control lawsuits on behalf of the state or agencies, and clashed with governors. Former Gov. Kirk Fordice in the 1990s attempted to prevent Attorney General Mike Moore from suing tobacco companies on behalf of the state. Moore prevailed.

State legislative leaders have likewise shown little interest in getting to the bottom of the scandal, preventing such from happening again or the state’s efforts to recoup stolen or misspent millions.

When asked whether, given questions about Reeves’ own involvement or his brother’s, they believe Reeves should still be in charge of the state’s investigation and lawsuit, Fitch, House Speaker Philip Gunn and likely next House Speaker Rep. Jason White declined comment.

A source close to the House leadership said, “the House leadership has not been privy to, nor kept in the loop on, the investigation and is not aware of anyone in the Legislature being informed or updated on the investigation and litigation.”

A spokeswoman for Lt. Gov. Delbert Hosemann said: “Our understanding is that the Attorney General’s Office represents the state (in the litigation).”


New lawsuit claims Reeves should repay state for airplane use

Eight people have been criminally charged in the welfare scandal. Seven have pleaded guilty, but remain free with sentencing postponed for agreeing to cooperate with prosecutors.

Federal authorities continue investigating, but have been silent about the investigation or anyone else who may be under scrutiny. Mississippi has long been without a permanent U.S. attorney to oversee the case, until the U.S. Senate broke an impasse on Sept. 29 and confirmed Todd Gee, a U.S. Department of Justice veteran overseeing public corruption cases.

The lawsuit filed on behalf of Smith in Hinds County Circuit Court on Wednesday claims Reeves is suing some people who will already be required to pay the money back because of federal law, and suing others who are “judgement proof” [sic] — with little or no means to repay large sums of money.

The new lawsuit also contains what appears to be an odd aside: It says Reeves should be liable for his use of the state airplane “for political purposes.” Mississippi Today recently published reports that Reeves has spent at least $31,000 using the state plan for apparent political trips.

“If low-level, local government employees are criminally prosecuted for embezzlement when they allegedly use government property for non-governmental purposes, then a state official should, at least, be held civilly liable for his or her use of a state airplane for non governmental purposes,” the lawsuit reads.

Smith in the lawsuit is specifically asking for: a trial by jury, a judgment for the benefit of MDHS for money paid for the second state audit and for private attorneys, an injunction removing Reeves from control of the lawsuit, a judgment for Reeves to repay the state for use of the airplane, and reasonable attorneys’ fees.


By Geoff Pender, Mississippi Today. Mississippi Today reporter Anna Wolfe contributed to this report.