Excerpt
Author’s Note This book is based on my own memory of events. Memories are fallible. But my memory is pretty good and is well supported by documentation and evidence. There will be some who lie and say what happened did not. I suspect those people will be the ones most embarrassed about their role in the scheme I recount in the following pages.
The credit for everything written here goes to the 140 men and women of the Mississippi Office of the State Auditor. They were the ones who stared at endless PDFs of documents, extracted information from interviewees, and pieced together the puzzle of the DHS — Department of Human Services — scandal. I have the honor of telling you what they did.
Introduction My cell phone buzzed in the empty passenger seat next to me. My family — my wife, our infant daughter in her car seat, and I — were traveling in our bright-orange Jeep to Florida where I was slated to give a speech to a group of accountants. It was June, 2019. Glancing down at my phone, I could see that I had several missed messages. The most recent notification was a voicemail from my office saying the governor of Mississippi was looking for me. He’d been calling my desk phone. It was important.
I serve as the state auditor of Mississippi. It’s an elected position atop a state agency of 140 people. Our mission is to ensure that Mississippi’s public money is spent legally. We do this by conducting routine audits, and if there is an allegation that funds have been stolen, we investigate. When we find a thief, we work with prosecutors to convict them. It’s similar to the FBI’s role for the federal government, except our jurisdiction only covers theft of taxpayer money — none of the heart-racing excitement of anti-terrorism or counter-intelligence work for us. We employ lawyers, career law enforcement officers who specialize in white-collar crime, accountants, a network intrusion specialist (a fancy way of saying “hacker”), and support staff.
It wasn’t unheard of for the governor to call me with a question. But it was unusual for his office to dial me repeatedly until he got an answer. There aren’t many auditing emergencies. It was also unusual that he did not call directly from his cell phone to mine. Because he’d been trying to call my office line, my secretary was leaving me messages about his persistence. The fact that the governor was calling from his government desk phone to my government desk phone suggested he wanted an official record of the call to exist.
I called Governor Bryant back. Phil Bryant was a colorful two-term governor known for his southern twang and for wearing cowboy boots with the state seal on them to even the most formal of events. He was popular in part due to his visceral connection with rural voters and in part because of the seriousness with which he took recruiting businesses to the state.
“I need to turn a matter over to your office,” Bryant said. More formal than normal for him. But Governor Bryant had previously served as Mississippi’s state auditor, so he understood the gravity of our work.
Over the next few minutes, Bryant described an encounter he had just had with an informant from the Mississippi Department of Human Services (DHS). DHS is the agency in Mississippi that disburses funds from federal programs like Temporary Assistance for Needy Families (TANF, commonly known as welfare). In a state like Mississippi, with our high poverty rate, tens of millions of dollars flowed through the agency every year. And in Mississippi, the governor selected the head of DHS.
Governor Bryant said the informant had approached his office demanding a meeting. The informant brought a short, one-page document he called an internal audit. As the governor described the contents of the document, I could tell the allegations were serious. They involved corruption by DHS’s director.
The phone crackled when Governor Bryant reached the meat of the allegations. I looked up to see that our Jeep was passing through Alabama’s George Wallace Tunnel — a thick, white ceramic tile passage taking cars under the Mobile River — and the cell phone connection dropped. The pressure change inside the tunnel turned the rumbling sound of the traffic into a quiet whoosh. As a kid, my parents and I would hold our breath when we were passing through, seeing if we could make it to the other side without exhaling. Now the air in my lungs felt bottled up against my will.
“Put the phone down while you’re driving,” my wife said.
“Sorry! This one is important,” I replied.
I redialed Bryant once we emerged from under the river, the gray battleship USS Alabama greeting us from the harbor outside the tunnel’s mouth.
Bryant picked up and finished the story. His informant claimed there was a kickback scheme involving DHS director John Davis.
“Looks like Davis is paying some vendor — Restore, LLC? — for some kind of contract. The checks for the company are going back to a P.O. box owned by Davis in his hometown,” said Bryant. “Doesn’t look good.”
DHS had paid a few thousand dollars in 2019 to a company called Restore, LLC. It was alarming to see a contractor to an agency being paid at a post office box owned by the head of that agency. But if Davis wanted a kickback for giving Restore an agency contract, why set up a P.O. box in his own name to receive the checks? It seemed like a careless paper trail to leave. Why not be paid in cash? Cash payments make kickback schemes hard to detect.
“Why wouldn’t Davis just steal the checks from the office?” I wondered aloud. “Save the trouble of mailing them.” As DHS director, Davis would have access to every physical space in his agency and could have easily put his hands on the checks before they were mailed. “And why have physical checks sent to yourself if you can’t deposit them? Sounds like the checks are made out to Restore, whoever that is.”
Regardless of the questions, I agreed with the governor that the situation was suspicious. Bryant closed the call by expressing concern for Davis.
Davis was an odd man. As our Jeep zoomed over marshy tidelands, shoots of green springing from the water, I reflected on our first encounter just a few months earlier. At the time, DHS’s financial records were unclear and scant. My staff was concerned about how DHS was handling welfare money. The staff suggested I talk to Davis and recommend he hire an outside CPA firm to do a dollar-by-dollar audit of their TANF spending. My auditors thought we did not have the staff on hand to do this ourselves, but they assured me Davis could pay for an outside audit from his ample budget.
I’d called Davis, set a time for the meeting, and driven to his office alone. The office’s appearance surprised me. DHS had taken over a lease previously held by one of Mississippi’s wealthier law firms. The wall paneling and advanced security system were unlike anything I’d seen in any other state government office. I would later find out that, back in Davis’s private office, he’d purchased a couch for tens of thousands of dollars and worked at an Italian desk. Plans were in the works to install high-tech glass walls that frosted when you touched them. At one point they even intended to build a shower in Davis’s office that could be entered from either his office or the office next door, which seemed beyond strange. It didn’t fit, knowing DHS’s mission was to serve the poor.
Davis’s demeanor also struck me. He was a career DHS employee who’d advanced from small-town social worker to the boss — now a paunchy, balding man with a penchant for flashy ties and decor. With his thick southern accent, he slathered on praise, flattering me to the point of making me uncomfortable.
Davis had a team ready to meet me when I entered his conference room. He did everything to signal he was eager to listen and take any recommendations I had. I walked him through why he should contract for a private audit of his books. He agreed on the spot. DHS would hire a CPA firm to take a look at how they’d spent their TANF dollars. They would ensure they were complying with all the relevant laws, he said.
That audit never happened. And now, a few months later, driving away from the Alabama sunset into Florida, I was told Davis might have stolen some of that money.
Governor Bryant was worried that if Davis had indeed stolen money and realized an informant squealed, he might “stick a pistol in his mouth” over the weekend. I shared that concern. During my time in office, another person accused of embezzling funds had confessed, scrawled a note on a pad, and then shot himself in the head before his trial date arrived.
I also wondered if Davis might start destroying important documents. The proof of a kickback might be doused in gasoline and burning in a five-gallon drum behind his house right now.
“I’ll get right on it,” I said.
I hung up and dialed Richie McCluskey, the man I trusted most on white-collar investigations. I’d hired Richie to run the investigations division of my office right after I’d taken my position. Richie was a square-jawed fireball of energy and red hair. He’d spent his career in law enforcement, starting as a beat cop, attending the FBI academy in Quantico, and then working as the lead consumer protection investigator in the Mississippi Office of the Attorney General. While there, he’d successfully investigated some of Mississippi’s civil rights cold cases. When I started my search for a chief investigator, Richie was home on early retirement and going crazy. He’d sanded, sealed, and painted his back fence two times in three months. And I was ready to put that energy back to good use.
“What do you think?” I asked him after describing the call with the governor.
Richie said Davis might commit suicide, but Richie believed he could manage the situation the right way. Richie believed, based on the tone of the governor’s call, that Davis probably already knew about the informant. The best approach was a direct one. Richie would call Davis and tell him there were questions about his interactions with one of his vendors, Restore. Richie would demand Davis be at DHS’s offices at nine o’clock sharp on Monday morning with copies of his personal bank statements from the last year. He should also be prepared to produce any documents on Restore that DHS had.
“Will Davis destroy those documents if he knows we’re coming?” I asked.
Richie thought for a moment. “Probably not,” he said. Davis would be on notice that he was under investigation. Destroying documents now would be another felony. He would be cutting his own throat if the matter ever went to trial. Also, Richie pointed out that our accountants on staff at the auditor’s office might already have copies of many of the relevant documents in their stored files from previous routine audits of DHS.
We wrapped up the call, and I finished the drive to our hotel. I could smell the salty seawater creeping through the cracked car door windows as we approached our destination, but my mind was far from the beach.
The next morning, I kissed my wife and baby goodbye in our room and walked to a windowless hotel ballroom to give a speech to the Mississippi Society of Certified Public Accountants.
Just before I walked on stage, I huddled with the CPAs from my own staff who were there. Their leader was Stephanie Palmertree. Stephanie was thirty-six years old and whip-smart — the most knowledgeable CPA I’d met when it came to accounting standards. She was also pugnacious and eager to look under the hood of any agency we suspected of fraud. I liked that her instinct was to go hard after someone if there was good reason to believe he was breaking the law, even if it ruffled feathers.
After hearing about the tip, Stephanie agreed with Richie that we had already captured most of DHS’s core financial documents in a recent routine audit. Those audits didn’t uncover a kickback scheme, because finding fraud in an audit could be like plucking a needle from a haystack. But now our search was that much easier.
We mapped out a strategy: Richie and his team of criminal investigators would start on Monday with an interview of Davis. They would also find the informant and obtain the “internal audit” that had been given to the governor. Stephanie’s team of CPAs would take stock of the DHS documents they had on hand as soon as they were back in Mississippi. They would also begin an audit of the TANF funds spent by DHS. It would stretch their capacity, but it was now a priority, given what we knew.
After that, I bounded the stairs to the stage to speak. I didn’t know it at the time, but Stephanie, Richie, and I had just laid the groundwork for investigating the largest public fraud case in state history. It would stretch from Mississippi to Malibu, California. It would involve some of the most famous athletes in the country and a few of television’s more notable professional wrestlers. The case would test my mettle — I was the youngest statewide elected official in Mississippi and the first millennial statewide official in the Deep South — and my judgment. Ultimately, we would discover that millions of taxpayer dollars intended to help the poor had been squandered by a group of wealthy power brokers.
