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GREAT EXPOSURE: How did the nation’s poorest state spent federal welfare money

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When Anna Wolfe won the Pulitzer Prize for her dogged reporting on Mississippi’s welfare fraud scandal, she had no inkling she was soon going to have to contend with the possibility of going to jail.

But just over a year after she secured journalism’s top award for exposing how $77 million in federal welfare funds went to athletes, cronies and pet projects, she and her editor, Adam Ganucheau, are contemplating what to pack for an extended stay behind bars. Sued for defamation by the state’s former governor — a top subject of their reporting — they have been hit with a court order requiring them to turn over internal files including the names of confidential sources. They say the order is a threat to journalism that they will resist.

“If one of us goes to jail, we will be the first person to go to jail in the Mississippi welfare scandal,” Wolfe told NBC News, referring to the eight indictments that stemmed from the imbroglio, none of which has yet resulted in a sentence. “How can I make promises to sources that I’m going to keep them confidential if this is possible?”

Anna Wolfe, Chris Wolfe and Bethel Wolfe. (Rogelio V. Solis / AP file)© Provided by NBC News

The case has drawn attention beyond Mississippi as an example of how public figures can make life difficult for news organizations long before they have ever presented evidence of the “actual malice” needed to prove defamation cases. Mississippi Today, the independent nonprofit organization that employs Wolfe and Ganucheau, is asking the state Supreme Court to overturn the order. Bryant appointed four of the nine justices.

“Breaching the confidentiality of sources violates one of the most sacred trusts — and breaks one of the most vital tools — in investigative journalism,” Ganucheau wrote in a recent New York Times op-ed. “No serious news organization would agree to this demand.”

(Andy Lack, former chairman of NBC News, is executive chair of Mississippi Today’s board of directors.)

The plaintiff in the defamation case is Phil Bryant, who was governor when the scandal erupted, first with a report by the state’s auditor, then with a blizzard of coverage by Mississippi Today. Bryant — who has not been charged with a crime and says he did nothing illegal — claims the online news organization wrongly accused him of criminal conduct.

He declined to be interviewed, but his lawyer, Billy Quin, said the lawsuit is not about punishing good reporting.

“I didn’t sue them because they exposed $77 million worth of misspending. He applauds them for doing that,” he said. “The suit is about defamation.”

Phil Bryant. (Kyle Grillot / Bloomberg via Getty Images file)© Kyle Grillot

The scandal came to light after Wolfe began asking questions about how a poor state rejected more than 90% of the people who applied for welfare. She wanted to know where the federal money was going. Her queries led to a referral to the state auditor, who published a scathing report in 2020 questioning more than $90 million in spending.

The details were stunning enough to make national news, though not surprising to many Mississippians. In America’s poorest state, where only a few thousand families a year qualify for welfare, white state officials and their associates diverted huge sums of federal welfare money intended for poor and mostly Black women and children, according to public records.

The money went instead to well-connected people and their favorite causes, public records show, most of which had little to do with helping poor people. They included a volleyball facility that cost more than $5 million at the University of Southern Mississippi, a project championed by former NFL football star Brett Favre, whose daughter happened to be on the volleyball team there.

Favre, who has not been charged, also received $1.1 million for purported promotional efforts. And a drug company in which he owned stock, Prevacus, received $2.1 million, according to public records. Favre lobbied the governor to help secure the money, according to text messages obtained by Mississippi Today.

“It’s 3rd and long and we need you to make it happen!!” Favre texted Bryant on Dec. 26, 2018. Bryant replied, “I will open a hole.”

Brett Favre. (Nick Cammett / Diamond Images / Getty Images file)© Nick Cammett

The question of Bryant’s role in the spending was a key topic of reporting in the series of articles that won the Pulitzer, dubbed “The Backchannel.” It’s now at issue in the defamation lawsuit.

“The investigation, published in a multi-part series in 2022, revealed for the first time how former Gov. Phil Bryant used his office to steer the spending of millions of federal welfare dollars — money intended to help the state’s poorest residents — to benefit his family and friends, including NFL Hall of Fame quarterback Brett Favre,” Mississippi Today reported when the prize was announced.

Bryant takes issue with that and similar pronouncements, saying he played no role in directing the money. The man who did, Quin said, is John Davis, the state’s welfare director, who pleaded guilty to federal fraud and theft charges in September 2022 but has yet to be sentenced.

Anna Wolfe. (NBC News)© NBC News

“The fact is, I did nothing wrong,” Bryant said in a statement in May 2023. “I wasn’t aware of the wrongdoings of others. When I received evidence that suggested people appear to be misappropriating funds, I immediately reported that to the agency whose job it is to investigate these matters.”

Bryant did not sue after the articles were published in April 2022, and, in fact, the statute of limitations on defamation claims in Mississippi lapses after one year. But in February 2023, the CEO of Mississippi Today, Mary Margaret White, mischaracterized the reporting at a journalism conference in Miami.

“We’re the newsroom that broke the story about $77 million in welfare funds, intended for the poorest people in the poorest state in the nation, being embezzled by a former governor and his bureaucratic cronies and used on pet projects like a state-of-the-art volleyball stadium at Brett Favre’s alma mater,” she said in videotaped remarks.

Image: women’s volleyball facility at the University of Southern Mississippi (NBC News)© NBC News

Embezzlement is a crime, and Bryant has never been charged, let alone convicted. There has been no indication he is a target of an ongoing federal investigation into the welfare fraud scandal.

In May 2023 — a few days after the Pulitzer announcement — Quin sent Mississippi Today a notice of his intention to sue, citing the “embezzlement” remark. A week later, White issued a public apology, saying: “I misspoke at a recent media conference regarding the accusations against former Governor Phil Bryant in the $77 million welfare scandal. He has not been charged with any crime. My remark was inappropriate, and I sincerely apologize.”

But Quin said her apology should have gone further, saying Mississippi Today has no evidence that Bryant embezzled funds.

“The upshot is ‘you embezzled $77 million and the criminal authorities aren’t doing anything about it,’” he said. “So here we are to give one of their favorite words, accountability, to the situation. Well, the rabbit’s got the gun now; we’ll see who’s going to be accountable.”

Mississippi State Supreme Court. (NBC News)© NBC News

Quin has since incorporated more recent articles and is arguing that references to the Backchannel series amount to a “republication” that makes the entire body of work fair game.

“This series of defamatory comments have taken a very serious toll on him,” Quin said. “He’s entitled to protect himself. He’s entitled to enforce his rights just like anyone else.”

To win a defamation lawsuit, a public figure has to show that someone published false information with “actual malice,” or a reckless disregard for the truth. Quin said that’s why he needs the newspaper’s internal emails and the names of confidential sources, something journalists are loath to ever provide. The order asks that the materials first be handed to the judge, who will decide whether any of the evidence is relevant to a claim of defamation.

“It’s not a fishing expedition,” Quin said. “A judge is going through the files that you claim to rely on to support your defamatory statements to determine whether they support what you said.”

But journalists are extremely reluctant to give up the names of confidential sources to anyone, even judges.

“It would have a chilling effect for the sources coming forward,” Ganucheau said. “It would have the effect of making the journalists in Mississippi second-guess how they collect what they collect and whether they should in the first place.”

Meanwhile, fighting what she views as an unwarranted lawsuit is taking a toll on one of the state’s most accomplished reporters.

“It makes it harder to do my job,” Wolfe said. “I mean, I’m working on a story right now that I think is of great significance and that I now feel like I’m going to get sued over, as well. It feels like now, anything that I try to report is going to be met with the same level of gaslighting and intimidation and scrutiny. So it definitely impacts my day-to-day.”

And Wolfe said it’s not clear more money is getting to Mississippi’s poorest. According to state figures, as of June, 1,423 families and 2,522 individuals are receiving federal welfare grants administered by Mississippi, a state where 548,000 people live in poverty.

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