Gov. Tate Reeves inspired welfare payment targeted in civil suit, texts show

by Anna Wolfe, Mississippi Today
August 12, 2022

Mississippi’s former welfare director said he was acting on behalf of then-Lt. Gov. Tate Reeves, text messages indicate, when he funneled $1.3 million into a fitness program that the state is now targeting in its civil lawsuit to recoup millions in misspent federal dollars.

Reeves’ longtime personal trainer and buddy Paul Lacoste is a defendant in the suit – the state’s primary response to the blockbuster scandal uncovered in 2020. The lawsuit has an uncertain fate now that the Reeves administration has fired the attorney bringing the case and Reeves made clear he is calling the shots in the litigation, which is now stalled.

Over the last decade, Lacoste ingrained himself in Mississippi politics, prompting the state’s welfare program to strike a lucrative partnership with his foundation. Not only was the expenditure a violation of federal regulations, auditors and attorneys eventually argued, but emails obtained by Mississippi Today allege Lacoste also paid himself upwards of $300,000 in bonus paychecks from the program.

The trainer was so gung-ho about getting his grant funding from the state, he even told former welfare director John Davis that he’d bring the hammer down on Reeves and another lawmaker in their workout if they didn’t give Davis the budget he wanted. And that the politicians agreed to oblige.

“I told Tate and Senator Josh Harkins this week at training to fully fund you or I would make them pay for it at training,” Lacoste wrote to Davis in a February 2019 text obtained by Mississippi Today. “They told me…”oh, we are taking care of John.””

Months before, Davis, who is now facing charges of fraud and bribery in the scandal, helped the trainer secure a welfare grant from the nonprofit run by Nancy New, another defendant in the criminal and civil cases.

But during the 2019 Legislative session, Lacoste was pushing Davis for meetings with Reeves, who wielded great control over appropriations in the Legislature, and other lawmakers to “share our hearts with them and to get them on board with us politically and financially.” One proposal suggests a 10-year, $13 million commitment from the welfare program for his fitness classes.

Lacoste told Davis that Reeves had selected a date and location for their meeting, and that Reeves wanted to meet with the two men alone before the full meeting to discuss the project. “Tate wants us all to himself!” Lacoste wrote.

Two days after meeting with Reeves, Davis asked his deputy to find a way to push a large sum of money to New’s nonprofit without triggering a red flag in an audit, so that the nonprofit could fund Lacoste’s boot camp. Davis called the project “the Lt. Gov’s fitness issue.”

Auditors say Lacoste’s organization Victory Sports Foundation improperly received over $1.3 million in funds from a federal welfare program called Temporary Assistance for Needy Families, or TANF, to conduct free boot camp-style fitness courses for well-to-do community members.

Months later, Lacoste cut commercials publicly endorsing Reeves for governor. Reeves won the election with 52% of the vote.

Reeves did not grant Mississippi Today an interview for this story. But when presented with Mississippi Today’s findings, Reeves staffer Cory Custer responded in a written statement: “It’s entirely possible that—before the abuse was uncovered—Tate Reeves said nice things in passing about people he is now suing and/or the stated goals of DHS. This was all before the fraud was revealed. How is he supposed to remember inconsequential conversations from years ago?”

Reeves’ connection to this part of the welfare scheme has not been made public until now, shortly after his administration canned the lawyer who crafted the zealous civil complaint against 38 people or companies — including Lacoste.

The governor publicly accused attorney Brad Pigott, a former Bill Clinton-appointed U.S. Attorney who was closing in on many of Reeves’ campaign donors and supporters, of having a political agenda in his handling of the case. Reeves is also accusing Mississippi Today, which has led coverage of the scandal and published damning text messages related to welfare spending that officials have tried to keep out of the public, of “political games.” 

In addition to conducting the workout courses as hired, Lacoste used the money to pay himself a monthly salary of about $11,000, in addition to separate payments of as much as $25,000, purchase a $70,000 vehicle, launch high-price marketing campaigns and treat himself and others to steak dinners, according to audit reports and ledgers Mississippi Today examined.

The civil suit also accuses Lacoste of charging participants a fee for courses he was already being paid with grant funds to conduct – an assertion Lacoste’s attorney denies.

An email from the Nancy New nonprofit says the nonprofit’s internal review found Paul Lacoste received more than $300,000 in bonus paychecks. 

“LaCoste never proposed or intended to provide services designed specifically to accomplish any lawful TANF purpose. Nor did he ever do so in response to the TANF funding he and Victory Sports sought and received,” wrote Pigott, who was hired on contract by the welfare department to bring the civil litigation. 

In a reply in support of a motion to dismiss the case, Lacoste denies he broke any laws or contract obligations, saying neither the state welfare agency nor the nonprofit told him the payments he received were from TANF funds.

While criminal investigations are ongoing, officials have not accused Lacoste of any crime.

In recent years, auditors found that Mississippi officials and political cronies stole or diverted at least $77 million intended for needy residents to other projects in violation of federal law. Federal law gives states extreme flexibility to define for itself what helping the needy looks like, but auditors say Mississippi crossed the line in its use of TANF funds, which were controlled by an agency under the authority of Gov. Phil Bryant.

Much of the money officials squandered was funneled through the nonprofit founded by former First Lady Deborah Bryant’s friend Nancy New, who has pleaded guilty to several charges of fraud and bribery and agreed to aid prosecutors in their ongoing probes.

The welfare agency had contracted with New’s nonprofit, Mississippi Community Education Center, purportedly to help run a statewide anti-poverty program called Families First for Mississippi.

Lacoste, a 47-year-old retired linebacker for Mississippi State University and the Canadian Football League, had been training Reeves, a 49-year-old career politician, for over a decade by the time the fitness trainer partnered with the state’s welfare program in 2018.

“As Tate Reeves’ coach for 15 years, I’ve seen sweat pouring off his face and those glasses of Tate’s fogged up from intensity that he’s given at every station,” Lacoste said in his 2019 commercial endorsing Reeves in the gubernatorial race.

Lacoste had trained lawmakers for free through a program called “Fit 4 Change” since 2010. Participants would write an “accountability check” of several hundred dollars, which they would receive back at the end of the 12-week program as long as they didn’t miss more than six sessions, in which case Lacoste would cash the check. Reeves was a poster child for this program.

Lacoste was a tough trainer, known for screaming at his pupils and pushing them to exhaustion. But he was also on a redemption path, finding Jesus after contracting West Nile and going through a nasty divorce.

Meanwhile, Gov. Bryant was looking to launch an obesity initiative, an effort to improve health and wellness across what’s often referred to as the fattest state in the country.

Lacoste had the kind of commanding masculine energy and tangential fame that Davis and Bryant gravitated towards.

In August of 2018, Dawn Dugle, then-digital marketing director for conservative talk radio network SuperTalk, introduced Davis and Lacoste by email. SuperTalk and its parent company TeleSouth Communications were also entrenched in Families First. They received hundreds of thousands of dollars worth of advertising contracts from the welfare program and aired glowing interviews about the state’s new approach to mitigating poverty.

“It sounds like there might be synergy in what you both are trying to do for the state of Mississippi,” wrote Dugle, also a boot camp participant.

Davis and Lacoste met the next day, striking up what would become a very friendly relationship, with the two men calling each other “brother” and texting “I love you.”

“He is one of the most inspirational indiviudals (sic) I have met in some time,” Davis told Dugle. “I appreciate the opportunity to get to know him even better.”

Lacoste drafted a proposal, which included him conducting motivational speaking seminars, and worked with the New nonprofit to set up a contract. Lacoste would be considered a partner of both Families First and Mississippi Department of Human Services and use their logos in promotional materials. The contract, inked in October of 2018, said he would receive the funds in a lump sum payment from the New nonprofit, Mississippi Community Education Center, or MCEC.

“The fact that Paul Lacoste was communicating directly with John Davis on the scope of work, and John Davis’s request to MCEC that they work with (Lacoste’s attorney) Michael Heilman, provides indication that John Davis’s influence was needed for Victory Sports to be awarded a grant from MCEC,” reads an October 2021 forensic audit, which questioned the contract because of the influence Davis had in its awarding.

Though texts show a Families First representative first reached out to Lacoste on Davis’ behalf, Davis lamented about Lacoste’s enthusiasm over the partnership. “I try to avoid him as much as possible cause he is always asking for money,” Davis once texted, referring to Lacoste.

The first boot camp began in January in Pascagoula.

The next month, several lawmakers were slated to attend the meeting with Lacoste and Davis at the Capitol to discuss “Mississippi’s long-term statewide fitness, nutrition and wellness initiative to destroy obesity and all related diseases.” Lacoste texted an invitation directly to Reeves’ cell phone. Another one of the lawmakers, Sen. Josh Harkins, R-Flowood, told Mississippi Today he did not recall attending the meeting, though he was in Lacoste’s boot camp.

“I heard Paul explain that the program was sponsored by private entities but was not aware of any other funding sources,” Harkins said by email.

Text messages obtained by Mississippi Today and retrieved from Reeves’ cellphone show that since May of 2020, at which point the welfare scandal had been uncovered, Lacoste has texted the sitting governor ten times, with the last message in October of 2020. There were no responses, at least by text message, from Reeves to any of Lacoste’s texts. The tenor of the messages suggests Lacoste considered Reeves his buddy. “I love you, Brother! You are doing GREAT with EVERYTHING!” he texted on June 30, 2020, the day Reeves signed a historic bill to change the state flag.

Two days after the meeting, the former director of the Mississippi Department of Human Services John Davis texted his deputy to ask if he could find an additional $2.5 million in federal grant funds for MCEC.

The nonprofit needed the cash, Davis explained, because it had just paid Lacoste for what Davis described as Reeves’ “fitness issue.” At the time, Reeves was lieutenant governor presiding over the Mississippi Senate. Reeves was notorious at the Capitol for strong-arming his fellow legislative leaders and exercised great control over the state budget, which included the state’s portion of the welfare agency’s annual appropriation.

“Do you have about $2.5 that you can get transferred today to MCEC,” Davis texted deputy Jacob Black, an attorney who helped the agency find loopholes or write creative grants in order to spend welfare funds in the way politicians wanted, Mississippi Today first reported. “They just paid Paul Lacoste on the Lt. Gov’s fitness issue that we met on Wednesday. … The Lt. Gov is very supportive of what we and as I told him you are doing.”

Mississippi Community Education Center shared the responsibility of running Families First for Mississippi with one other nonprofit, Family Resource Center of North Mississippi. Awarded nearly $100 million in welfare agency funding between them, they promised to open centers across the state to provide parenting and workforce development training to needy families, but most of their funding they passed on through grants to other partners.

Private messages obtained by Mississippi Today indicate there was strife between the welfare agency, the nonprofits and other figures in early 2019, shortly after Davis sent letters to TANF subgrantees indicating their budgets would be cut. A news story at the time indicated that Family Resource Center was forced to lay off 100 employees and close 10 of its offices.

An email from Nancy New’s accountant shows her nonprofit was asking for $2.5 million to fund four projects, including Victory Sports, Supertalk advertisements, a program at University of Mississippi and a virtual reality center by a politically-connected startup called Lobaki. (Ole Miss says it never received the funding from MCEC). This email is heavily discussed in one of the forensic audit reports that led the auditor to make a $3 million demand for repayment on Black, though he has not been named in the civil suit. By that time, the nonprofit had paid Victory Sports Foundation about $350,000 and Lacoste was asking the New nonprofit to pay the rest of the money under the nearly $1.4 million contract.

When Davis asked Black to find the money, Black responded by text, “I think I can figure it out and get the money over there due to the cuts we made.”

But he’d have to be clever about it. “Let me figure out how to do it without creating an audit finding,” Black added.

“Oh yes sir. No audit finding,” Davis responded.

Black, who declined to comment for this story, issued the payment to MCEC that day, according to the forensic audit. MCEC paid Victory Sports not in a lump sum, but in several payments over the following five months, according to Mississippi Today’s review of the nonprofit’s ledger, which the state auditor previously said could be fabricated.

Victory Sports held two more 12-week boot camps during the summer of 2019, as Davis was being ousted from office, in Brookhaven and Greenville. Lacoste’s contract with Mississippi Community Education Center did not require him to restrict the free program to disadvantaged residents. He submitted several testimonials to MDHS from participants who saw health improvements from the program.

And the program accomplished more than helping people lose weight.

“I think those kinds of community initiatives need to be done, especially in a real diverse community like we got,” said Rep. John Hines, D-Greenville, who went through the program. “One thing I do know is Black folks and white folks, male and female, working together, sweating together, crying together, fussing together, cussing together and playing together was good for our community. I met some people I never would have met, never would have had a conversation with.”

But folks in Brookhaven were concerned and complained to Mississippi Community Education Center about how Victory Sports was using its grant funding. Lacoste’s boot camp would be one of the first problematic grant contracts identified by investigators. 

“We have identified concerns with Victory Sports’ expense reports and services. Also, we have had a number of complaints concerning his services,” New wrote in an email to MDHS officials in September of 2019, after the auditor’s office had already begun its official investigation and Davis was ousted. “…Paul LaCoste was asked not to use Families First for Mississippi’s brand and his funding was suspended.”

In November of 2019, Heilman, Lacoste’s attorney, requested payment of over $85,000 he says the nonprofit owed Victory Sports Foundation. 

In response, Nancy New’s other son Jess New emailed the attorney to notify him that the nonprofit identified over $300,000 in “unallowed expenses” during an internal review of the fitness program’s expenditures. This includes bonus checks to Lacoste; fees to two consultants that are a relative and friend to Lacoste; fees to a law firm and tax preparer; and health insurance premiums for Lacoste’s family members, according to a January 2020 email.

“Furthermore, we once again reiterate the the (sic) truck purchased by VSF (Victory Sports Foundation) should be returned to MCEC immediately,” wrote Jess New, who is also a defendant in the civil suit but not the criminal case.

Lacoste continued to email the News and other nonprofit employees several times asking for payment and denying that any purchases were unallowed, emails show.

Auditors and the state’s civil complaint also allege Lacoste used the Victory Sports Foundation grant to serve lawmakers and other wealthy community members and charged fees for some participants even though the grant was supposed to ensure the program was free.

“Defendant Paul LaCoste … directly proposed to MDHS Executive Director John Davis that Davis steer substantial grant funds to Victory Sports (and thus to LaCoste) in exchange for LaCoste’s continuing provision of ‘fitness camps’ to elected officials, their political staffs, and fee-paying participants,” the complaint reads.

In a recent interview with Mississippi Today, Heilman said that the other boot camps Lacoste conducted – the one for lawmakers and other courses that charged an enrollment fee – were distinct and separate from the welfare-funded program. Heilman said his client’s for-profit company, Paul Lacoste Sports, not the welfare-funded Victory Sports Foundation, were responsible for those courses.

It doesn’t help that posts on the Facebook page of the for-profit Paul Lacoste Sport tout the participation of lawmakers in its program and use logos for Paul Lacoste Sports, MDHS and Families First in the same advertisement. Around the same time, the company also posted a photo with Gov. Bryant at a Salvation Army event, tagging the welfare program.

Mississippi Today was the first to uncover in February of 2020 that Lacoste’s program had received welfare funding. In response, Heilman demanded Mississippi Today for a retraction and Lacoste threatened legal action in an email to his subscribers.

Heilman, whose firm was also paid several thousand under the grant for work the firm did negotiating Lacoste’s contract, is aggressively aiming to get the complaint against Lacoste thrown out. He argues in a July filing that Lacoste violated no laws and fulfilled the obligations of his contract, which was with a private nonprofit, not the state, and did not specify the funds came from the TANF program. Lacoste, like many of the unsuspecting welfare recipients within the scandal, has argued he had no idea the money he received came from the welfare fund and would not have accepted the contract if he did.

Pigott argued in response that, “As Defendant Paul Lacoste would have it, Mississippi law makes it easy for a grantee of government funds (required by a statute and contract to be used for a specified public purpose) to convert those funds from that purpose by entering subcontract agreements in terms which simply ignore the public purpose.”

“Under the theory,” Pigott continued, “… a private recipient of grant funds from the government can simply give away the government funds to another grantee, through private subgrant contracts which make no specific mention of the governmental status of either the funds or their purpose. And with that, supposedly, Mississippi law allows the grantor and grantee to wash their hands of the governing statutes and original grant contracts, and to spend the public money on private projects they have decided they prefer to the public purpose for which the money they are spending was raised through taxes, appropriated through legislation, authorized by regulations, and disbursed through governmental contracts requiring their expenditure for the statutory purpose alone.”

Heilman shot back a reply that argued the state had failed to substantiate any breach of contract and accused the state of putting forth a red herring.

Heilman said the TANF scandal has destroyed Lacoste’s business and livelihood, and that the trainer hasn’t been able to find work because of the public’s scorn towards him. The attorney argues that officials in charge of spending welfare money approached Lacoste, not the other way around, and in turn sullied his decades-long mission to help Mississippians get in shape. 

In the end, Lacoste’s enmeshment in Mississippi politics and state government led to the demise of his vision.

“I think that Paul’s passion for improving the overall health of Mississippi and Mississippians comes through in every single class that he does,” Reeves told the Associated Press in a 2013 article.

Below is the entire statement from Cory Custer, deputy chief of staff in external affairs for the governor’s office, in response to this story.

Governor Reeves has tasked new agency leadership with cleaning up the DHS mess he inherited and eliminating any waste, fraud, and abuse of federal welfare funds. Their work since the Reeves administration began has not been questioned because it is entirely appropriate and Mississippi Today knows it. However, Mississippi Today is now attempting to use anecdotes and innuendo to paint a fictional picture.

Secondhand characterizations of passing conversations and participation in a workout program that long-predated TANF abuse are hardly newsworthy. They certainly don’t help the argument that Mississippi Today is anything more than a left-wing blog that prioritizes rumors and political games over journalism.

It’s entirely possible that—before the abuse was uncovered—Tate Reeves said nice things in passing about people he is now suing and/or the stated goals of DHS. This was all before the fraud was revealed. How is he supposed to remember inconsequential conversations from years ago?

There is real investigative work being done on the TANF scandal, but this latest narrative is just desperate and embarrassing politics by Mississippi Today.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.