What would help solve generational poverty in Mississippi?
Phone apps, according to a witness who testified Tuesday in the ongoing trial of former WWE wrestler Ted “Teddy” DiBiase, who is charged in a welfare misspending case.
On the 17th day of the trial, which has had several pauses since it began in early January, the prosecution rested its case after it finished questioning a forensic accountant for the FBI. The defense called its first witness, Kevin McClendon, co-founder and former CEO of Birmingham-based marketing agency Telegraph Creative.
McClendon testified that he met DiBiase more than a decade ago and not long afterward, he was introduced to John Davis, the then-director of Mississippi Department of Human Services.
In 2017, Davis brought DiBiase into the fold of the welfare agency, helping the ex-wrestler secure a $3 million windfall of federal public assistance funds. Prosecutors say DiBiase was paid under sham agreements while the defense argues he was a legitimate contractor.
Davis pleaded guilty to bribery and fraud charges in 2022 and DiBiase is on trial for charges of conspiracy, wire fraud, theft and money laundering.
Former Mississippi Department of Human Services director John Davis heads to the Thad Cochran United States Courthouse on Monday, Feb. 23, 2026, in Jackson. Credit: Vickie D. King/Mississippi TodayDavis and DiBiase bonded over God, fitness and a number of pie-in-the-sky supposed anti-poverty initiatives – such as the idea for two phone apps. They wanted to develop one of the apps to encourage better fitness and nutrition among welfare recipients and another to reach troubled teens with Bible verses.
These projects represent just a sliver of the overall welfare scandal, which occurred when DHS outsourced tens of millions of its functions to two nonprofit organizations running an initiative called Families First for Mississippi. Those entities then squandered the money on the pet projects of politicians and celebrities.
McClendon said DiBiase approached him with the idea of developing the first app called Get Fit and that they spent six months developing a pitch deck. Part of DiBiase’s defense strategy is to show that DiBiase attempted to conduct work under his agreements with the nonprofits.
DiBiase was instrumental with the app, McClendon said, not because he had any tech development capabilities but because he would convince Mississippi celebrities to sign onto the project and film video content – guided workout plans and cooking lessons – that would be used within the app.
“The purpose of this application was to gamify the work that MDHS was doing, you know, essentially to break the cycle of poverty within the state,” McClendon said.
McClendon said the state’s goal was also to collect data on residents, such as where they purchase food.
The pitch deck included plans to feature DiBiase, Archie Manning, Cat Cora and Jerry Rice inside the app, though McClendon admitted he didn’t know if DiBiase had received commitments from any of them. To unlock the content, users would complete “challenges” such as the “forget fried challenge,” McClendon explained, with an explainer of how to bake okra instead of frying it.
“Let me just say, baked okra sounds terrible,” Assistant U.S. Attorney Dave Fulcher said on cross examination.
The prosecution presented evidence of payments between companies controlled by McClendon and DiBiase. Telegraph paid one of DiBiase’s companies, Priceless Ventures, more than $7,000 in 2017. In 2018, Priceless paid one of McClendon’s companies, Nonfiction, $25,000. On that check, the “for” line read “INFLCR.” McClendon said he couldn’t remember the reason behind either of those payments.
Priceless wrote another check for $50,000 to a separate company, INFLCR LLC, for “investment.” McClendon said he had nothing to do with that payment.
INFLCR was an app developed primarily to help athletes post content to promote themselves on social media. Both Mississippi State University and University of Southern Mississippi partnered with that company.
Additionally, Mississippi Today’s review of a forensic audit shows Mississippi’s welfare agency directly paid Telegraph $57,500 in 2017-2018 for a “6-week audit of the external and internal marketing and communications strategy for MDHS.” Forensic auditors found the payment was allowable but the agency should have used funds other than welfare dollars to pay for it.
Beyond DiBiase’s contracts with the nonprofits, the welfare agency also provided subgrants to DiBiase’s father’s Christian ministry called Heart of David. The ministry, which pitched the app for teens in partnership with Families First, also paid Telegraph $110,000 for web design and maintenance. On Heart of David’s pitch deck, the organization said it planned to leverage the INFLCR platform to help its mentors elevate their personal brand to expand reach.
At one point, McClendon said his company made a pitch to MDHS for nearly $2 million to develop the app. It was not accepted and the project never materialized. McClendon left Telegraph Creative in February 2020.
The prosecution’s last witness was FBI forensic accountant Matthew Auckerman, who analyzed DiBiase’s personal bank accounts as well as the accounts for his companies, Priceless Ventures and Familiae Orientem. Auckerman also analyzed the accounts of the welfare-funded nonprofits who paid DiBiase – Family Resource Center and Mississippi Community Education Center. These nonprofits had received tens of millions of dollars, mostly from a federal program called Temporary Assistance for Needy Families and a smaller amount from the Temporary Emergency Food Assistance Program.
Auckerman described shell companies as “hollow inside” – absent of expenses or employees and often used to shield unlawful activity.
“It is my expert opinion that Priceless Ventures and Familiae Orientem were shell companies,” he said.
Auckerman testified about his analysis of records from bank accounts controlled by the nonprofits and DiBiase. He outlined how nearly $3 million flowed from the two nonprofits to accounts associated with DiBiase’s LLCs. From those accounts, Auckerman said he found purchases of a $55,000 pontoon boat, a $40,000 truck, and nearly $31,000 worth of country club fees and golf equipment.
But Auckerman said the majority of the money doled out to the LLCs – $2.7 million – was transferred to other personal bank accounts controlled by DiBiase. From there, Auckerman’s analysis showed the money flowed toward the purchase of a 6,000-foot home in Madison and into a high-dollar investment account.
Auckerman also analyzed DiBiase’s personal income and expenses prior to his work with the welfare agency.
Auckerman’s analysis showed that in the three and a half years prior to DiBiase contracting with the nonprofits, the bank accounts controlled by him and his wife saw average monthly deposits of around $10,000. In 2018, his biggest year with the welfare agency, that amount rose to about $200,000 a month.
Auckerman said he did not observe a great difference in the types of expenses in those two time periods, such as new office rentals and supplies associated with his LLCs. He said he did see large increases to retail shopping and entertainment and recreation purchases, such as luxury vacations.
From the outset of the welfare scandal breaking in 2020, defendants highlighted what they saw as a problem with the case: The nonprofits had commingled their federal grant funds with other operating revenue, making it hard to know to which purchases federal rules actually applied.
At one point in Auckerman’s analysis of Family Resource Center’s bank account, for example, he identified that less than half of the money in there was from federal sources.
When DiBiase’s lawyer Sidney Lampton questioned Auckerman on cross-examination, she focused on whether the forensic accountant could confirm whether the federal government was the original source of the money associated with the payments from the nonprofits to DiBiase. In several instances, Auckerman said the payments were traced back to other sources. The prosecution retorted that an intent to use federal funds outweighed whether every dollar was traceable to federal funds.
The defense on Wednesday called its second witness, New Orleans-based consultant Matt Theriot, who helped DiBiase form one of his LLCs. He testified that it is commonplace for people with multiple businesses to form LLCs, which have no employees, to protect against liability.
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