Nancy and Zachary New Face House Arrest in Welfare Fraud Case

“I just need to get to the end of the state’s case,” Hinds County Circuit Court Judge Faye Peterson told the court Tuesday morning. The judge plans to sentence Nancy and Zachary New to house arrest as they wait for the final resolution of their federal sentencing in what has been described as the state’s largest welfare fraud case, WLBT reported.

The decision comes after a frustrating four-year delay in the state’s proceedings. Nancy and Zachary New previously pleaded guilty to both state and federal charges for their roles in a scheme that illegally funneled $4.5 million in federal welfare funds through their nonprofit. While they entered their guilty pleas on state charges back in April 2022, the state court had been holding off on sentencing to see how the federal case unfolded.

Nancy and Zach New face house arrest in welfare fraud case

Judge Peterson targets docket clearance and restitution

Judge Peterson expressed visible frustration during Tuesday’s status hearing, noting that she expected federal sentencing to have occurred long ago. The court had retained jurisdiction on sentencing pending developments in the federal system, but the timeline has stretched far beyond the judge’s expectations.

By moving the pair to house arrest now, Peterson aims to clear the case from her docket while ensuring the defendants remain under supervision. She noted that if she had known the federal process would be “backed up” this significantly, she would have reached this conclusion years ago. The state sentence of house arrest will run until the federal sentencing is finalized, at which point any federal sentence would run consecutively.

Nancy, Zach New face house arrest in welfare scandal case

Beyond the physical sentence, the judge is now focusing on the financial fallout of the fraud. Peterson stated she is investigating whether any of the stolen $4.5 million has been repaid, emphasizing that the priority is now to close these cases and secure restitution.

The scale of the New Summit School fraud

The fraud centered on the now-defunct New Summit School, a private institution that served students with special needs. Nancy New owned the school, while Zachary New served as vice president of the associated district, New Learning Resources Inc. Together, they used the nonprofit as a vehicle to siphon millions in public funds.

Judge eyes HOUSE ARREST for mom, son awaiting federal sentencing in state’s largest welfare scheme

The charges brought against the mother and son include:

Zachary New: Five counts of wire fraud, two counts of fraud against the government, and four counts of bribery of a public official.
Nancy New: One count of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act, six counts of wire fraud, two counts of fraud against the government, and four counts of bribery of a public official.

Conflicting timelines for federal sentencing

While Judge Peterson is moving to close the state’s portion of the case, the exact date the News will face their federal fate remains a point of contention between prosecutors and defense attorneys.

BREAKING NEWS: Judge eyes house arrest for mother, son in state’s largest welfare scheme

Source	Estimated Federal Sentencing Window
U.S. Attorney’s Office (via ADA Jamie McBride)	As early as the week of November 16 of this year
Luke Whitaker (Attorney for Zachary New)	As early as January

This discrepancy highlights the “dragging of heels” that Judge Peterson referenced in court. The federal system generally carries much broader sentencing implications and harsher penalties than the state system, which is why the state court was hesitant to act prematurely.

Ted DiBiase Jr. avoids conviction in fraud case

The broader welfare fraud investigation has seen various outcomes for different players. Earlier this year, former professional wrestler Ted DiBiase Jr. was found not guilty on more than a dozen federal charges. DiBiase had been accused of participating in the bribery scheme that fueled the News’ nonprofit.

The dynamics of the case shifted when Nancy New testified at DiBiase’s trial as part of her own plea deal. This testimony provided a glimpse into the inner workings of the bribery ring, though it did not result in a conviction for DiBiase.

Judge Peterson now awaits a response from the Mississippi Department of Corrections regarding the feasibility of house arrest. Once confirmed, she expects to set a formal sentencing date within the next few weeks, finally ending a state legal saga that has lingered since early 2022.

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