Child food program operator indicted on theft charges

The operator of a Memphis faith-based agency that contracted with the Department of Human Services to feed low-income children has been indicted on theft charges, after an investigation revealed she misappropriated $162,165 in taxpayer monies intended for meals.

Jeannette Jives-Nealy, who calls herself "Pastor Prophetess Jeannette Jives Nealy” of Kingdom Dominion Worldwide Ministries on the group's Facebook page, was arrested late last week in Florida, where she awaits extradition back to Tennessee.

Instead of feeding children, Jives-Nealy spent tens of thousands of dollars on retail items and travel, and transferred more than $25,000 into a savings account, a report by the state's comptroller found.

The arrest comes after a series of critical audits of the food program by the Tennessee comptroller, legislative hearings and an ongoing Tennessean investigation questioning a lack of oversight by DHS Commissioner Raquel Hatter and her staff of the $80 million food program that is intended to address childhood hunger in the state, where one in five children live in poverty.

In March a report by the comptroller revealed a Clarksville agency director had spent thousands on home improvements, including a $38,000 gazebo, new windows, vinyl siding, tile floors and other renovations, and thousands more spent on gas, restaurants and retail stores. Last year, a Camden, Tenn., food program operator was found to have paid herself and her daughter bonuses that topped $100,000, as well as spending the funds on remodeling her home office, adding a new deck and spending thousands more on perks that included meals, hotel movies, late credit card fees, and cable and Internet services.

2 Tennessee agencies accused of pocketing thousands intended for hungry kids

At a hearing in April, Comptroller Justin Wilson testified that his staff had uncovered $11.4 million in questionable payments to food program contractors and that the department was in denial over the extent of the problems in the troubled food program.

Hatter told lawmakers the department had resolved $10 million of what was questioned in the audit after determining that the money did properly go to feeding the children for whom it was intended. She said the department was waiting to verify another $400,000.

“It’s time for DHS to admit they have a problem,” Wilson told lawmakers, noting that many of the issues raised in the most recent audit have gone as far back as 2011 and that before that year, auditors had not uncovered such extensive problems. “It’s clearly time for a change.”

Wilson told lawmakers DHS deliberately withheld a critical federal evaluation from auditors, noting DHS officials attested to auditors they had turned over all federal evaluations of the programs. Wilson learned of the recent evaluation from a Tennessean report, he said. Comptroller chief of staff Jason Mumpower said DHS' answers were at best “unresponsive” and at worst “misleading or false.”

On Monday Wilson again stressed the importance of proper monitoring of the program, which relies on cash advance to subcontractors — including child care centers, after-school programs and churches — to purchase food for qualified children.

"Whenever a program allows for cash advances, it's important that program administrators carefully monitor how the money is being used," he said. "It is disappointing to learn that such a large sum of public money could be provided without any credible documents to support the feeding of children. The victims in this case include not only taxpayers but the thousands of children who may have otherwise been fed."

Hatter told lawmakers she believed the agency had been misinterpreted and misunderstood, and that the agency had made a variety of improvements, including an increase in the number of meals provided in food service programs and bolstering the accuracy and timeliness of the Supplemental Nutrition Assistance Program, which is unrelated to the food programs. DHS officials have said the federal design of the system made it prone to fraud and abuse and the department errs on the side of feeding children.

On Monday a spokeswoman for the agency noted that DHS identified problems with Kingdom Dominion and alerted the comptroller, and has since made further improvements.

“The Tennessee Department of Human Services (DHS) is continuing on the course of making improvements with a focus on program administration and program integrity," a statement from spokeswoman Stephanie Jarnagin said.

Most notable, Jarnagin said, the agency has implemented a new case management system.

Kingdom Dominion is one of several instances in which out-of-state operators who had racked up a string of offenses in other states were able to easily move to Tennessee and bilk taxpayers of hundreds of thousands of dollars intended to buy food for kids in poverty, a Tennessee investigation found in September.

Crooked agencies find it easy to dupe TN's child food programs

In the case of Jives-Nealy, she was convicted on multiple counts of racketeering, conspiracy, money laundering, forgeries and theft in Florida in 2007 after stealing $200,000 from a school voucher program intended for kids with disabilities. Her 19-year-old son, Demario Jives, was also arrested but not convicted in the case.

In 2011, after Nealy was released from prison, she and her son moved to Memphis to open Kingdom Dominion. The pair then contracted with the Department of Human Services to receive cash advances to serve meals to children.

DHS paid Jives-Nealy $122,000 in advance of June and July 2014 after she pledged to serve 33,800 children for each of those months. She received an additional $40,000 after claiming Kingdom Dominion had actually served more than 40,500 meals in July 2014. DHS paid the advances even though Jives-Nealy was serving a 10-year probation, in which she was banned from applying for any state or federal funding.

DHS terminated the contract with the agency.in June 2014.

In July 2014, when auditors with the comptroller's office tried to meet with Jives-Nealy to review her program, she advised them she was ending the food program effective that day.

When auditors visited her offices to review paperwork, Jives-Nealy told them the records had been destroyed by flooding that morning. Auditors found no sign of flooding at the site and were advised by a building maintenance personnel there had been no plumbing, roof or any other leak that day.

A review of Kingdom Dominion bank records found that Jives-Nealy did not use the funds to purchase food. The records revealed "large cash withdrawals, large payments to Jives-Nealy, frequent debit card purchases for retail items and travel, a transfer of $25,000 into a personal savings account and numerous ATM cash withdrawals."

DHS is in the process of recouping funds from Kingdom Dominion, Jarnagin said.

DHS, the comptroller's report noted, "was responsible for training, monitoring and oversight of Kingdom's operations by ensuring Kingdom complied with state and federal requirements to deliver meals to eligible participants."

State Sen. Jim Tracy, R-Shelbyville, called the misappropriation "inexcusable."

Tracy this year pushed for a measure, since signed into law, that requires DHS to perform background checks to "stop offenders from setting up shop in a different state after fraud has been committed." The new law requires DHS to regularly report on the food program to lawmakers.

Reach Anita Wadhwani at 615-259-8092 or on Twitter @AnitaWadhwani.