Nonprofit Mississippi News Nancy New, and Zach New, her son, reached a deal Wednesday to plead guilty to a federal case that involved $4 million in public school funds. Prosecutors claim they bilked their private school. New, the former owner of New Summit School, a private school that provided special education students, pleaded guilty on Wednesday to using proceeds of wire fraud or money laundering. This could lead to a maximum of ten years in prison. Zach New, vice-president of the private school district New Learning Resources Inc., pleaded guilty for conspiracy to commit wire fraud. This sentence can carry a maximum five year sentence. Each could face fines of up to $250,000. They could each face fines up to $250,000. The sentencing hearing before U.S. Circuit Court Judge Carlton Reeves will be held on Nov. 19, 2022. A federal indictment was filed against both News and the Mississippi Department of Education over a year ago. It alleged that they fraudulently claimed reimbursements to defraud the Department of Education of $4 million. Nancy New pleaded guilty to the charges in that case. Zach’s charge was split in a separate bill-of-information. This document is filed when a defendant agrees not to be indicted by the grand jury. The plea agreements follow the “The Backchannel” investigation by Mississippi Today, which revealed new information about former Gov. Phil Bryant was involved in another scandal involving Mississippi Department of Human Services. The News are currently facing separate state accusations. These plea agreements were made less than three weeks prior to the News being scheduled for trial in federal case. READ MORE: Mississippi Today’s investigation into former Governor Phil Bryant is “The Backchannel”. Phil Bryant’s role as a welfare administrator in the case against Phil Bryant, the Hinds County District Attorneys Office accuses the News of embezzling $4 million in federal public aid funds. Prosecutors claim they used $2.15million to invest in Prevacus or PreSolMD. Mississippi Today has discovered text messages that Bryant received in exchange for his support as governor. Bryant accepted the offer by text and agreed to receive stock from Favre. Favre also mentioned in text messages to Bryant that the company was being funded by the state and Nancy New. Bryant was positive. Mississippi Today received Bryant’s explanation that Bryant didn’t read his texts properly enough to understand their meaning. Officials have not examined Bryant’s involvement in the Prevacus scandal and welfare scam. The initial investigation was led by Shad White, the State Auditor, who is a Bryant appointee, and a former Bryant campaign manager. Sources say that federal authorities continue to investigate welfare spending. Federal plea agreements signed Wednesday by Assistant U.S. attorney David Fulcher do not indicate how defendants will be required to cooperate in case the News has information that could help officials prosecute more powerful individuals. This is a common scenario in plea agreements. The agreement refers to a separate sealed amendment, which typically spells out these conditions. T. Gerry Bufkin for Nancy New, Cynthia Speetjens and Brandon Essig respectively for Zach New were the defense attorneys. The Attorneys Office did not respond to Mississippi Today’s calls on Wednesday night or Thursday morning regarding the plea agreements or declined to comment. The federal welfare theft charges will be resolved before the state charges. This means that the News will spend any prison sentence they receive in federal prison instead of Mississippi’s notoriously harsh state prisons. Prosecutors allege that the News used the names of children who did not attend the school and people who weren’t employed at the school to claim public school funds. They also claimed teachers with lower certification levels than they claimed. Funding came from a special program called 504 teacher units, which is supposed provide a private teacher to a child if a psychologist or doctor determines that the student needs placement in a licensed psychiatric or hospital. According to Mississippi Today, New Learning Resources received approximately $20 million in these funds between 2007 and 2017. According to public records, New Summit School, Jackson, and North New Summit School, Greenwood, each reported that they had hired between 10 and 16 teachers under the “504 teacher unit” program in 2016. This means that New Summit School in Jackson and North New Summit School in Greenwood claimed to have served around 325 students with severe mental illnesses. That’s roughly the entire student population. Although the prosecution has not provided any details, they claimed Nancy New used at least part of the public school money to buy a $250,000 Jackson home. CORRECTION! A previous version of this story misrepresented the crime for which Nancy New pleaded guilty. It was monetary transactions with wire fraud proceeds or money laundering.