As the old saying goes, it takes money to make money, but apparently it takes $53 million to give money away.
Earlier this month, the Post reported that Mayor Adams was handing out prepaid cash cards to immigrants.
Unusually for a mayor, Adams himself did not publicize the story, and his administration failed to correct some facts for nearly a month. public misunderstanding about it.
One misconception is that the program allows the city to provide only $50 million to immigrants.
No wonder the mayor is silent.
This debit card program, if you read the actual contract, has the potential to become an unlimited multi-billion dollar Bermuda Triangle of unaccounted for, untraceable cash that can be used for any purpose.
Immigrants would be given up to $10,000 each in taxpayer money, with no ID checks, no restrictions, and no controls on fraud.
Why issue debit cards?
When the Post exposed the mayor’s debit card program earlier this month, the mayor’s office introduced it as a savings program to solve the problem of immigrants staying in hotels not eating all their food.
DocGo is the city’s no-bid “emergency” contractor that provides immigrants with three meals a day. Up to 5,000 meals are thrown away every daywasting $7.2 million a year.
Some foods are inedible because they are expired or spoiled, and other foods do not meet the dietary needs of immigrants.
Providing meals appropriately and at scale with options tailored to specific needs, such as halal, kosher, vegan, and gluten-free, is not that difficult. School systems do it, airlines do it, hospitals do it, prisons do it.
It won’t be too difficult for the city to solve this problem. On-site city auditors may refuse to pay for meals that are objectively inedible, for example, with visible mold or expired labels.
Solve the old Boondoggle with the new Boondoggle
However, the Adams administration took issue with hiring new no-bid “emergency” contractors instead of ensuring that existing no-bid “emergency” contractors met their obligations to provide edible food. solved. It offers a service with far more room for waste, fraud, and abuse than a stale sandwich, and billions of dollars in cash can be handed out with few questions asked.
Which vendors did the city’s Department of Housing Preservation and Development consider for this contract as qualified to provide this complex financial service?
New York City is home to hundreds of top-notch financial services and utility providers, and a competitive bidding pool would be a dream to ensure the city gets a fair deal, as well as strong protections against fraud and abuse. I am.
However, HPD only considered one company. That’s Newark-based Mobility Capital Finance, which also has an office in Harlem.
MoCaFi was founded by Wole Coaxam, a former managing director at JPMorgan Chase & Co. He said the death of Michael Brown in Ferguson, Missouri, in 2014 inspired him to serve the “underbank” and “close the racial wealth gap.” .
How did HPD choose Mobility Capital? The contract clearly states that MoCaFi was “referred to HPD by City Hall.”
What experience does MoCaFi bring to this complex endeavor?
none. As HPD helpfully points out in its “List of Previous/Related Emergency Major Contracts,” MoCaFi is “a new provider of emergency services for HPD.”
According to HPD, MoCaFi’s only urban experience is small-scale support for the city’s participatory budgeting program.
The company has an extensive national track record as a “platform” for prepaid, third-party debit cards and bank accounts sold to minorities.
Where did City Hall find MoCaFi?
The only clue is an off-the-cuff comment Adams made at the reception. early this month, calls MoCaFi “a minority business I came across while campaigning.” . . . Little did we know that God would say there would be a crisis and you would have to meet it. . . . And “making an investment” costs money. . . in our community. ”
A year ago, the Adams administration was already eager to find out what MoCaFi could do.
Last year, the chairman of the mayor’s slush fund for the development of New York City said: anonymous individual donor “At one of the foundation’s board meetings, the concept of a future partnership with the mayor’s office was brought up. . . And Mokafi. . . A universal basic income project, giving cash to poor New Yorkers (not immigrants).
Mr. Coexum appears to have become part of the mayor’s orbit, even providing a quote in City Hall’s official press release praising Mr. Adams’ creation of a new “mission bureau.”
How much cash does MoCaFi give the city and how much does MoCaFi get paid?
Since striking an immigration deal with MoCaFi, Adams has been content to let the public misunderstand: The program is small and intensive, with 500 immigrant families at the Roosevelt Hotel receiving about $1,000 a month in debit card payments. They receive a card that allows them to buy essential items at the grocery store. Food, convenience stores, etc.
As the mayor stated in February In response to In response to a question from reporters, he answered, “We are conducting a pilot project with 500 people.”
It’s easy to conclude — and the mayor isn’t denying this thought process to anyone — that it will cost a total of $53 million or so, as reported in the press. This is the number in the heading.
no. He would give 500 families $1,000 a month for a year, a reasonable amount of time for a pilot, and it would cost him $6 million.
The city could have written and signed a contract for that amount. This agreement allowed for a clearly defined pilot program with clearly defined costs and a way to evaluate its results.
That’s not a contract the city signed.
Most importantly, the headline figure of $53 million do not have Money that immigrants will receive during the pilot.
This is the number that the vendor, MoCaFi, may receive as a service fee.
“in exchange” for the period of the year, as clearly and expressly stated in the contract documents. [MoCaFiâs] . . . For performance of services, the City shall pay the Contractor an amount not to exceed $53 in the aggregate. [million] . . . Depending on the scope of services and fees. ”
The “scope of services” is do not have It also includes money that immigrants actually receive on their debit cards.
The city funds the card separately, meaning it puts money on the card.
In other words, for up to $53 million, MoCaFi will issue a large number of blank Mastercards.
That’s all.
And for the “services” provided, MoCaFi not only makes money from each card distributed, but also receives a 3% commission on the first $50 million, or $1.5 million, that the city places on the card. Masu. After the first $50 million, fees decrease slightly.
It’s easy to calculate how MoCaFi will receive a fee of around $50 million, the maximum allowed in the contract. The city intentionally gave itself the flexibility to spend at least $2.5 billion a year on these prepaid debit cards, after the company deducts various fees such as printing blank cards.
Fraud Regulation – What is Fraud Regulation?
So, to summarize, the Adams administration launches a massive parallel benefits program that is “not a replacement” without any oversight, without consultation with City Council, and without any public debate. It means giving yourself flexibility. Traditional welfare cash assistance and federal food stamp benefits (for legal long-term New Yorkers).
But these traditional programs at least have reasonable, if not fail-safe, fraud protection features. People must prove eligibility for these programs, including by providing identification.
The SNAP food stamp card is not a debit card. They are programmed to only pay for certain foods.
By contrast, Adams’ potentially multibillion-dollar debit card program has no such protections built in.
The contract with MoCaFi clearly states that “the cardholder is not subject to ID verification” and that “the city is responsible for the correct delivery of the card to the consumer.” There is.
And “after delivery” [cards] The city shall be responsible to the city for its safety. [cards] Until delivery. . . To cardholders. ”
Under the agreement and at the city’s request, MoCaFi will take over hundreds of blank debit cards with no one’s name on them, up to a “maximum” amount, with an unknown amount of money to be loaded onto the cards. Just throw it away. The city will provide a one-time payment of $10,000 per card.
The city may also issue debit cards to children. [cards] Not distributed to anyone under 18 years of age. . . City . . . You confirm that the parent or guardian of the minor Cardholder has consented to the minor’s receipt and use of the Card.
As such, city employees and shelter contract workers are responsible for distributing cards that can be loaded with untraceable cash and regularly refilled to people who do not have identification recognized by the U.S. financial services system. will be incurred. Eligibility or Verification Policy.
What could go wrong?
To name one of many potential problems, gang members could use these debit cards to prevent people staying in adjoining rooms, including vulnerable women and underage children, from possessing these debit cards. I know that.
And potential card recipients will immediately know who is in a position to decide whether or not they can receive a card.
The City also cannot guarantee that recipients will not spend the money on fraudulent products or simply withdraw it for cash.
These are not SNAP cards. They are Mastercard. The agreement states, “Cardholder may pay for any product/service at any merchant that accepts Mastercard,” and the restrictions are arbitrary.
Yes, the City can ask MoCaFi to enable or disable specific merchant codes or spending codes.
However, these limitations are not incorporated into the contract. They are at the city’s discretion to change.
The city could also allow cardholder “consumers” to withdraw cash from their cards at domestic and international ATMs. The contract states, “As requested by the city, the amount of ATM withdrawals per day may be limited.” “If ATM access is included as part of the program, card fees will be subject to a specified schedule.”
Why bother establishing a fee structure for international ATM withdrawals when the city knows they will never be allowed? In the possible circumstances, would the city need him to incorporate this flexibility into a year-long pilot?
Fiction from the Fine Print
as mayor he told radio host Gary Bird. Earlier this month, he said, “It’s important for us to speak directly to you to separate fact from fiction.” . . The fact of fiction is immigration cards distributed to immigrants to buy food. Here are some quick bullet points you need to know about these cards. Folks, these are not American Express Gold Cards. This is a pilot project that we are running with 500 immigrants. ”
There is fiction in the mayor’s statement.
That fact is stated in the contract documents.
The city has completed a full contract disbursing billions of dollars in untraceable global cash to unidentified people who are ineligible to access the American financial system in case of an “emergency situation.” and have given themselves technical authority.
Nicole Gelinas is a contributing editor for the Manhattan Institute’s City Journal.
