A New Jersey startup that signed a controversial $53 million no-bid contract with New York City to provide prepaid debit cards to immigrants will receive a portion of the funds provided to asylum seekers. The Post reported that it could earn a whopping $1.8 million. Have learned.
The one-year contract signed by Mayor Eric Adams’ administration and tech finance firm Mobility Capital Finance, first reported by the Post last month, is now being reviewed by the City Council, which points out that the deal did not go through normal procedures. This has raised eyebrows among members of the department. Competitive bidding process.
“There is something wrong with this contract and the taxpayers are being defrauded,” City Councilman Bob Holden (D-Queens) said Thursday of the details of the contract.
“These no-bid emergency contracts and profit-driven bidding are out of control and require us as a city to re-evaluate the way we do business,” he added.
The deal is likely to give the Newark, N.J., company known as MoCaFi, which was founded about a decade ago by former JPMorgan Chase banker Wole Coaxum, a dwarf of profits from similar but much larger contracts. It seems like they guarantee a 3x profit. Along with Los Angeles.
Under the agreement with the Big Apple, MoCaFi will collect 3% of the first $50 million in taxpayer funds to be loaded onto prepaid cards that the city plans to distribute to families of newly arrived asylum seekers during their stay. This will help pay for food and baby supplies. He is being housed in a temporary evacuation center.
MoCaFi will earn a 2.5% profit if an additional $100 million is paid, and 2% if the amount exceeds $150 million, according to the agreement obtained by the newspaper.
That means the company would get about $1.6 million if City Hall expands the 500-home pilot program to a second phase of 6,500 homes.
According to the agreement, the company will also receive $125,000 in start-up costs and $250,000 in annual “administration and customer support costs.”
“In addition to the fees, there’s a lot of due diligence that goes into a project of this size,” former City Comptroller Scott Stringer told the Post. “The reason we are competitive is because [request for proposals] It’s about creating competitive contracts. The RFP process is simply a best practice. ”
The Adams administration was able to circumvent the RFP process by leveraging emergency powers granted to the mayor by the city auditor in November 2022 to address the ongoing immigration crisis.
Mr. Adams also used emergency contracting powers last year to strike a troubled $432 million contract with COVID-19 testing-turned-immigrant shelter company DocGo.
“I’ve certainly never seen anything like this,” said City Councilwoman Gail Brewer (D-Manhattan) when the Post detailed the payment terms of the MoCaFi contract.
“I can’t believe we couldn’t have gotten a better price,” she said of City Hall, adding that in the wake of the DocGo outrage, the city council had been told “everything will be up for bid in the future.” .
The Adams administration said it used emergency powers to award the contract because the competitive bidding process would take a long time and MoCaFi had the necessary personnel to carry out the pilot program.
City officials have not said when the immediate response card initiative will begin.
Under the program, asylum-seeking families will receive between $345 per month per immigrant and $2,203 per month for a family of eight, according to a breakdown sheet shared with the Post by the city’s Housing Preservation and Development Department (HPD). . Early this week.
If the city were to expand the program to 6,500 households, the deal would see the funds available in just over six months, judging by the size of the payments provided by HPD.
If the initiative ultimately covers the roughly 15,000 families receiving city care, it would require a contract worth about $250 million a year, with more than $6 million in fees just for card loading. will be brought to MoCaFi.
That compares with the fees the company paid under a $1.1 million annual contract with L.A. to provide coronavirus funding and rental assistance to tens of thousands of low-income families from 2020 to last year. This is a two-fold increase.
LA’s contract, which has been renewed three times, included $375,000 in initial costs for an initial set of cards, distribution, and the creation of an app and website. In exchange for a cut of the funding provided, MoCaFi only received a flat rate of $500,000 a year to manage the program, according to a contract obtained by the newspaper.
The Adams administration says the debit card initiative is an experiment aimed at solving the long-standing problem of food waste in immigrant shelters, potentially saving the city $7.2 million a year while putting that money back into the local economy. It defends the debit card concept by claiming that there is.
Controversial company DocGo was found to be dumping thousands of dollars worth of uneaten meals in shelters, leaving migrants with meals so “bad” they would rather cook in their rooms. he told the Post.
Scandals including a no-bid contract with DocGo and allegations of immigrant abuse against the company led to a review of the mayor’s emergency contracting powers by City Comptroller Brad Lander.
Mr. Lander ultimately scaled back his authority, requiring his office to approve all no-bid deals entered into by the administration.
“The need to procure services through emergency procurement met procedural requirements,” Lander spokeswoman Chloe Chick said when asked about the MoCaFi contract.
MoCaFi and City Hall had no comment Thursday.
“The MoCaFi pilot program is available only in supermarkets and bodegas and is expected to save the city millions of dollars in services to families with children in their care,” City Hall spokeswoman Kayla Mamalek said. he said in a previous statement.
“The suggestion that New York City is handing out thousands of dollars in free cash to immigrants is false, plain and simple,” she added.
Additional reporting by Griffin Eckstein
