New Jersey wasted $2.4 million on fishy emergency coronavirus payments

Nearly $2.4 million in COVID-19 recovery funding paid to fisheries in New Jersey was improper because officials in the administration of Gov. Phil Murphy sent applicants more money than they lost as a result of the coronavirus pandemic.

report from the Office of the State Comptroller (OSC) found that the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) program administered by the New Jersey Department of Environmental Protection (DEP) was intended to provide funds to fisheries that lost revenue during the height of the pandemic.

In response, DEP officials claimed that they rushed to develop the Fishery Program quickly to ensure that financial relief reached fishing businesses impacted by the pandemic.

Progressive activist Lisa McCormick said Rep. Bonnie Watson Coleman and other members of Congress gave then-President Donald Trump “a $6 trillion slush fund” that would result in precisely the kind of waste, fraud, and corruption that the watchdog report has identified.

The CARES Act is 880 pages of outrage and corruption, that gave Republican President Donald Trump a $6 trillion slush fund without adequate oversight or guidance to prevent abuses,” said McCormick, who was a candidate for Congress when the law was enacted. “Instead of stabilizing the economy, it enriches the rich and insults the 99 percent of Americans who follow the rules. This is worse than the TARP bailouts under Bush.”

To qualify for the emergency funding, applicants must have experienced a greater than 35-percent loss between March and June of 2020, but the program guidelines required that fisheries could not receive more funds than their actual losses.

OSC’s review found that $2,373,550, or 22 percent of the money paid to fisheries, may have been improper. To date, those funds have not been returned as required.

“These funds were for fisheries that lost money because of the pandemic,” said State Comptroller Kevin D. Walsh. “If they didn’t lose money during the pandemic or didn’t lose as much as they claimed, they should pay the money back. If the excess funds aren’t returned, taxpayers could potentially be on the hook.”

Walsh leads New Jersey’s watchdog office that audits and reviews government programs and operations, investigates misconduct by government employees and officials, scrutinizes the legality of public contracts, and recovers improperly expended Medicaid funds.

OSC selected 24 out of 90 program recipients for its review.

Ten recipients received awards that put their total revenue for the year above what their average revenue for 2015-2019, a violation of program guidelines.

New Jersey was allocated $11,247,242 in the first round of the program plus an additional $9,439,080 later in the year, but the watchdog report covers only the initial funding.

Federal guidance did not require that applicants submit documentation of their lost revenue. Instead, applicants signed an affidavit stating that the information they gave was truthful.

This “self-certification” process was intended to speed up the distribution of funds. However, OSC found that DEP overlooked basic red flags that would have alerted DEP to errors or misrepresentations in applications.

The federal allocation of $300 million in fisheries assistance funding was provided by the CARES Act to states with coastal and marine fishery participants who had been negatively affected by COVID–19, according to then-U.S. Department of Commerce Secretary Wilbur Ross, who served under former President Donald Trump.

The New Jersey watchdog identified several red flags that DEP should have caught.

For example, one applicant reported revenue of $19,200 from March to June every year from 2015-2019 — a circumstance that warranted further investigation. OSC’s review found that this applicant didn’t suffer a 2020 revenue loss, yet still received funds.

Another applicant submitted two applications for assistance, and received two awards totaling nearly $377,000, but only suffered a loss of $188,000.

In these instances, DEP did not follow up or request more information from applicants prior to distributing funds, missing a key opportunity to prevent fraud, waste, and abuse.

“Our report finds that DEP did not take adequate steps to address red flags and protect federal recovery funds from being misspent,” said Walsh. “Getting COVID funding out quickly was important, but more should have been done to protect the funds from fraud, waste, and abuse.”

OSC is recommending that DEP, along with all agencies tasked with distributing federal COVID recovery funds, take reasonable steps to identify problems that can be addressed without causing any delay. OSC also recommends that DEP direct recipients who were made “more than whole” to return excess funds, in accordance with the rules they agreed to when they received the funds.

If readers have any information about government fraud, waste, abuse or mismanagement — particularly of COVID-19 recovery funds — they may submit a confidential tip to OSC’s hotline by email, on OSC’s website, or by calling 1-855-OSC-TIPS.

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