Nearly $2.4 million in CARES Act funding earmarked for struggling marine fisheries may have been improper, OSC report finds

Ten of 24 recipients received more money than they lost in 2020 due to the pandemic

  • Posted on - 03/24/2022

TRENTON – A new report from the Office of the State Comptroller (OSC) finds that nearly $2.4 million in COVID-19 recovery funding paid to fisheries in New Jersey may have been improper, because the fisheries received more funds than what they lost in 2020 due to COVID. 

The CARES Act-funded program, administered by DEP, was intended to provide funds to fisheries that lost revenue during the height of the pandemic. To qualify, applicants must have experienced a greater than 35-percent loss between March and June of 2020. But program guidelines required that fisheries could not be made “more than whole”—that is, they could not receive more funds than their actual losses in 2020.

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 Acting 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.”

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.

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.

OSC 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 Acting State Comptroller Kevin D. 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 you have any information about government fraud, waste, abuse or mismanagement — particularly of COVID-19 recovery funds — submit a confidential tip to OSC’s hotline by email, on OSC’s website, or by calling 1-855-OSC-TIPS.

The Office of the State Comptroller (OSC) is an independent State agency that works to make government in New Jersey more efficient, transparent and accountable. OSC is tasked with examining all aspects of government expenditures, conducts audits and investigations of government agencies throughout New Jersey, reviews government contracts, and works to detect and prevent fraud, waste and abuse in Medicaid.

Stay up-to-date with the latest from OSC by following us on Twitter, Facebook, LinkedIn, and on Instagram at @NewJerseyComptroller.

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