New Jersey’s Office of the State Comptroller (OSC) believes that roughly $7 million in federal COVID-19 funds paid out to New Jersey fisheries may be improper and should be recovered. That constitutes approximately 49% of the total CARES Act grants that the New Jersey Department of Environmental Protection (DEP) made to marine fisheries during the pandemic.
Reviews by OSC and an independent Integrity Monitor found that payments to 37 marine fisheries did not appear to meet program guidelines, with OSC noting in a letter to DEP that many of the fisheries had been made “more than whole” and received more funds than their actual losses in 2020. Some failed to submit supporting documentation when requested. A few were ineligible because they did not have at least a 35% loss in revenue.
DEP said it has begun to review the payments and recoup those found to be improper.
“This is a step in the right direction,” Acting State Comptroller Kevin Walsh said. “Agencies have an obligation to not only have sufficient controls in place to prevent fraud and improper payments but also to respond quickly when potentially improper payments are later detected.”
The CARES Act Marine Fisheries Assistance Grant 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 at least a 35% loss between March and June of 2020.
In March 2022, OSC’s first review of the program found nearly $2.4 million paid to fisheries may have been improper and that DEP did not act on some obvious red flags. 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 did not 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.
DEP also contracted with an Integrity Monitor to review its administration of the program, and in September 2022, the Integrity Monitor found that nearly $3.5 million should be recouped from 13 applicants. The Integrity Monitor identified one approved applicant as ineligible, for instance, because it showed only an approximate 12% loss in revenue and said that the fishery needed to return $638,244 to DEP.
Together, OSC and the Integrity Monitor reviewed 52 of the 117 applications – which amounted to 88% of the funds awarded by DEP. The reviews found at least 41% of the payments – $5.9 million – were subject to possible recoupment, due to applicants being either made “more than whole” or ineligible for payments.
Another $1.1 million might also be subject to recovery due to applicants’ failure to provide complete documentation to support their awards when requested. During the application process, applicants signed an affidavit certifying that the information they supplied was accurate; they did not have to submit any supporting documents but had to agree to make records available if requested. In addition to taking steps to recover improper payments, DEP agreed to establish stronger internal controls, such as enhanced training of staff in grants management and avoiding self-certifications. Read OSC’s letter to DEP.
