Improper Covid Aid Flowed to Fishery Businesses, Official Finds

The New Jersey Department of Environmental Protection is pressing fishery businesses to pay back almost half of all their federal Covid-19 aid because it was improperly allocated, according to a letter from the state comptroller’s office.

In its haste to dispense $14.4 million, the state Department of Environmental Protection failed to thoroughly review the applications, at times missing prominent red flags, according to a letter sent on Tuesday to the agency by Kevin D. Walsh, the acting state comptroller.

The vetting was so sloppy, Mr. Walsh noted, that 25 percent of awards surveyed lacked necessary documentation. Almost 40 percent of 117 applicants were made “more than whole,’’ Walsh wrote — that is, the awards they received were greater than the losses claimed by a sample pool that included seafood processors and dealers and recreational businesses such as charter boats.

“Receiving and processing applications and distributing funds in a timely manner were critical to the success of the fisheries program, but the work is not done when the funds are distributed,’’ Mr. Walsh wrote to Sean Moriarty, a deputy environmental protection commissioner. Mr. Moriarty’s department “intends to follow up’’ with recipients to recoup about $7 million, Mr. Walsh noted.

Some applications drew auditors’ attention immediately during an earlier review whose results, in March 2022, triggered a broader exam. The comptroller found overpayments of as much as $892,653. In one instance, $378,702 was paid despite a lack of documentation.

The environmental department has already increased training for its staff regarding grant allocations, according to the letter.

Though businesses weren’t required to document their revenue, they signed affidavits certifying truthful answers. Should the applicants not give back the money, he said, New Jersey taxpayers may have to cover the cost to the federal government.

In all, Congress authorized $4.26 billion in spending in response to a pandemic that killed 1.1 million people in the United States and brought the economy to a near standstill. While the assistance boosted health care, allowed schools to teach remotely and supplied millions of out-of-work employees with a paycheck, it also proved ripe for waste, fraud and abuse.

In March, the Internal Revenue Service said it was prosecuting almost 1,000 instances of Covid-related tax fraud and money laundering totaling $3.2 billion. Improper unemployment payments alone may have amounted to $60 billion, according to a February estimate by the Government Accountability Office, which acts as Congress’s investigative arm.

In the New Jersey matter, Gov. Philip D. Murphy asked Mr. Walsh’s staff in June 2020 to monitor what would total $6.24 billion in coronavirus relief money.

The Murphy administration since has issued 88 reports compiled by auditors. Most reviews have found no shortcomings or minor ones that were easily corrected. Some, though, have uncovered overpayments, awards to ineligible applicants and questionable paperwork.

“My expectation would be this could be going on for a decade or more, that state and local governments have to answer for how and why they spent the funds entrusted to them,’’ Mr. Walsh said. “There was a lot of money spent.’’

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