NYC’s Migrant Debit Card Program Could Cost Billions, Not Millions: Report

The initiative is based on a non-bid, open-ended contract that could potentially cost the city $2.5 billion each year.
NYC’s Migrant Debit Card Program Could Cost Billions, Not Millions: Report
New York City Mayor Eric Adams holds a press conference in New York City on Jan. 8, 2024. (Spencer Platt/Getty Images)
Bill Pan

New York City’s pilot program of giving illegal immigrant families pre-paid debit cards to buy food is under scrutiny, as a new report found that the initiative involves an open-ended contract that could potentially cost the city $2.5 billion each year, far greater than the $53-million-per-year price tag the mayor has promised.

Under the program, championed by Mayor Eric Adams, the city will hand out prepaid debit cards to 500 illegal immigrant families with children, giving each participant $12.52 each day. That translates to roughly $350 a month for an individual to spend on food and baby supplies.

Camille Joseph Varlack, the mayor’s chief of staff, called the program a “cost saving measure.” Speaking at a Feb. 5 press briefing, she said the city could “save” $600,000 a month, or $7.2 million a year, by eliminating food waste and slashing the manpower previously required to deliver food to hotels where illegal immigrants are staying.

“What had been happening is that every couple of days, we were going to the hotel and delivering food,” Ms. Varlack told the reporters. “So, what you ended up happening is that you have the cost of the food itself as well as the cost of delivery services.”

Mr. Adams, who has warned that the illegal immigration crisis is pushing his city to a “breaking point,” called the plan “brilliant.”

“We have to recycle this money back into our local economy, because we’re spending this money anyway,” he said, noting that the debit cards’ recipients would have to sign an affidavit promising only to use cards at local stores.

“Local businesses are going to benefit.”

The Real Cost

Although the Adams administration said the program would cost $53 million a year, a closer look by the New York Post at a contract signed between the city and the company tasked to distribute the debit cards reveals that this is far from the actual total cost.
According to the Post, the $53 million figure is merely the fee for the services of Mobility Capital Finance, or MoCaFi, a Newark, New Jersey-based digital banking firm founded by Wole Coaxum, a former managing director at JPMorgan Chase on a mission to bridge the “racial wealth gap.”

“In exchange for [MoCaFi’s] ... performance of the services, the city shall pay to the contractor a total amount not to exceed $53 [million] ... in accordance with the scope of services and fees,” read the contract, reviewed by the Post.

That “scope of services,” as the Post noted, does not include the money that would actually go into the debit cards.

“After stripping out various fees the company gets for printing up the blank cards and such, the city has purposely given itself the flexibility to disburse at least $2.5 billion on these pre-paid debit cards over a year,” said Nicole Gelinas, a Manhattan Institute senior fellow and City Journal contributing editor who wrote for the Post.

Fraud Concerns

To make matters worse, the city allows MoCaFi to allocate up to “$10,000 per card” without putting any fraud-control measures—such as ID checks—in place. The contract even states that “cardholders will not be subject to ID verification.”

The city also appears to want to give the cards to individuals under 18, saying in the contract that it will ensure that “the minor cardholder’s parent or guardian has consented to the minor’s acceptance and use of the card.”

With no built-in protections, such a program appears to be ripe with possibilities for fraud, Ms. Gelinas warned.

“So, city employees and shelter contract workers are going to be in charge of handing out cards to be loaded and regularly refilled with untraceable cash, to people who have no forms of identity acceptable to the American financial services system, under a program with no eligibility or verification policy,” she wrote. “What could go wrong?”

Ms. Gelinas also took issue with how MoCaFi was selected for the job in the first place. The contract itself appears to show that the New York City Department of Housing Preservation & Development (HPD) did not go through the usual competitive bidding process before awarding the task to MoCaFi, which was listed as “a new provider of emergency services.”

As the Post noted, the contract stated that MoCaFi was simply “referred to HPD by City Hall,” without any discussion with the city council or public hearing.

This is not the first time the Adams administration has hired a non-bid “emergency” contractor. In the spring of 2022, the city awarded a $432 million contract to DocGo to help manage hotels and shelters that house and care for illegal immigrants. DocGo’s only city experience was to run mobile COVID-19 testing sites during the pandemic.

DocGo’s job performance has since caused much criticism, including from New York City Comptroller Brad Lander, who initially refused to sign off the $432 million non-bid contract. According to a New York Times report, DocGo received up to $33 per day to provide three meals for each of the 4,000 illegal immigrants in its care. However, it discarded thousands of uneaten meals daily, causing a multi-million dollar waste.

New York City Hall did not respond to a request for comment.