The New Jersey start-up that snagged a controversial no-bid $53 million contract with New York City to give migrants prepaid debit cards could net a whopping $1.8 million in profits by taking a cut of the funds doled out to asylum seekers, The Post has learned.
The one-year deal signed by Mayor Eric Adams’ administration and tech finance company Mobility Capital Finance — first reported by The Post last month — is now raising eyebrows with some members of the City Council, who noted the agreement didn’t undergo the usual competitive bidding process.
“Something’s wrong with this deal, and taxpayers are getting fleeced,” Councilman Bob Holden (D-Queens) said Thursday when provided with details of the contract.
“These no-bid emergency contracts and profit-driven bids are out of control, and we need to reevaluate how we do business as a city,” he added.
The contract appears to guarantee a windfall for the Newark, NJ firm known as MoCaFi — founded by ex-JP Morgan Chase banker Wole Coaxum about a decade ago — possibly netting it three times more than it pocketed under a similar, but much larger, deal with Los Angeles.
Under the Big Apple deal, MoCaFi will collect 3% of the first $50 million in taxpayer funds that get loaded onto the prepaid cards the city plans on handing out to newly arrived families of asylum seekers to help them pay for food and baby supplies while being housed in temporary shelters.
If an additional $100 million are disbursed, MoCaFi would garner a 2.5% profit, followed by 2% for anything beyond $150 million, according to the contract obtained by The Post.
That means the company stands to pocket some $1.6 million, should City Hall expand the pilot program of 500 families to the second phase of 6,500 families.
That’s on top of the $125,000 start-up fee and $250,000 annual “management and customer support fee” the company will pocket, according to the contract.
“A vig of this size on top of fees, due diligence must be done,” former city Comptroller Scott Stringer told The Post. “The reason we have a competitive [request for proposals] is it produces competitive contracts. The RFP process is simply best practice.”
The Adams administration was able to bypass the RFP process by using emergency powers the city comptroller granted to the mayor in November 2022 to deal with the ongoing migrant crisis.
Adams also used the emergency contract powers to sign a problem-plagued $432 million deal with COVID testing-turned-migrant-shelter firm DocGo last year.
“I certainly have never seen this,” Councilmember Gale Brewer (D-Manhattan) said when The Post detailed the MoCaFi contract payment terms.
“I can’t believe they wouldn’t have gotten a better price,” she said of City Hall, adding that the council had been told “that everything would be going out for bid in the future” following the DocGo boondoggle.
The Adams administration said it used the emergency powers to issue to contract because the competitive bidding process would take to long and MoCaFi had the staffing necessary to conduct the pilot program.
City officials haven’t said when the Immediate Response Card initiative will launch.
Asylum seeker families stand to receive between $345 a month for a single migrant to $2,203 per month for a family of eight under the program, according to a breakdown chart the city’s department of Housing Preservation and Development (HPD) shared with The Post earlier this week.
If the city did expand the program to 6,500 families, the contract would be tapped of funds after just over six months, judging by the payment scale provided by HPD.
Should the initiative eventually cover the roughly 15,000 families in city care, the contract would have to come in at around $250 million annually — bringing in more than $6 million to MoCaFi in fees coming from loading the cards alone.
That would mark a twelvefold increase from what the firm made in fees under the $1.1 million annual contract it inked with LA to provide tens of thousands of low income families with COVID funds and rental assistance between 2020 and last year.
The LA contract, which was renewed three times, included $375,000 in start-up fees for an initial set of cards, distribution and the creation of an app and website. Instead of taking a cut of the funds provided, MoCaFi only received a flat rate of $500,000 annually for program management, according to the deal obtained by The Post.
The Adams administration has defended the debit card initiative by saying it is an experiment aimed at solving the long-running issue of wasted food at migrant shelters — and could potentially save the city $7.2 million annually while putting the money back into the local economy.
Controversial company DocGo was found to be dumping thousands of dollars of uneaten meals at the shelters — and migrants have told The Post that they would rather cook in their rooms because the provided food was so “bad.”
The no-bid deal with DocGo, and ensuing scandals — including allegations of mistreatment of migrants made against the company — led to a review of the mayor’s emergency contract powers by City Comptroller Brad Lander.
Lander eventually scaled the powers back, so that his office would have to sign off on all the no-bid deals struck by the administration.
“The need to procure the service through an emergency procurement met the procedural requisites,” said Lander spokesperson Chloe Chik when asked about the MoCaFi contract.
MoCaFi and City Hall didn’t comment Thursday.
“The MoCaFi pilot program can only be utilized at supermarkets and bodegas, and it is expected to save the city millions of dollars in services for families with children in our care,” City Hall spokesperson Kayla Mamalek previously said in a statement.
“The suggestion that New York City is handing out thousands of dollars in free cash to migrants is false, plain and simple,” she added.
Additional reporting by Griffin Eckstein
