A New Jersey-based startup, Mobility Capital Finance (MoCaFi), stands to make an estimated $1.8 million in profit from a controversial $53 million contract deal with New York City to provide migrants with prepaid debit cards.
The deal, which Mayor Eric Adams’ administration finalized without bidding, has now sparked concern among City Council members over the lack of due diligence and the potential for misusing taxpayer money.
Queens Councilman Bob Holden criticized the agreement, saying, “Something’s wrong with this deal, and taxpayers are getting fleeced. 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.”
The contract deal with MoCaFi, a company founded by former JP Morgan Chase banker Wole Coaxum, will receive a 3% commission on the initial $50 million of taxpayer funds loaded onto prepaid cards.
These cards are intended for distribution to newly arrived families of asylum seekers, assisting them with expenses such as food and baby supplies during their stay in temporary shelters.
This deal has raised questions about the city’s procurement practices, especially regarding MoCaFi’s potentially higher earnings than a similar agreement with Los Angeles.
Former city Comptroller Scott Stringer highlighted the importance of competitive bidding, “A vig of this size on top of fees, due diligence must be done.”
Despite these concerns, the Adams administration leveraged emergency powers to expedite the contract deal, bypassing the standard Request for Proposals (RFP) process due to the urgent need for migrant assistance.
The Immediate Response Card initiative plans to distribute funds ranging from $345 for an individual to up to $2,200 for a family of eight, with the potential expansion to 15,000 families.
If the initiative expands to cover 15,000 families under city care, the contract deal would need to account for approximately $250 million annually, resulting in MoCaFi earning over $6 million in fees solely from card-loading activities.
The new contract with New York City could increase Mobility Capital Finance’s (MoCaFi) earnings twelvefold compared to its previous $1.1 million annual deal with Los Angeles.
This earlier contract, renewed three times, provided low-income families with COVID-19 relief and rental assistance, including a $375,000 startup fee and a $500,000 annual management fee, without taking a percentage of the distributed funds.
Critics like Manhattan Councilmember Gale Brewer expressed surprise at the terms of the deal, suggesting that a competitive process could have yielded better value for the city.
The administration defended its decision, citing the urgent need to address food waste in migrant shelters and improve local economic contributions.
Despite controversies surrounding previous no-bid contracts, officials argue that this initiative will offer substantial savings and benefits to the city and its residents.
