Portland Money Went to Roach-Infested Hotel
July 8, 2024
Topline: The single largest recipient of city money in Portland, Maine last year was a motel recently shut down by a cockroach infestation, according to a review of spending records by OpenTheBooks.
Key facts: Since 2019, Portland has been using a local Motel 6 to house homeless families and asylum seekers.
The motel had its lodging license revoked by the state’s department of health this March for several violations. The building was infested with rodents and insects, and there were only two microwaves available for 120 families.
One mother told Maine Public, "Every time I put [my baby daughter] in the crib, I found cockroaches there, and I was afraid that the cockroaches could crawl into her ears or her nose."
Portland, Maine’s largest city, spent just under $11 million at the motel in 2023. It’s 7% of the city’s $158 million checkbook obtained by OpenTheBooks through an open records request. No private company received more city business.
Portland’s parks and recreation department and library system received less funding than the Motel 6. Only five city departments had a higher budget.
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Background: City Manager Danielle West said the motel charges Portland $225 per night for each family, while other motels contracted by the city charge just $90, according to News Center Maine.
Portland’s options are limited, though. The housing is funded through the state’s General Assistance Voucher program, which reimburses cities for 70% of eligible expenses. Most motels don’t accept the vouchers.
Maine cities spent $43 million on the vouchers in 2023. That means up to 25% of all the voucher spending went to the cockroach-infested Motel 6, assuming Portland applied for reimbursement on the entire $11 million.
The state also has an Emergency Housing Relief Fund. So far, $35 million of the $55 million fund (65%) has gone toward 2,200 asylum seekers.
Summary: If Portland is going to blow its checkbook on free housing, the city can at least find somewhere sanitary for families to stay.
Waste of the Day: Pandemic Tax Credits Turn into Free-For-All
July 9, 2024
Topline: Up to 90% of claims submitted for the pandemic-era Employee Retention Tax Credit show an “unacceptable level of risk” of containing errors or deliberate fraud, according to a press release from the IRS.
Key facts: Business owners can claim tax refunds for up to $28,000 in wages paid to each employee between March 2020 and December 2021 if their business was shut down by the government or saw its revenue decline by at least 20% during the pandemic.
The tax credits had strict limits when they were created in 2020 but were expanded last year. That opened the floodgates for an extra $86 billion in claims, and the IRS paused applications in September because they simply couldn’t keep up with all the paperwork.
Between 10% and 20% of the claims are in what the IRS calls the “highest-risk group,” which show “clear signs” of errors. An additional 60% to 70% also show “risk indicators.”
The IRS has already canceled $2 billion from erroneous claims, according to the press release. It has also opened 450 criminal cases into potentially fraudulent claims worth $7 billion. Thousands more are currently being audited, and there are 1.4 million claims waiting to be processed.
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Critical quote: IRS Commissioner Danny Werfel blamed most of the issues on private tax companies that he says “misled” ineligible businesses into applying for the credits.
“These claims are clogging the system for legitimate taxpayers,” Werfel said. “We worry that ending the moratorium might trigger a gold rush by aggressive marketers that could lead to a new round of improper claims “
Background: When the tax credit was first established in 2020, the Congressional Budget Office estimated it would cost $55 billion.
Since then it’s been extended three times, and now the nonprofit Committee for a Responsible Federal Budget estimates it will cost over $550 billion unless changes are made. $230 billion had been paid out at the end of 2023.
Recent estimates also show the federal government lost about $1 trillion to fraud during the pandemic, but only $1.4 billion has been recouped.
Summary: A program once meant to help the most vulnerable American small businesses is now home to billions of dollars in fraudulent claims.
Secret Security Company Made NYC Money Vanish
July 10, 2024
Topline: New York City’s security services for former prison inmates have turned into a years-long game of “whodunnit?” with a twist ending revealed this June.
Mayor Eric Adams’ office found that a nonprofit secretly sent $12 million in federal Covid relief funds to an unlicensed security company in what certainly violates procurement rules and may be a more elaborate kickback scheme, according to the nonprofit newsroom The City.
Key facts: When the Covid-19 pandemic began, New York hired the nonprofit Exodus Transitional Community to place inmates released from the Rikers Island prison complex into hotels so they could not spread or contract the virus.
Exodus then hired a security company to work at the hotels. For two years, no one was completely sure which company that was.
New York’s checkbook identified “Global Security Solutions” as the company hired to guard the hotel, but their attorneys told reporters at The City that they had no involvement.
Emails from Exodus’ lawyers identified “Global Operations Security” as the correct company, but a staffer there refused to put reporters in touch with the company.
Finally, the mayor’s office told The City that “Global Operations Security Services” was the company that actually provided security. This third company promptly emailed the mayor to say that it “is not associated in any way, shape or form” with Rikers inmates.
The confusion caused Adams’ office to launch a formal investigation. This June, it was revealed that the “Global” companies were all red herrings; Exodus had secretly paid $12 million for Watchforce Security Services to guard the hotels.
Watchforce, though, did not actually have a security license, so it paid $8.3 million to other companies that could legally take its place. The remaining $3.7 million is unaccounted for.
Hiring a fake security company is preposterous, which is why the mayor’s office investigated a potential kickback arrangement between Watchforce and Exodus. Some ties between the companies were found, but nothing conclusive.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
Background: Exodus’ contract was awarded through a no-bid process because of emergency procedures. It was originally supposed to be worth $835,000 but increased to $83 million throughout its 16-month duration, according to The City.
The group was responsible for former inmates at the Wyndham Garden Hotel, where one woman alleges she was sexually assaulted by an Exodus worker.
Mayor Adams held campaign events at the hotel and one of his staffers stayed there for months rent-free, all while prison inmates lived there.
Exodus was rehired with a $40 million contract for “emergency reentry hotel services” that was set to expire this June, even though the mayor’s office was already investigating them, The City reported.
Summary: New York’s vendor spending should be clear and transparent, not something that reads like an Agatha Christie novel.
Throwback Thursday: Lobsters Made Taxpayers See Red
July 11, 2024
Throwback Thursday!
Topline: Maine lobsters are known for their sharp claws, and in 2008 they could have taught the federal government a thing or two about penny pinching.
House members floated $178,000 to Maine’s Lobster Institute, helping fund outreach and education with money that would be worth $258,000 today.
That’s according to the “Wastebook” reporting published by the late U.S. Senator Dr. Tom Coburn. For years, these reports shined a white-hot spotlight on federal frauds and taxpayer abuses.
Coburn, the legendary U.S. Senator from Oklahoma, earned the nickname "Dr. No" by stopping thousands of pork-barrel projects using the Senate rules. Projects that he couldn't stop, Coburn included in his oversight reports. Coburn's Wastebook 2008 included 65 examples of outrageous spending worth more than $1.3 billion, including the $178,000 wasted on lobsters.
Key facts: The grant funds came from the National Oceanic and Atmospheric Administration, even though the Lobster Institute had recently told the Bangor Daily News that it accepts money from “sponsors and endowments so that it will not need to rely on the federal government.”
The Institute helped organize the first-ever International Lobster Congress and created the now-defunct Lobster Cam, which updated online every two minutes with pictures of shellfish.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
That doesn’t mean the Institute ignores the culinary field. They’ve created lobster-based dog treats called “Lobster Bisque-its” and helped publish “A Lobster in Every Pot,” a cookbook filled with “100 workmanlike recipes, trivia and lobstering reminiscences.”
The House voted 328-87 to fund the Institute, but no one took more heat than Rep. Kenny Hulshof. His primary election opponent sent staffers dressed as lobsters to Hulshof’s campaign events to remind voters about his wasteful spending.
Background: The earmark was proposed by Maine’s Republican Sens. Susan Collins and Olympia Snowe and Democratic Rep. Tom Allen.
Collins still represents Maine and helped secure nearly $568 million in earmark funding this year, giving Maine more earmarked cash than all but four other states.
Summary: For the sake of food safety, let’s hope the Lobster Institute’s fish is prepared with more care than the federal government’s half-baked funding initiatives.
Biden Poured $230 Million Into Broken Gaza Pier
July 12, 2024
Topline: President Joe Biden announced his plan to build a floating pier for humanitarian assistance in Gaza during his State of the Union speech in March. Four months later, the $230 million project is barely treading water.
The Pentagon announced yesterday that the pier will “soon cease operations.”
Key facts: About 1,000 U.S. soldiers spent two months building the pier on the Gazan coast, which opened on May 17.
Over the next few days, rough seas and civilian unrest disrupted the transfer of aid supplies. White House staffers learned on May 25 the pier was about to fall apart — just hours after Biden bragged about the project in a speech at West Point, per CNN. That forced the Pentagon to spend over a week repairing the dock with help from the Israel Defense Forces.
The pier was only usable for 12 days between May 17 and June 23, according to The Guardian.
In that time, the U.S. delivered only 250 truckloads of food and supplies, less than half of what would arrive in Gaza in a single day before the war, according to The Guardian. Most of it is stuck at the pier; officials fear it’s too dangerous to deliver the food to Gazans because of airstrikes and street conflicts.
John Hannah, a senior fellow at the Jewish Institute for National Security of America, wrote in the Washington Examiner that the U.S. team tasked with getting aid to Gaza knew the pier was a “dumb idea” as early as last December.
Critical quote: Dr. Hanan Balkhy, the head of the World Health Organization’s Eastern Mediterranean region, told the Associated Press that the pier won’t do much to address the humanitarian crisis.
“The pier has supported a little bit, but it’s not to the scale that is needed by any stretch of the imagination,” Balkhy said. “So we need to emphasize on the land routes to ensure the amount and the quantity and the efficiency.”
Background: Previous reporting from OpenTheBooks.com revealed that the Biden administration has also sent $1.2 billion in Palestinian aid to the United Nations Relief and Works Agency, including $121 million since Oct. 7. Funding was paused in January.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
The Wall Street Journal reported that 10% of UNRWA staff have ties to Islamic extremists, and there is currently draft legislation in the Israeli parliament to officially label UNRWA as a terrorist organization.
Summary: The humanitarian crisis in Gaza needs pragmatic, responsible solutions — not half-broken boondoggles.
The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com.