Lawmakers press DEED and grantees on suspected fraud in Promise Act applications; no criminal referrals reported

Representatives on the House Workforce, Labor and Economic Development Finance and Policy Committee pressed DEED and nonprofit administrators on March 4 about suspected fraud, document alteration and misrepresentation among Promise Act applicants.

Neighborhood Development Center (NDC) said its review teams identified instances of misrepresentation (for example, applicants applying on behalf of large chain restaurants and applicants submitting inconsistent tax documents). NDC reported that in round 1 it flagged 12 highly suspicious cases and that in round 2 similar categories of unverifiable applications were more numerous (NDC’s testimony cited 22 instances in certain categories). Greg Wagner of the West‑Central Initiative Foundation said his region flagged 22 questionable applications in round 1 and that the design of fabricated applications grew more sophisticated in round 2; other regional partners reported similar but smaller counts.

Partners told the committee they package suspicious applications and share them with DEED rather than contacting law enforcement directly unless instructed. Kevin McCann said DEED reviews flagged cases internally (legal and internal audit) and has the authority to escalate to the Bureau of Criminal Apprehension (BCA) where appropriate. McCann told lawmakers he was not aware of any criminal referrals resulting from the current set of flagged applications as of the March 4 hearing.

Representative Schultz and others raised media‑reported examples of awarded entities with prior regulatory or billing problems; DEED said eligibility was determined based on the statutory revenue‑year rule and noted some organizations were operating under appeal timelines when awards were made. The agency said it will include investigation and escalation details in its forthcoming March 15 legislative report and that it reserves the right to perform post‑award audits and pursue recovery or referral when warranted.

Ending: Committee members urged quicker escalation to law enforcement when evidence suggests criminal activity and asked DEED to include referral status and audit outcomes in its March 15 report.