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Carolina Journal News Reports

Stimulus money sent to phantom ZIP codes in North Carolina

$2.5 million in federal spending created 0.5 jobs, government claims

Jan. 11th, 2010
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RALEIGH — The federal government sent 2.5 million stimulus dollars to North Carolina ZIP codes that don’t exist.

The information came from the government’s own Web site — Recovery.gov. The site was set up to track the distribution of the $787 billion made available by the American Recovery and Reinvestment Act.

It lists 479 North Carolina ZIP codes as the destination of $4.2 billion in grants, contracts, and loans. Four of those ZIP codes — 24858, 28389, 23854, and 27600 — are nowhere to be found on U.S. Postal Service maps. In the four ZIP codes, the Web site reports, the $2.5 million created 0.5 jobs all told.

All North Carolina ZIP codes start with 27 or 28, so projects listed in 24858 and 23854 ZIP codes would not be based in North Carolina, even if such ZIP codes existed.

The Philadelphia-based Franklin Center for Government & Public Integrity reported last week that the federal government’s Web site had assigned $375 million in stimulus spending nationally to 440 nonexistent ZIP codes.

In December, the Franklin Center found that nearly $6.4 billion in stimulus spending had been attributed to 440 phony congressional districts.

Deputy Press Secretary for the Recovery Act Jim Gilio said the illegitimate ZIP codes were probably innocent mistakes. He said the list was compiled based on information reported by recipients of the funding, and that they most likely made data entry errors.

“There’s really no story here,” he said in a telephone interview. “Every project was real. There’s never been a question about whether a real recipient received the money.”

Gilio suggested searching by dollar amount rather than by ZIP code. While the “funds by ZIP code” page is based on recipient-reported data, the “funds by amount” page is based on agency-reported data. He demonstrated that the $34,096 figure, which corresponded with the phony 24858 ZIP, could be found on the agency-reported data page along with the correct ZIP code, 27834, and the correct recipient, East Carolina University.

Using the same method for 28389, the $63,000 award went to ZIP code 28226, and that the recipient was Uplift Cosmetic Surgery Laser and Skin Center. The award created zero new jobs.

And yet it’s not possible to use Recovery.gov’s “search by amount” method to learn how the $2.1 million assigned to 23854 or the $367,472 for 27600 were spent. That leaves nearly $2.4 million unaccounted for on the federal Web site.

Ed Pound, spokesman for the Recovery Accountability and Transparency Board, told Watchdog.org, a transparency Web site from the Franklin Center, that the bogus ZIP Codes are “nonsense” and “much ado about nothing.”

“This is simply human error,” he said to Watchdog.org. “Just because recipients inverted ZIP Codes (at the place of performance) does not mean that the money is going to some phantom place.”

For North Carolina’s projects, that explanation does not add up. The U.S. Postal Service’s ZIP Code Lookup site does not recognize ZIP codes 28458, 26700, 28354, and 28839 — ZIP codes that result by transposing the second and third digits on the bogus ZIP codes reported on Recovery.gov.

Gilio said the recovery board’s goal is to make the Web site “better each time we update it and to correct mistakes whenever we see them.”

The site was last updated in October 2009. To date, the faulty ZIP codes have not been corrected.

Sara Burrows is an associate editor of Carolina Journal.