A Dec. 27 article on alleged fraud by employees of Spherion Corp. who handled financial assistance for Hurricane Katrina evacuees at a Red Cross call center in Bakersfield, Calif., misidentified the company that hired Spherion. The company was ACS Inc., not 2XCL Training LLC.
Fraud Alleged at Red Cross Call Centers
Tuesday, December 27, 2005
Nearly 50 people have been indicted in connection with a scheme that bilked hundreds of thousands of dollars from a Red Cross program to put cash into the hands of Hurricane Katrina victims, according to federal authorities.
Seventeen of the accused worked at the Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims across the country and authorized cash payments to them. The others were the workers' relatives and friends, prosecutors said last week.
The scam came to light when Red Cross officials noticed that a suspiciously high number of people were picking up Red Cross money at Western Union outlets near the Bakersfield center, even though few evacuees were in the area.
The Red Cross called law enforcement authorities. Forty-nine people in the Bakersfield area have been indicted in the past three months for filing false claims with the center.
More indictments are expected soon, said Stanley A. Boone, an assistant U.S. attorney in Bakersfield.
The incident reveals a sometimes chaotic system that the Red Cross cobbled together after the devastating storm get cash to desperate evacuees. Many had fled their homes with only the clothing they wore and what they could carry.
Before winding up the program two weeks ago, the Red Cross gave out $1.3 billion to evacuees in more than 1.4 million households. It was the charity's largest cash-assistance program ever -- double the amount of cash it distributed after the Sept. 11, 2001, terrorist attacks, according to financial statements.
"We went in knowing that we had a great need, almost an incomprehensible need," said Michael Brackney, manager of the Red Cross's client services program.
But charity experts say that in this era, when a highly visible disaster can trigger an outpouring of hundreds of millions of dollars, relief groups are under enormous pressure to disburse the money as quickly as possible or risk the ire of donors.
In the wake of the Sept. 11 attacks, when the Red Cross was criticized for attempting to use some of the money to prepare for future disasters, donors have little tolerance for diverting funds to other causes, say those who study charitable giving. But that presents challenges to charities that usually are careful to parcel out aid based on need.
"Sometimes they have so much money, there is no obvious, easy way to give it out," said C. Eugene Steuerle, a senior fellow at the Urban Institute who conducted studies of the money donated to charities after Sept. 11.
In the days after Katrina tore through the Gulf Coast, Red Cross officials realized they faced a gargantuan task. Hundreds of thousands of evacuees fleeing the storm would need money quickly. Some left their homes with no identification, no cash and no access to their local banks.