Fraudulent Katrina and Rita Claims Top $1 Billion

By Larry Margasak
Associated Press
Wednesday, June 14, 2006

The government doled out as much as $1.4 billion in bogus assistance to victims of Hurricanes Katrina and Rita, and was hoodwinked to pay for season football tickets, a tropical vacation and even a divorce lawyer, congressional investigators have found.

Prison inmates, a supposed victim who used a New Orleans cemetery for a home address, and a person who spent 70 days at a Hawaiian hotel were able to wrongly get taxpayer help, according to the Government Accountability Office.

Agents from the investigative arm of Congress went undercover to expose the ease of receiving disaster expense checks from the Federal Emergency Management Agency.

The GAO concluded that as much as 16 percent of the billions of dollars in FEMA aid to individuals after the two hurricanes was unwarranted.

The findings are detailed in testimony that is scheduled to be delivered at a hearing today by the House Homeland Security subcommittee on investigations.

To dramatize the problem, the GAO provided lawmakers with a copy of a $2,358 U.S. Treasury check for rental assistance that an undercover agent got using a bogus address. The money was paid even after FEMA learned from its inspector that the undercover applicant did not live at the address.

"This is an assault on the American taxpayer," said Rep. Michael McCaul (R-Tex.), chairman of the subcommittee that will conduct the hearing. "Prosecutors from the federal level down should be looking at prosecuting these crimes and putting the criminals who committed them in jail for a long time."

FEMA spokesman Aaron Walker said yesterday that the agency, already criticized for its poor response to Katrina, makes its highest priority during a disaster "to get help quickly to those in desperate need of our assistance."

"Even as we put victims first, we take very seriously our responsibility to be outstanding stewards of taxpayer dollars, and we are careful to make sure that funds are distributed appropriately," he said.

FEMA said it has identified more than 1,500 cases of potential fraud since Katrina and Rita, and has referred those cases to the Homeland Security inspector general. The agency said it has identified $16.8 million in improperly awarded disaster relief money and has started efforts to collect the money.

The GAO said it was 95 percent confident that improper and potentially fraudulent payments were much higher: between $600 million and $1.4 billion.

The investigative agency said it found people lodged in hotels often were paid twice, because FEMA gave them individual rental assistance and paid hotels directly. FEMA paid California hotels $8,000 to house one individual -- the same person who received three rental assistance payments for both disasters.

FEMA paid another individual $2,358 in rental assistance, while at the same time paying about $8,000 for the same person to stay 70 nights at more than $100 per night in a Hawaii hotel.

FEMA also could not establish that 750 debit cards worth $1.5 million even went to Katrina victims, the auditors said.

Among the items purchased with the cards were five season tickets to New Orleans Saints professional football games and a divorce lawyer's services in Houston.

"Our forensic audit and investigative work showed that improper and potentially fraudulent payments occurred mainly because FEMA did not validate the identity of the registrant, the physical location of the damaged address, and ownership and occupancy of all registrants at the time of registration," GAO officials said.

FEMA paid millions of dollars to more than 1,000 registrants who used names and Social Security numbers belonging to state and federal prisoners for expedited housing assistance. The inmates were in Louisiana, Texas, Alabama, Mississippi, Georgia and Florida.

To demonstrate how easy it was to fool FEMA, the GAO told of an individual who used 13 different Social Security numbers, including the person's own, to receive $139,000 in payments on 13 separate registrations for aid. The payments were sent to one address.


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