Katrina fraud cost up to $1.4 billion
Published 9:00 pm Tuesday, June 13, 2006
WASHINGTON – The government doled out as much as $1.4 billion in fraudulent claims for relief after Hurricanes Katrina and Rita, getting 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 all were able to wrongly get taxpayer help, according to evidence that gives a new black eye to the nation’s disaster relief agency.
Federal investigators even informed Congress that one man apparently used FEMA assistance money for a sex change operation.
Agents from the Government Accountability Office, 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 help to individuals after the two hurricanes was unwarranted.
The findings are detailed in testimony that is to be delivered at a hearing today by the House Homeland Security subcommittee on investigations.
To dramatize the problem, 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.
FEMA said it has identified more than 1,500 cases of potential fraud after 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, since FEMA gave them individual rental assistance and paid hotels directly. In one instance, FEMA paid an 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:
* An all-inclusive, one-week Caribbean vacation.
* Five season tickets to New Orleans Saints professional football games.
* Adult erotica products in Houston and “Girls Gone Wild” videos in Santa Monica, Calif.
* Dom Perignon champagne and other alcoholic beverages in San Antonio.
* A divorce lawyer’s services in Houston.
