October 4, 2005

Nine charged in Calif. with $25,000 Katrina fraud

LOS ANGELES (Reuters) - Nine people in California have been
charged with defrauding the American Red Cross out of at least
$25,000 in donations intended for victims of Hurricane Katrina,
law authorities said on Tuesday.

The nine, all residents of Bakersfield, in central
California, were either working as temporary staff at a Red
Cross call center or were friends with someone employed there.

U.S. Attorney McGregor Scott told journalists that $25,000
in fraudulent losses have been documented so far but that he
expected the total to "grow dramatically."

"It is beyond the pale that there are those who would seek
to capitalize on the tragedy wrought by Hurricane Katrina and
the generosity of so many who donated relief funds," said
Scott, in Fresno, California.

The nine are charged with participating in a wire fraud
scheme and could face prison terms of up to 20 years each. They
will appear in federal court in Fresno on Wednesday.

According to prosecutors, four of those accused were
employed at an American Red Cross call center in Bakersfield
that was set up to handle claims for assistance from the
thousands of those made homeless by Katrina. The other five
were friends or relatives of employees -- all of them hired
through a temporary staff agency.

The defendants, who range in age between 19 to 44, are
accused of manipulating systems set up by the Red Cross to
verify genuine Katrina claimants to obtain checks for
themselves or their friends.

Scott said Red Cross officials became suspicious and
referred the matter to the FBI. Some of those arrested were
pictured on video cameras cashing or attempting to cash checks
at Western Union offices in Bakersfield, according to
affidavits in the case.

The American Red Cross said last week that it was committed
to being "a good steward of the public's generosity" but
acknowledged that fraud was unfortunately part of life
following major disasters.

It said it knew of 261 cases of alleged fraud in connection
with Hurricanes Katrina and Rita and would continue to operate
a zero-tolerance policy in all such cases.