February 11, 2006

Wide-Scale Fraud Likely in FEMA’s Katrina Aid – NYT

NEW YORK -- More than one-third of the 2.5 million applications for individual assistance after Hurricanes Katrina and Rita were "potential duplicates," suggesting that FEMA was the victim of extensive fraud, The New York Times reported on Saturday.

According to the Government Accountability Office, thousands of applicants for federal emergency relief money after the devastating storms lashed southern states last year used duplicate or invalid Social Security numbers or bogus addresses, the Times said, citing a GAO report to be released on Monday. The newspaper obtained a copy of the report.

GAO examined the Expedited Assistance program and determined that the Federal Emergency Management Agency, which was widely criticized for its slow response to help storm victims, at the same time failed to take even the most basic steps to confirm the identifies of 1.4 million people who sought expedited cash assistance, leaving the program vulnerable to "significant fraud and abuse," the Times said.

While the newspaper said auditors did not estimate the dollar value of fraudulent claims, it noted that the government report says FEMA itself found that 900,000 of the 2.5 million applications for all forms of individual assistance were "potential duplicates."

Even in cases where computers ferreted out possible fraudulent applications, payments were still sent in some cases, according to advance testimony by Gregory Kutz, managing director of the GAO's forensic audits unit.

Auditors were even able to secure their own $2,000 relief check by using "falsified identifies, bogus addresses and fabricated disaster stories," the Times said, citing the report for the Senate Homeland Security and Governmental Affairs Committee.

A FEMA spokeswoman told the Times the agency recognized the possibility of fraud, but said that getting money to victims was the priority at the time. The paper quoted her as saying it was a "calculated risk" but "the right thing to do."

The spokeswoman also said some arrests have been made and that FEMA is suspending payments to possible cheats.

Among the report's findings:

Nearly half of the 11,000 individuals who received debit cards as payment got a second $2,000 payment in emergency aid.

Inspections of 200 properties in Texas and Louisiana listed as home addresses turned up 80 that were vacant lots or nonexistent apartments.

More than half of a group of 248 other applicants used Social Security numbers that were never issued, belonged to dead people or did not match the name provided. In one case, auditors found 17 individuals, some with the same last name and addresses, who used 34 bogus Social Security numbers to collect more than $103,000 in payments.

Auditors also found cases in which debit cards were used to pay for adult entertainment, a .45-caliber handgun, jewelry or bail bond services.