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Auditors Find Huge Fraud in FEMA Aid
By ERIC LIPTON
02/11/06 "New
York Times" -- -- WASHINGTON, Feb. 10 —
Thousands of applicants for federal emergency relief money after
Hurricanes Katrina and Rita used duplicate or invalid Social
Security numbers or bogus addresses, suggesting that the $2.3
billion program was a victim of extensive fraud, a Congressional
auditor will report Monday.
The examination of the so-called Expedited Assistance program
determined that the Federal Emergency Management Agency failed
to take even the most basic steps to confirm the identifies of
about 1.4 million people who sought expedited cash assistance,
leaving the program vulnerable to the "significant fraud and
abuse," the Government Accountability Office intends to report.
The auditors did not try to estimate the total dollar amount of
fraudulent claims. But the report says that FEMA itself had
found that 900,000 of the 2.5 million applications for all forms
of individual assistance were "potential duplicates."
Even when FEMA's automated computer system picked out what might
be fraudulent applications, payments were at times still sent,
says the advance testimony of Gregory D. Kutz, the managing
director of the G.A.O.'s forensic audits unit.
The controls were so lax that auditors were able to secure their
own $2,000 relief check by using "falsified identifies, bogus
addresses and fabricated disaster stories," and then simply
waiting for the money to arrive in the mail, says the report for
the Senate Homeland Security and Governmental Affairs Committee,
a copy of which was obtained by The New York Times.
Nicol Andrews, a FEMA spokeswoman, said the agency recognized
there could be fraud. But Ms. Andrews said the priority was
getting aid as fast as possible to hundreds of thousands of
families in dire need.
"We took a calculated risk in a catastrophic situation," she
said. "It was the right thing to do. Unfortunately, some may
have cheated the system."
She added that some arrests have been made. The agency is also
suspending payments to people suspected of trying to cheat the
system.
Still, the auditors found signs of fraud nearly everywhere:
-Nearly half of the 11,000 individuals who received special
debit cards as payment — an approach used in the immediate
aftermath of the storm in Texas — 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 had 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 found isolated instances where the electronic debit
cards were used to pay for "adult entertainment," a .45-caliber
handgun, jewelry or bail bond services.
Copyright 2006The New York Times Company
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