Lynn7
06-27-2006, 02:55 PM
'Breathtaking' Waste and Fraud in Hurricane Aid
Robert King/Polaris
FEMA spends $250,000 a month to store about 10,000 empty mobile homes at an airfield in Hope, Ark.
·
By ERIC LIPTON
Published: June 27, 2006
WASHINGTON, June 26 — Among the many superlatives associated with Hurricane Katrina can now be added this one: it produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history, costing taxpayers up to $2 billion.
Jamie Rose for The New York Times
Gregory D. Kutz, a G.A.O. official, testified before a House panel about fraud and held up one of the $2,000 debit cards given out by FEMA.
A hotel owner in Sugar Land, Tex., has been charged with submitting $232,000 in bills for phantom victims. And roughly 1,100 prison inmates across the Gulf Coast apparently collected more than $10 million in rental and disaster-relief assistance.
There are the bureaucrats who ordered nearly half a billion dollars worth of mobile homes that are still empty, and renovations for a shelter at a former Alabama Army base that cost about $416,000 per evacuee.
And there is the Illinois woman who tried to collect federal benefits by claiming she watched her two daughters drown in the rising New Orleans waters. In fact, prosecutors say, the children did not exist.
The tally of ignoble acts linked to Hurricane Katrina, pulled together by The New York Times from government audits, criminal prosecutions and Congressional investigations, could rise because the inquiries are under way. Even in Washington, a city accustomed to government bloat, the numbers are generating amazement.
"The blatant fraud, the audacity of the schemes, the scale of the waste — it is just breathtaking," said Senator Susan Collins, Republican of Maine, and chairwoman of the Homeland Security and Governmental Affairs Committee.
Such an outcome was feared soon after Congress passed the initial hurricane relief package, as officials at the Federal Emergency Management Agency and the American Red Cross acknowledged that their systems were overwhelmed and tried to create new ones on the fly.
"We did, in fact, put into place never-before-used and untested processes," Donna M. Dannels, acting deputy director of recovery at FEMA, told a House panel this month. "Clearly, because they were untested, they were more subject to error and fraud."
Officials in Washington say they recognized that a certain amount of fraud or improper payments is inevitable in any major disaster, as the government's mission is to rapidly distribute emergency aid. They typically send out excessive payments that represent 1 percent to 3 percent of the relief distributed, money they then ask people to give back.
What was not understood until now was just how large these numbers could become.
The estimate of up to $2 billion in fraud and waste represents nearly 11 percent of the $19 billion spent by FEMA on Hurricanes Katrina and Rita as of mid-June, or about 6 percent of total money that has been obligated.
"This started off as a disaster-relief program, but it turned into a cash cow," said Representative Michael McCaul, Republican of Texas, a former federal prosecutor and now chairman of a House panel investigating storm waste and fraud.
The waste ranged from excessive loads of ice to higher-than-necessary costs on the multibillion-dollar debris removal effort. Some examples are particularly stark.
The $7.9 million spent to renovate the former Fort McClellan Army base in Anniston, Ala., included fixing up a welcome center, clinic and gymnasium, scrubbing away mold and installing a protective fence between the site and a nearby firing range. But when the doors finally opened, only about 10 people showed up each night, leading FEMA to shut down the shelter within one month.
The mobile homes, costing $34,500 each, were supposed to provide temporary housing to hurricane victims. But after Louisiana officials balked at installing them inland, FEMA had no use for them. Nearly half, or about 10,000, of the $860 million worth of units now sit at an airfield in Arkansas, where FEMA is paying $250,000 a month to store them.
The most recent audit came from the Government Accountability Office, which this month estimated that perhaps as much as 21 percent of the $6.3 billion given directly to victims might have been improperly distributed.
"There are tools that are available to get money quickly to individuals and to get disaster relief programs running quickly without seeing so much fraud and waste," said Gregory D. Kutz, managing director of the forensic audits unit at the G.A.O. "But it wasn't really something that FEMA put a high priority on. So it was easy to commit fraud without being detected."
For the entire article here is the link:
Katrina article (http://www.nytimes.com/2006/06/27/washington/27katrina.html?pagewanted=1&ei=5065&en=94142ea1ee48b0e8&ex=1151985600&partner=MYWAY)
Robert King/Polaris
FEMA spends $250,000 a month to store about 10,000 empty mobile homes at an airfield in Hope, Ark.
·
By ERIC LIPTON
Published: June 27, 2006
WASHINGTON, June 26 — Among the many superlatives associated with Hurricane Katrina can now be added this one: it produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history, costing taxpayers up to $2 billion.
Jamie Rose for The New York Times
Gregory D. Kutz, a G.A.O. official, testified before a House panel about fraud and held up one of the $2,000 debit cards given out by FEMA.
A hotel owner in Sugar Land, Tex., has been charged with submitting $232,000 in bills for phantom victims. And roughly 1,100 prison inmates across the Gulf Coast apparently collected more than $10 million in rental and disaster-relief assistance.
There are the bureaucrats who ordered nearly half a billion dollars worth of mobile homes that are still empty, and renovations for a shelter at a former Alabama Army base that cost about $416,000 per evacuee.
And there is the Illinois woman who tried to collect federal benefits by claiming she watched her two daughters drown in the rising New Orleans waters. In fact, prosecutors say, the children did not exist.
The tally of ignoble acts linked to Hurricane Katrina, pulled together by The New York Times from government audits, criminal prosecutions and Congressional investigations, could rise because the inquiries are under way. Even in Washington, a city accustomed to government bloat, the numbers are generating amazement.
"The blatant fraud, the audacity of the schemes, the scale of the waste — it is just breathtaking," said Senator Susan Collins, Republican of Maine, and chairwoman of the Homeland Security and Governmental Affairs Committee.
Such an outcome was feared soon after Congress passed the initial hurricane relief package, as officials at the Federal Emergency Management Agency and the American Red Cross acknowledged that their systems were overwhelmed and tried to create new ones on the fly.
"We did, in fact, put into place never-before-used and untested processes," Donna M. Dannels, acting deputy director of recovery at FEMA, told a House panel this month. "Clearly, because they were untested, they were more subject to error and fraud."
Officials in Washington say they recognized that a certain amount of fraud or improper payments is inevitable in any major disaster, as the government's mission is to rapidly distribute emergency aid. They typically send out excessive payments that represent 1 percent to 3 percent of the relief distributed, money they then ask people to give back.
What was not understood until now was just how large these numbers could become.
The estimate of up to $2 billion in fraud and waste represents nearly 11 percent of the $19 billion spent by FEMA on Hurricanes Katrina and Rita as of mid-June, or about 6 percent of total money that has been obligated.
"This started off as a disaster-relief program, but it turned into a cash cow," said Representative Michael McCaul, Republican of Texas, a former federal prosecutor and now chairman of a House panel investigating storm waste and fraud.
The waste ranged from excessive loads of ice to higher-than-necessary costs on the multibillion-dollar debris removal effort. Some examples are particularly stark.
The $7.9 million spent to renovate the former Fort McClellan Army base in Anniston, Ala., included fixing up a welcome center, clinic and gymnasium, scrubbing away mold and installing a protective fence between the site and a nearby firing range. But when the doors finally opened, only about 10 people showed up each night, leading FEMA to shut down the shelter within one month.
The mobile homes, costing $34,500 each, were supposed to provide temporary housing to hurricane victims. But after Louisiana officials balked at installing them inland, FEMA had no use for them. Nearly half, or about 10,000, of the $860 million worth of units now sit at an airfield in Arkansas, where FEMA is paying $250,000 a month to store them.
The most recent audit came from the Government Accountability Office, which this month estimated that perhaps as much as 21 percent of the $6.3 billion given directly to victims might have been improperly distributed.
"There are tools that are available to get money quickly to individuals and to get disaster relief programs running quickly without seeing so much fraud and waste," said Gregory D. Kutz, managing director of the forensic audits unit at the G.A.O. "But it wasn't really something that FEMA put a high priority on. So it was easy to commit fraud without being detected."
For the entire article here is the link:
Katrina article (http://www.nytimes.com/2006/06/27/washington/27katrina.html?pagewanted=1&ei=5065&en=94142ea1ee48b0e8&ex=1151985600&partner=MYWAY)