FEMA hurricane cards bought jewelry, erotica Federal audit finds $1 billion in potential fraud
Wednesday, June 14, 2006; Posted: 11:30 a.m. EDT (15:30 GMT)
WASHINGTON (CNN) -- A $200 bottle of champagne from Hooters and $300 worth of "Girls Gone Wild" videos were among items bought with debit cards handed out by FEMA to help hurricane victims, auditors probing $1 billion in potential waste and fraud have found.
The cards -- given to people displaced by Hurricanes Katrina and Rita -- also bought diamond jewelry and a vacation in the Dominican Republic, according to the Government Accountability Office audit.
The GAO uncovered records showing that $1,000 from a FEMA debit card went to a Houston divorce lawyer; $600 was spent in a strip club and $400 was spent on "adult erotica products," all of which auditors concluded were "not necessary to satisfy legitimate disaster needs."
The GAO found that at least $1 billion in disaster relief payments by the Federal Emergency Management Agency were improper and potentially fraudulent because the recipients provided incomplete or incorrect information when they registered for assistance. (GAO report)
The GAO said the scope of the problem may be even larger, because it only looked at the validity of registration information and not at other forms of potential fraud.
FEMA acknowledged its shortcomings late Tuesday.
Spokesman Aaron Walker said FEMA has "revamped the registration process" and has a contract with a company that will verify immediately the identity and address of anyone for assistance.
"We are confident in the system we have in place at this point," Walker said. "We are prepared for the upcoming season."
The GAO also found that FEMA provided housing assistance to people who were not displaced, including at least 1,000 prison inmates, and also provided rental assistance to people who were simultaneously living in free hotel rooms.
Results of the GAO's audit will be presented Wednesday to an investigative panel of the House Homeland Security Committee. FEMA is part of the Department of Homeland Security.
The GAO also found that FEMA lost track of 750 debit cards, worth a total of $1.5 million.
After inquiries from the GAO, FEMA recovered about half of that money, which had not been distributed by JPMorgan Chase, the bank hired to run the program. But the agency still cannot account for 381 cards, worth about $760,000 total, which JPMorgan Chase says it distributed, according to the GAO.
GAO investigators estimated that 16 percent of FEMA's disaster relief payments were made to people who submitted invalid registrations, to the tune of about $1 billion. Because the figures were calculated using a statistical sample, however, the agency said the amount could range from $600 million to as much as $1.4 billion.
Among other problems found with the registrations, according to the GAO study:
People signed up for assistance using Social Security numbers that didn't exist or belonged to other people.
Aid applications contained bogus addresses for damaged property, or gave addresses for damaged property where the applicants did not live when the hurricanes struck. In one case, FEMA paid nearly $2,360 to a man whose allegedly damaged property was in a cemetery.
Payments were made to people who listed post office boxes as their damaged residences.
People submitted duplicate registrations, which FEMA did not detect.
More than 1,000 registrations used the names and Social Security numbers of prison inmates. According to the GAO, in one instance, FEMA paid $20,000 to a Louisiana prisoner who listed a post office box as his damaged property.
As part of its audit, the GAO used an undercover registrant who submitted a vacant lot as a damaged address.
FEMA paid the registrant $6,000 and even made payments after being notified by one its own inspectors, as well as an inspector for the Small Business Administration, that the damaged property could not be found, the GAO investigators found.
The GAO concluded that the potentially fraudulent payments were made because FEMA did not validate registrants' identities and the locations and ownership of purportedly damaged property.
While conceding that FEMA acted out of the need to provide assistance quickly, GAO investigators said the agency's own policies required additional verification before continuing payments.
The GAO study also found FEMA improperly provided rental assistance to people who were staying in hotels paid for by FEMA because the agency did not require hotels to collect Social Security numbers and FEMA registration information.
Without that information, FEMA could not verify if people were staying in hotels when they applied for rental assistance.
And because that information doesn't exist, GAO auditors said they could not determine how many people might have double-dipped -- or how much it cost the government.
Copyright 2006 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.
Its one thing if they gave money to people who weren't even affected by the hurricane. Its another altogether, if people whose property was damaged by the hurricane decided to spend the money on Cyrstal, vacations and porn instead of fixing their houses.
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Payments were made to people who listed post office boxes as their damaged residences.
And they say they are prepared for the upcoming season??
I love how some people would rather own the GGW series than fix their demolished house.
Do you really think that the people buying GGW had a house that they were responsible for fixing? I would say those people were either renting or in government housing - neither of which they are obligated to fix. And besides, why not use the cards on strip clubs and porn? All you had to do to get another card is stand in line (because they weren't verifying anyone's identity), and it's not like they were working at the time, so they didn't have anything better to do.
The distribution of relief funds after Katrina was an absolute disaster, with many people that sincerely needed help not getting any/enough, and others (that didn't face anything but some inconvenience) milking the system to the detriment of people that face real problems. But that's the story with all government assistance, and there's not a lot that can be done about it.
onnestabe wrote:The distribution of relief funds after Katrina was an absolute disaster, with many people that sincerely needed help not getting any/enough, and others (that didn't face anything but some inconvenience) milking the system to the detriment of people that face real problems. But that's the story with all government assistance, and there's not a lot that can be done about it.
In this case, there was a lot that could have been done that wasn't.
For starters, I'm not so sure that credit cards were the best thing to hand out. They should have worked out a partnership with Home Depot and given away vouchers redeemable towards supplies. Vouchers for food, and hotel stays comped.
The only thing FEMA should have been responsible for providing was food, shelter, and HELP in funding repairs. All of these things could have been given in the form of vouchers that could only be redeemed appropriately.
I know that ultimately the fault doesn't lie with FEMA but those who took advantage of FEMA's piss-poor setup, but that doesn't mean that there isn't anything that FEMA could have done differently that would have made this situation better. They definitely could have prevented this by not handing out credit cards in the first place.
That being said, it is my personal opinion that the government shouldn't hand out money to anyone. I hate that 30% of my paycheck is taken from me and given, in portions, to lazy asses who not only don't deserve it, but spend it on stuff it wasn't intended for in the first place. Not to threadjack, but the problem of people taking advantage of free money will only go away if you stop giving them free money.
moonhead wrote:don't let fema off the hook for this one. this is a blunder of epic proportions. no planning, no strategy, no clue, no vision. hmmm, i'm drawing parallels to another disaster...i'll leave it at that.
I don't see why FEMA is even acting surprised. Remember, these are the same people that looted a demolished city. FEMA should have at least put restrictions on the credit cards that wouldn't allow the money to be spent on anything inappropriate - but I still say giving out credit cards is retarded.