Disaster Fraud

The U.S. Government Accountability Office (formerly the General Accounting Office) released two reports last week on Federal Emergency Management Agency disaster aid payments made in the wake of hurricanes Katrina and Rita. "Hurricanes Katrina and Rita Disaster Relief: Improper and Potentially Fraudulent Individual Assistance Payments Estimated to Be Between $600 Million and $1.4 Billion," released June 14, details instances of suspect disaster aid claims as well as instances of legitimately claimed but misused aid. "We estimate that through February 2006, FEMA made about 16% or $1 billion in improper and potentially fraudulent payments to registrants who used invalid information to apply for disaster assistance," an overview of the report reads. "Examples of fraud and abuse include payments to registrants who used post office boxes, United Parcel Service stores, and cemeteries as their damaged property addresses. ... [M]illions of dollars in expedited and housing assistance payments went to registrations containing the names and Social Security numbers of individuals incarcerated in federal and state prisons during the hurricanes. ... We also found debit cards that were used for a Caribbean vacation, professional football tickets, and adult entertainment."

The second report, "Expedited Assistance for Victims of Hurricanes Katrina and Rita: FEMA's Control Weaknesses Exposed the Government to Significant Fraud and Abuse," was released June 16. It identifies problems with the federal government's disaster aid registration process. "For Internet applications, limited automated controls were in place to verify a registrant's identity. However, there was no independent verification of the identity of those who applied for disaster assistance via the telephone. GAO demonstrated the vulnerability inherent in the call-in applications by using falsified identities, bogus addresses, and fabricated disaster stories to register," an overview reads. "Other control weaknesses include the lack of any validation of damaged property addresses for both Internet and telephone registrations. Given these weak or nonexistent controls, it is not surprising that GAO's data mining and investigations showed substantial potential for fraud and abuse."

FEMA responded to the GAO's findings in a prepared statement. "This assistance is intended for disaster victims, and it is despicable that individuals fraudulently exploited FEMA programs or spent money on anything but emergency needs," said FEMA spokeswoman Aaron Walker. "[W]e have been aggressively overhauling our processes to eliminate processing errors and fraudulent abuse that individuals exploited during Katrina." To read the reports, see www.gao.gov/cgi-bin/getrpt?GAO-06-844T and www.gao.gov/cgi-bin/getrpt?GAO-06-655.

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Examples of Payments Made to Improper and Potentially Fraudulent Registrations

Case 1

Amount: $109,708

• 8 individuals submitted 8 registrations using their own SSNs.

• All 24 payments were sent to a single apartment.

• 4 individuals were members of the same household who were displaced to the same location. However, these individuals each received an expedited assistance and a rental assistance payment. According to public records, the other 4 individuals were not living at the damaged property at the time of the hurricane.

Case 2

Amount: $139,000

• Individual received 26 payments using 13 different SSNsÑonly 1 of which belonged to the person.

• Public records indicate that the individual did not reside at any of the 13 addresses claimed as damaged property addresses.

• Public records also indicate that 8 of the 13 addresses did not exist or have public ownership records.

Case 3

Amount: $4,358

• Registrant claimed a UPS store address as damaged property address to qualify for 2 payments for expedited assistance and rental assistance.

Case 4

Amount: $2,358

• Registrant used an address in Greenwood Cemetery, New Orleans, as the damaged property address to qualify for one rental assistance payment.

Case 5

Amount: $2,000

• Registrant used a New Orleans cemetery as the damaged property address to obtain one expedited assistance payment.

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Source: GAO analysis and investigation of FEMA data.