The American Government has handed out $1.4 billion's worth of hurricane assistance to bogus claimants. The list of dishonest claimants includes people who managed to acquire football season tickets, vacations, legal help for a divorce, to a prisoner who used a cemetery as his home address claiming to be a hurricane victim.
It seems that 16% of the money handed out did not actually make its way to real hurricane victims, according to a General Accountability Office (GAO) inquiry. Some GAO officials went undercover and found out how easy it was to con the system and get payments from FEMA (Federal Emergency Management Agency). One of the agents managed to make up a fake address and get a $2,358 treasury cheque for rental assistance. Even when FEMA found out the agent did not live at that address it still went ahead with the payment.
The list of scams is like something out of a fiction novel. One claimant managed to get money that paid for a 70-day vacation in a hotel in Hawaii.
Michael, McCaul, chairman of the subcommittee that will conduct a hearing in the House of Representatives today said "This is an assault on the American taxpayer. Prosecutors from the federal level down should be looking at prosecuting these crimes and putting the criminals who committed them in jail for a long time."
FEMA received a lot of criticism for its slow response to the Katrina disaster. It seems it will be in for even more criticism now. A FEMA spokesman said that it takes the stewardship of looking after taxpayers' dollars very seriously. He added that FEMA is careful to make sure funds are distributed appropriately.
Although FEMA puts the amount of wrong payments at about $16 million, the GAO says it is almost sure the figure is around $600 million to $1.4 billion. There were many cases of people being paid for their hotel stay while at the same time receiving emergency rental assistance. There were other cases of people being paid thousands of dollars for their stay in a hotel while at the same time receiving rental assistance for multiple locations.
To try to claw back a possible one billion dollars or more will be a monumental task. How many people were involved in scams? If the number is high, the total Katrina bill is going to be massive. To the total amount raised and given out, add to this the bill of trying to get back the money that went to fraudsters, and then add to this the cost of taking them to court for their crimes.