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Report not kind to FEMA regarding hurricane assistance

Watchdog agency finds around $1 billion was handed out improperly

A report released June 14 by the U.S. Government Ac-countability Office (GAO) assessing the Federal Emergency Management Agency’s handling of its disaster aid process in the wake of Hurricanes Katrina and Rita maintains that FEMA improperly paid out around $1 billion in assistance after the storms. “Hurricanes Katrina and Rita Disaster Relief: Improper and Potentially Fraudulent Individual Assistance Payments Estimated to Be Between $600 Million and $1.4 Billion,” was presented by GAO Managing Director of Forensic Audits and Special Investigations Gregory D. Kutz, and John J. Ryan, assistant director of Forensic Audits and Special Investigations, to the House of Representatives Subcommittee on Investigations, Committee on Homeland Security.

The GAO said as of February 2006 FEMA had made 2.6 million post-Katrina/Rita payments totaling more than $6 billion. Assistance through FEMA’s In-dividuals and Households Program (IHP) included $2,000 payments to disaster victims for food, clothing, shelter and personal items. Eli-gible applicants could also receive money for “temporary housing assistance, real and personal property repair and replacement, and other necessary expenses related to a disaster—up to a cap of $26,200.”

In a study conducted between February and June 2006, the GAO found that around 16 percent of the aid FEMA provided through the IHP was “improper or potentially fraudulent” and paid to “registrants who used invalid information to apply for disaster assistance.”

The GAO said improper payments “were made to (1) registrations containing Social Security Numbers (SSNs) that were never issued or belonged to other individuals, (2) registrants who used bogus damaged addresses, (3) registrants who had never lived at the declared damaged addresses or did not live at the declared damaged address at the time of disaster, and/or (4) registrations containing information that was duplicative of other registrations already recorded in FEMA’s system.”

While the GAO recognized the significant challenge in providing rapid assistance to the millions of individuals displaced by Katrina and Rita, it faulted FEMA for not having sufficient controls to ensure that benefits were paid only to eligible applicants.

Using a statistical sample of 250 payments made to hurricane assistance registrants and an undercover investigation, the GAO discovered that FEMA had “weak or nonexistent controls” over who received aid and that although “FEMA’s automated system frequently identified fraudulent registrations … the manual process to review these flagged applications did not prevent EA and other payments from being issued.”

As part of its undercover work, the GAO registered bogus properties as damaged addresses. For one fake registration it received nearly $6,000 in rental assistance despite the fact that third-party records verified by FEMA showed that the “undercover registrant did not live at the damaged address, and after the Small Business Administration reported that the damaged property could not be found.”

Millions of dollars were paid to 1,000-plus registrants using the names and social security numbers of individuals incarcerated at state prisons in Louisiana, Texas, Florida, Georgia, Mississippi and Alabama, or at federal prisons across the U.S. FEMA also failed to require hotels to collect registration and social security numbers from individuals staying in rooms paid for by the government, so it could not identify those individuals or determine whether they were also receiving free lodging on the government’s dime, the report said. The GAO cited FEMA for not instituting “adequate controls to ensure accountability over the debit cards” issued to disaster victims and for being unable to verify that some 750 debit cards funded in the amount $1.5 million actually went to eligible applicants.

According to the GAO, FEMA maintains it has “instituted corrective actions to remedy the weaknesses” identified by the study.

The report can be found online at www.gao.gov/cgi-bin/getrpt?GAO-06-655.

Topics Hurricane