- The Washington Times - Thursday, September 29, 2005

The Federal Emergency Management Agency yesterday warned Gulf Coast residents receiving disaster assistance to spend the money only for hurricane recovery as reports of fraud proliferate.

Police in several states are investigating people accused of using the FEMA cards for luxury purchases or filing fraudulent claims with the Red Cross.

In one case, two women in Atlanta reportedly bought monogrammed Louis Vuitton handbags valued at $800 apiece from a local shopping mall.

The Houston Police Department has formed a task force to investigate abuse of debit cards after local news reports indicated they were being used for purchases at strip clubs.

“The initial $2,000 in expedited assistance was granted to hurricane victims for housing or other essential disaster-related needs,” the FEMA advisory said. “Any other FEMA assistance will be granted for a specific purpose, such as home repair or rental assistance.”

The agency gave out more than 10,000 cards before the program was discontinued Sept. 11. FEMA said the cards were given out for only three days as a short-term measure during the emergency. Each card had a value of $2,000.

FEMA gave other cash assistance to households through direct deposits and checks. The agency has given $2.4 billion in all kinds of assistance for recovery from Aug. 29 Hurricane Katrina damage to about 1.7 million people.

“Random audits may be made to confirm funds were spent properly,” the FEMA advisory said.

FEMA officials acknowledge that security of the debit cards and proper identification from recipients may have been lax.

“This was a unique program,” FEMA spokeswoman Barbara Ellis said. “Some of those people didn’t have identification.”

FEMA found many of them by searching through shelters in the disaster area.

“At the time, we were trying to get the assistance to the victims to address their emergency needs,” Miss Ellis said.

Each recipient was required to sign an agreement to use the debit cards only for disaster recovery.

The American Red Cross continues to give out debit cards, called Client Assistance Cards. Like FEMA’s program, each disaster victim must agree to use the cards for emergency needs, such as food, housing and clothing.

Gulf Coast evacuees can obtain the debit cards at Red Cross chapters nationwide. Claimants must provide identification showing they come from ZIP codes most severely damaged by the hurricanes.

Red Cross case workers have standardized rates for compensating the victims based on the number of people in their families and the kind of property damage they suffered.

“These cards can be used at any retail location that accepts the cards,” Red Cross spokeswoman Carmela Burke said.

Durham, N.C., police are searching for six persons who they say posed as Hurricane Katrina victims to obtain Red Cross debit cards.

The Durham residents are accused of making more than $4,000 of purchases on the cards.

They were apprehended after suspicious Red Cross case workers searched electronic databases to find their true identities and residences.

In Lincoln, Neb., police cited one person for making a fraudulent claim to the Red Cross and are searching for two others.

Together, they made purchases of about $2,300 with Red Cross debit cards.

Lincoln residents who recognized two of the suspects notified the Red Cross that they were not really Gulf Coast evacuees.

Miss Burke said that although the amount of fraud is small so far, the Red Cross is limited in its ability to stop it.

“We’re not a regulatory agency,” Miss Burke said.

So far, no arrests have been made for fraudulent use of the cards in the Washington area, according to the Metropolitan Police Department.

The Central Maryland chapter of the Red Cross in Baltimore gave out 654 of the debit cards by yesterday afternoon, valued at a total of about $450,000.

Each one averages around $350 per person, or about $1,100 per family.

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