Tuesday, February 14, 2006

In its rush to provide Katrina disaster aid, the Federal Emergency Management Agency wasted millions of dollars and overpaid for hotel rooms, including $438-a-day lodging in New York City, government investigators said yesterday.

Two reports released by the Government Accountability Office and the Homeland Security Department’s office of inspector general detail a series of accounting flaws, fraud or mismanagement in their initial review of how $85 billion in federal aid is being spent.

The audits do not try to estimate a total dollar figure on abuse, but GAO auditor Gregory Kutz told senators it was “certainly millions of dollars; it could be tens or hundreds of millions of dollars.”

The two audits found that up to 900,000 of the 2.5 million applicants who received aid under FEMA’s emergency cash assistance program — which included the $2,000 debit cards given to evacuees — were based on duplicate or invalid Social Security numbers, or false addresses and names.

Meanwhile, a judge in New Orleans let the federal government drop about 12,000 families made homeless by last year’s hurricanes from a FEMA program that has put them up in hotels.

FEMA has promised the evacuees that they will still receive federal assistance that they can use toward hotel stays or fixing their ruined homes, although the agency will no longer pay for the hotels directly.

Attorneys for the evacuees tried to get U.S. District Judge Stanwood Duval to issue a temporary restraining order, saying the forthcoming money from FEMA won’t be enough for reasonable living accommodations or for hotel stays.

Separately, the Justice Department said yesterday that federal prosecutors have filed fraud, theft and other charges against 212 persons accused of scams related to Gulf Coast hurricanes. Forty persons have pleaded guilty so far, the latest report by the Hurricane Katrina Fraud Task Force said. Many defendants were accused of trying to obtain emergency aid, typically a $2,000 debit card, issued to hurricane victims by FEMA and the American Red Cross.

Thousands of additional dollars appear to have been squandered on hotel rooms for evacuees that were paid at retail rather than the contractor’s lower estimated cost. They included $438 rooms in New York City and beachfront condominiums in Panama City, Fla., at $375 a night, according to the audits.

The two audits were released by the Senate Homeland Security and Governmental Affairs Committee as the panel wrapped up its investigation into the federal government’s preparation and response to the disaster.

Sen. Susan Collins, Maine Republican, who chairs the committee, decried the findings, noting that a series of audits and hearings after hurricanes in Florida in 2004 highlighted similar accounting problems and had called on then-FEMA Director Michael D. Brown to make immediate changes.

“The problem, once again, is that FEMA failed to prepare for the very type of disaster that happens every year,” Miss Collins said. “This ‘pay first, ask questions later’ approach has been an invitation to unscrupulous behavior.”

FEMA spokeswoman Nicol Andrews called the emergency aid “the right thing to do.”

Offering the $2,000 “was a calculated risk taken in a catastrophic situation where many people were forced from their homes, often without any identification or basic necessities,” she said.

In the Justice Department probe, the largest investigation centered on a Red Cross call center in Bakersfield, Calif., in which some employees schemed to steal the emergency money for themselves and others, prosecutors said. Fifty-three persons have been charged in the probe.

The prosecutions and a public information campaign appear to have persuaded some people to return money to which they may not have been entitled, the Justice Department report said. FEMA and the Red Cross reported receiving more than $8 million in returned funds, along with letters confessing to fraud or seeking to arrange installment plans to pay back the money, the report said.

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