Bogus hurricane aid hit $1.4 billion, GAO says

WASHINGTON — The government doled out as much as $1.4 billion in bogus claims to victims of Hurricanes Katrina and Rita, getting hoodwinked to pay for football-season tickets, a tropical vacation and even a divorce lawyer, congressional investigators have found.

Prison inmates, a supposed victim who used a New Orleans cemetery for a home address, and a person who spent 70 days at a Hawaiian hotel all were able to wrongly get taxpayer help, according to evidence that gives a new black eye to the nation's disaster-relief agency.

Federal investigators informed Congress that one man apparently used assistance money from the Federal Emergency Management Agency for a sex-change operation.

Agents from the Government Accountability Office, the investigative arm of Congress, went undercover to expose the ease of receiving disaster expense checks from FEMA.

The GAO concluded that as much as 16 percent of the billions of dollars in FEMA help to individuals after the two hurricanes was unwarranted.

The findings are detailed in testimony, obtained by The Associated Press, to be delivered at a hearing today by the House Homeland Security subcommittee on investigations.

To dramatize the problem, the GAO provided lawmakers with a copy of a $2,358 U.S. Treasury check for rental assistance that an undercover agent got using a bogus address. The money was paid even after FEMA learned from its inspector that the undercover applicant did not live at the address.

"This is an assault on the American taxpayer," said Rep. Michael McCaul, R-Texas, chairman of the subcommittee. "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 spokesman Aaron Walker said Tuesday that the agency, already criticized for a poor response to Katrina, makes its highest priority during a disaster "to get help quickly to those in desperate need of our assistance."

"Even as we put victims first, we take very seriously our responsibility to be outstanding stewards of taxpayer dollars, and we are careful to make sure that funds are distributed appropriately," he said.

FEMA said it has identified more than 1,500 cases of potential fraud after Katrina and Rita, and has referred those cases to the Homeland Security inspector general. The agency said it has identified $16.8 million in improperly awarded disaster-relief money and has started efforts to collect the money.

The GAO said improper and potentially fraudulent payments were likely much higher — between $600 million and $1.4 billion.

The auditors said FEMA could not establish that 750 debit cards worth a total of $1.5 million even went to Katrina victims. Among the items purchased with the cards:

• An all-inclusive, one-week Caribbean vacation in the Punta Cana resort in the Dominican Republic.

• Five season tickets to New Orleans Saints professional- football games.

• Adult erotica products in Houston and "Girls Gone Wild" videos in Santa Monica, Calif.

• Dom Perignon champagne and other alcoholic beverages in San Antonio.

• A divorce lawyer's services in Houston.

"Our forensic audit and investigative work showed that improper and potentially fraudulent payments occurred mainly because FEMA did not validate the identity of the registrant, the physical location of the damaged address, and ownership and occupancy of all registrants at the time of registration," GAO officials said.

FEMA paid millions of dollars for expedited housing assistance to more than 1,000 registrants who used names and Social Security numbers belonging to state and federal prisoners. The inmates were in Louisiana, Texas, Alabama, Mississippi, Georgia and Florida.

FEMA also made about $5.3 million in payments to registrants who provided a post-office box as their damaged residence.

To demonstrate how easy it was to hoodwink FEMA, the GAO told of an individual who used 13 different Social Security numbers to receive $139,000 in payments on 13 separate registrations for aid. All the payments were sent to a single address.

Another person used a damaged property address located within the grounds of Greenwood Cemetery in New Orleans to request disaster aid. Public records show no record of the registrant ever living in New Orleans.