Wednesday, December 06, 2006


Report Finds New Problems in FEMA Aid Distribution

WASHINGTON, Dec. 5 — The Federal Emergency Management Agency has recouped less than 1 percent of an estimated $1 billion in fraudulent or unjustified payments it distributed after Hurricanes Katrina and Rita, a new report by Congressional investigators says.

At the same time, the agency continued to wrongly send out millions of dollars of new aid this year, including $17 million in rental assistance to families living rent-free in FEMA trailers, the Government Accountability Office report says.

The auditors’ findings, set to be released on Wednesday, demonstrate how the agency has remained open to criticism from advocates for evacuees as being too stingy with people who have real needs, and to criticism from auditors as being too willing to give taxpayer dollars to scam artists and cheats.

Just last week, a federal judge ordered the agency to restore housing assistance and pay back rent to thousands of Hurricane Katrina evacuees who had been deemed ineligible for long-term housing aid.

Yet the new report by the Congressional investigators said that, in addition to the rental aid given to more than 8,600 victims living in trailers rent-free, the agency distributed $20 million to people who registered for both hurricanes, meaning they received double payments for rent and other emergency aid.

The investigators also recently determined that the agency gave at least $3 million to more than 500 foreign students or other foreigners in the United States on work visas even though federal law specifically prohibits such aid.

“FEMA has much work to do before we can be confident that it is providing assistance to those who are eligible and who need it, while denying it to those who do not,” said Senator Joseph I. Lieberman of Connecticut. Mr. Lieberman is the ranking Democrat on the Homeland Security and Governmental Affairs Committee, which has scheduled a hearing for Wednesday on Hurricane Katrina-related fraud and abuse.

The agency’s officials on Tuesday said they had not yet seen the new report and would not comment in detail until they had. But they acknowledged the serious flaws in distribution of financial aid after the hurricanes. A copy of the report was given to The New York Times.

“The stringent controls instituted this past year by FEMA will dramatically improve safeguards and help eliminate processing errors and fraudulent abuse,” Pat Philbin, an agency spokesman, said in a written statement.

But the Government Accountability Office report made it clear that the inappropriate payments continued into this year. For example, 10 residents of an apartment complex in Plano, Tex., collected $46,000 in rental assistance from FEMA through June, even though the City of Plano was paying their rent, with money from the federal agency.

FEMA estimates that of the $7 billion in emergency aid given out to individuals and families after Hurricanes Katrina and Rita, about $290 million was unjustified. But based on more than a year of spot-checking applications, Congressional auditors said they believed the federal agency was grossly underestimating the figure, and that a more accurate amount would be at least $1 billion.

That would include money that went to thousands of inmates and people who used falsified Social Security numbers or submitted applications for phantom homes, all cases turned up by the investigators.

FEMA has recouped about $7.5 million of these inappropriate payments, an agency official said Tuesday, and he estimated that an additional $8.1 million was on the way.

Senator Susan Collins, Republican of Maine, chairwoman of the Homeland Security Committee, said the small percentage of money recouped showed how important it was for the agency to improve how it screened applications for disaster aid.

“Once the money is out the door, it is very difficult for it to be recovered,” Ms. Collins said.

At the time Hurricanes Katrina and Rita hit, the agency had systems in place to prevent fraud, including a computer program that looked for applications with the same Social Security number. But officials said they turned the system off, claiming that they were worried it might prevent legitimate victims from getting help, the report said.

That is why, for example, the 7,600 individuals had been able to collect $20 million in emergency aid for properties supposedly hit by both storms, the report said.

Ms. Collins said she did not accept the assertion that the agency could not figure out how to distribute emergency assistance quickly while preventing widespread waste and fraud.

“It’s a false choice,” she said.

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