Federal Auditors Uncover Millions in Katrina, Rita Fraud

U.S. government auditors have identified millions of wasteful and fraudulent dollars paid by FEMA for relief in the wake of hurricanes Katrina and Rita.

The Federal Emergency Management Agency (FEMA) continues to respond to hurricanes Katrina and Rita, two storms which laid waste to the U.S. Gulf Coast in 2005.

In one case, FEMA provided free housing to 10 individuals in apartments in Plano, Texas, while at the same time it sent these individuals $46,000 to cover out-of-pocket housing expenses. In addition, several of these individuals certified to FEMA that they needed rental assistance, according to a recent report by the Government Accountability Office (GAO).

GAO is the nonpartisan watchdog agency of Congress.

FEMA made nearly $20 million in duplicate payments to thousands of individuals who claimed damages to the same property from both hurricanes Katrina and Rita. FEMA also made millions in potentially improper and/or fraudulent payments to nonqualified aliens who were not eligible for FEMA’s Individuals and Households Program (IHP).

For example, FEMA paid at least $3 million to more than 500 ineligible foreign students at four universities in the affected areas. This amount likely understates the total payments to ineligible foreign students because it does not cover all colleges and universities in the area. FEMA also provided potentially improper and/or fraudulent IHP assistance to other ineligible non-U.S. residents, despite having documentation indicating their ineligibility.

Finally, FEMA’s difficulties in identifying and collecting improper payments further emphasized the importance of implementing an effective fraud, waste, and abuse prevention system, GAO says. For example, GAO previously estimated improper and potentially fraudulent payments related to the IHP application process to be $1 billion through February 2006. As of November 2006, FEMA identified about $290 million in overpayments and collected about $7 million.

GAO recommends that DHS direct FEMA to take six actions, including establishing controls to prevent duplicate housing benefits to FEMA trailer and apartment residents and duplicate benefit payments for the same damages. GAO is also recommending that FEMA establish controls to prevent benefits to nonqualified aliens.

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Alabama Woman Sentenced to More Than Six Years in Prison for Katrina Fraud

Lawanda T. Williams, also known as Lawanda Johnson, was sentenced to more than six years in prison for defrauding the Federal Emergency Management Agency (FEMA) of more than $267,000 and for aggravated identity theft following Hurricane Katrina, U.S. Attorney Deborah Rhodes of the Southern District of Alabama announced.

Williams was sentenced to 75 months in prison, and was ordered to pay full restitution to FEMA in the amount of $267,377. In addition, Williams was ordered to forfeit all of the property she purchased with the proceeds of her Katrina fraud, including four automobiles, real estate, televisions and other electronics.

Williams pled guilty in September 2006 to making false claims to the government, wire fraud, and aggravated identity theft in connection with 28 fraudulent claims for disaster assistance she made to FEMA after Hurricane Katrina. Williams admitted that her residence in Jackson, Ala. was not damaged by the hurricane and that she filed 28 fraudulent claims for Katrina assistance, falsely claiming to have lived at various addresses in Alabama, Mississippi, Louisiana and Florida. In those applications, Williams admitted using Social Security numbers of other people and providing FEMA with fraudulent and fictitious documents that purported to prove her ownership of property she did not own.

"Ms. Williams used Hurricane Katrina and the relief efforts as an opportunity to make hundreds of thousands of dollars by lying and by stealing other people's identities," says Rhodes. "The Hurricane Katrina Fraud Task Force is actively working to bring to justice those who took advantage of the recovery efforts to enrich themselves."

Hurricane Katrina was the costliest and one of the deadliest hurricanes in the history of the United States. It made landfall along the Gulf Coast in late August 2005, laying waste to New Orleans and the surrounding region. The government response, particularly from FEMA, was widely criticized.

In September 2005, Attorney General Alberto Gonzales created the national Hurricane Katrina Fraud Task Force, designed to deter, investigate and prosecute disaster-related federal crimes such as charity fraud, identity theft, procurement fraud and insurance fraud. The Hurricane Katrina Fraud Task Force, chaired by Assistant Attorney General for the Criminal Division, Alice Fisher, includes members from the FBI, the Federal Trade Commission, the Department of Labor Office of Inspector General, the Postal Inspector's Office and the Executive Office of United States Attorneys, among others.

The case was investigated by the Department of Homeland Security, Office of the Inspector General, the FBI, and the United States Postal Inspection Service. The case was prosecuted by Assistant U.S. Attorney Sean Costello.


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Mississippi Man Arrested For Hurricane Katrina Fraud

Paul Ladner, of Pass Christian, Miss., waived arraignment yesterday on charges of making false statements to Federal Emergency Management Agency (FEMA) for Hurricane Katrina disaster assistance funds, as well as wire fraud, U.S. Attorney Dunn Lampton of the Southern District of Mississippi announced.

Ladner was indicted on Dec. 5, 2006 for receiving over $14,000 from Federal Emergency
Management Agency by providing a false address in Pass Christian, Miss., and claiming hurricane damage at that address.

The case has been set for trial on March 5, before U.S. District Judge Louis Guirola, Jr. If convicted, Ladner faces up to 60 years in prison and up to $1,250,000 in fines.

In September 2005, U.S. Attorney General Alberto Gonzales created the national Hurricane Katrina Fraud Task Force, designed to deter, investigate and prosecute disaster-related federal crimes such as charity fraud, identity theft, procurement fraud and insurance fraud. The Hurricane Katrina Fraud Task Force, chaired by Assistant Attorney General Alice Fisher, includes members from the FBI, the Federal Trade Commission, the Department of Labor Office of Inspector General, the Postal Inspector's Office and the Executive Office of United States Attorneys, among others.

Hurricane laid waste to the city of New Orleans, areas of Mississippi and other regions of the Gulf Coast in 2005. The government response to Katrina was much criticized. The head of FEMA was forced to step aside after the storm.

Pursuant to the Justice Department initiative, a local Katrina Fraud Task Force, consisting of over 20 federal and state law enforcement agencies, was formed in the Southern District of Mississippi to pursue and prosecute individuals who engage in fraud associated with the hurricanes.

If anyone has information concerning possible fraud being committed during the post-Katrina recovery effort, please call either the Department of Homeland Security Office of the Inspector General Fraud Hotline at 1-866-720-5721 or the FBI Fraud Hotline at 1-800-225-5324.


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