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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Survey: Labor Demand Still Soaring in Gulf Coast Area

Labor markets in areas damaged by hurricanes Katrina and Rita in 2005 continue to be among the most active markets in the United States, according to The Conference Board Help-Wanted OnLine DataSeries.

For the last three months, the average monthly count of online advertised vacancies in the New Orleans metro area was 17,300, a level that is more than double the monthly average for the three months before Katrina.

"In the last three months, the average number of ads for the nation was 11% above the three months prior to Katrina, well below the growth in the Lake Charles (65%), Pascagoula (30%), Gulfport (41%) and New Orleans (105%) metro areas for the same period," says Gad Levanon, economist at TheConference Board. "The Houma metro area had a very dramatic rise in online ads after the storm and the average monthly number of advertised vacancies is still running about 1,700 ads per month, a level that is over five times the pre-hurricane level."

Adds Levanon: "Labor demand is also stronger than the national average in many of the metro areas where the Katrina evacuees fled."

Again, while vacancies were up 11% nationally, the three-month moving averages seen in Baton Rouge (74%), Austin (76%), Houston (49%), San Antonio (86%), and Dallas (37%) are much greater, the survey says.

The labor demand covers a wide range of occupations. In New Orleans the largest increase in demand is for office and administrative support, business and financial operations, and management occupations. "It's not just construction," notes Levanon. "In the damaged areas, the number of ads for architects and engineers has more than doubled, reflecting there building efforts. The high labor demand is a positive sign for the revitalization of the Gulf Coast area. But it is just part of the overall dynamic of the area. Population shifts make a big difference."

In some areas like Lake Charles, the labor force has rebounded almost to its pre-hurricane size while New Orleans' labor force is reported to be down over 30 percent from its previous level. "Part of the labor demand reflects the difficulty of finding workers in the reduced local labor force," he says.

The Conference Board Help-Wanted OnLine Data Series is released monthly and measures the number of unduplicated online jobs postedon more than 1,200 major Internet job boards and smaller job boards that serve niche markets and smaller geographic areas.

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