FEMA Aid Effort Fraught With Fraud; Thousands Received Money Improperly

washingtonpost.com
FEMA Aid Effort Fraught With Fraud
Thousands Received Money Improperly

By Peter Whoriskey
Washington Post Staff Writer

Tens of thousands of people received aid from the Federal Emergency Management Agency using possibly fraudulent identities because the relief effort did not perform routine checks that might have flagged such activity, government investigators said yesterday.

The extent of the fraud in the $6 billion evacuee-assistance effort has not been calculated, but it could reach hundreds of millions of dollars, investigators told the Senate Homeland Security and Governmental Affairs Committee, and it appears that the losses were limited only by the thieves' ingenuity.

"It was a mess. It was a system that was wide open to fraud," said Gregory D. Kutz, who led the investigation for the Government Accountability Office. "All you had to do was call FEMA on the telephone and lie and you could get money. It was just a question of how many people were willing to make false statements."

The report came amid a stream of revelations yesterday regarding questionable activity during the relief effort -- including $438-a-night lodging in New York, emergency meals being sold on eBay, and emergency checks being used to buy adult entertainment and weapons.

But the main focus of yesterday's testimony was FEMA's lack of financial controls as it doled out $2,000 checks to people who said they were affected by the storm.

FEMA representatives defended their procedures, saying that the urgency of the situation did not allow for strict identity verification and that they were focused on getting aid to desperate families as quickly as possible.

"It was the right thing to do," FEMA spokeswoman Nicol Andrews said. "We helped thousands of families who were forced from their homes without basic necessities. To slow down that process in order to find out who is trying to cheat the system would have hurt those who the system is designed to help.

"In other words, we're not going to let a few bad apples ruin the whole process." She added that FEMA is helping investigators pursue criminal charges against those suspected of fraud. "We are enforcing a zero-tolerance policy," she said.

Investigators, however, concluded that although getting aid to victims quickly is a priority, "more can be done" to check recipients' addresses and Social Security numbers using computers.

People who improperly sought aid over the Internet were sometimes blocked by verification systems, Kutz said, but they were often told to apply by telephone, where no such safeguards were in place.

Investigators said that so far they have learned that about 1,000 people who applied for aid used the Social Security numbers of dead people, 1,000 used numbers that were never issued, and tens of thousands used names, birthdates and Social Security numbers that did not match.

In one case cited by the GAO report, for example, one person used 15 Social Security numbers to submit 15 applications over the phone and received payments totaling $41,000, including 13 emergency-assistance payments, two payments for temporary housing assistance and a payment of $10,500.

Once the money is issued to someone using a false identity, it becomes much more difficult to recover it and prosecute the person, Kutz said.

The GAO report was accompanied by testimony from Richard L. Skinner, the inspector general of the Homeland Security Department. He noted that FEMA may have purchased too many manufactured houses, given the housing needs, and that FEMA is now paying to store and maintain them at various places nationwide. At one site in Hope, Ark., 10,777 manufactured houses are sitting on runways and in fields.

"The homes are sinking in the mud," according to Skinner's testimony.

He also said that in many cases, FEMA was paying relatively reasonable prices to house evacuees in hotels, but some rooms cost more than $150 a night, and as late as December, FEMA was paying $364 per night for a hotel in San Diego and $339 per night for a New Orleans hotel.

Also yesterday, a federal judge ruled that the agency could stop paying directly for hotel rooms for about 12,000 families left homeless by last year's hurricanes, the Associated Press reported.

FEMA promised the evacuees from hurricanes Katrina and Rita that they will still receive federal rent assistance that they can put toward hotel stays or other housing. But the agency will no longer pay for their hotel rooms directly.