‘Breathtaking’ Waste and Fraud in Hurricane Aid WASHINGTON, June 26 — Among the many superlatives associated with Hurricane Katrina can now be added this one: it produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history, costing taxpayers up to $2 billion. A hotel owner in Sugar Land, Tex., has been charged with submitting $232,000 in bills for phantom victims. And roughly 1,100 prison inmates across the Gulf Coast apparently collected more than $10 million in rental and disaster-relief assistance. There are the bureaucrats who ordered nearly half a billion dollars worth of mobile homes that are still empty, and renovations for a shelter at a former Alabama Army base that cost about $416,000 per evacuee. And there is the Illinois woman who tried to collect federal benefits by claiming she watched her two daughters drown in the rising New Orleans waters. In fact, prosecutors say, the children did not exist. The tally of ignoble acts linked to Hurricane Katrina, pulled together by The New York Times from government audits, criminal prosecutions and Congressional investigations, could rise because the inquiries are under way. Even in Washington, a city accustomed to government bloat, the numbers are generating amazement.

 

“The blatant fraud, the audacity of the schemes, the scale of the waste — it is just breathtaking,” said Senator Susan Collins, Republican of Maine, and chairwoman of the Homeland Security and Governmental Affairs Committee... Officials in Washington say they recognized that a certain amount of fraud or improper payments is inevitable in any major disaster, as the government’s mission is to rapidly distribute emergency aid. They typically send out excessive payments that represent 1 percent to 3 percent of the relief distributed, money they then ask people to give back.

 

What was not understood until now was just how large these numbers could become. The estimate of up to $2 billion in fraud and waste represents nearly 11 percent of the $19 billion spent by FEMA on Hurricanes Katrina and Rita as of mid-June, or about 6 percent of total money that has been obligated. “This started off as a disaster-relief program, but it turned into a cash cow,” said Representative Michael McCaul, Republican of Texas, a former federal prosecutor and now chairman of a House panel investigating storm waste and fraud. The waste ranged from excessive loads of ice to higher-than-necessary costs on the multibillion-dollar debris removal effort.

 

The most recent audit came from the Government Accountability Office, which this month estimated that perhaps as much as 21 percent of the $6.3 billion given directly to victims might have been improperly distributed. To date...federal prosecutors have filed hurricane-related criminal charges against 335 individuals. That represents a record number of indictments from a single hurricane season, Justice Department officials said. Separately, Red Cross officials say they are investigating 7,100 cases of possible fraud. Congressional investigators, meanwhile, have referred another 7,000 cases of possible fraud to prosecutors, including more than 1,000 prison inmates who collected more than $12 million in federal aid, much of it in the form of rental assistance. Investigators also turned up one individual who had received 26 federal disaster relief payments totaling $139,000, using 13 Social Security numbers, all based on claims of damages for bogus addresses. Thousands more people may be charged before the five-year statute of limitations on most of these crimes expires, investigators said... Auditors examining spending in Iraq also have documented hundreds of millions in questionable spending or abuse. But Mr. Kutz of the accountability office said that in all of his investigative work, he had never encountered the range of abuses he has seen with Hurricane Katrina. R. David Paulison, the new FEMA director, said in an interview on Friday that much work had already been done to prevent such widespread fraud, including automated checks to confirm applicants’ identities. “We will be able to tell who you are, if you live where you said you do,” Mr. Paulison said. But Senator Collins said she had heard such promises before, including after Hurricane Frances in 2004 in which FEMA gave out millions of dollars in aid to Miami-Dade County residents, even though there was little damage. Mr. [Gregory D.] Kutz, [managing director of the forensic audits unit at the Government Accounting Office] said he too was not convinced that the agency was ready. “I still don’t think they fully understand the depth of the problem,” he said.

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We turned off the main highway headed back to downtown New Orleans and headed down a road that, like many roads in that area, looked dusty and unused. Weeds grew tall on the sides of the road and there were no cars, no people to be seen.

We crossed over some railroad tracks and came to a stop sign. Our host dutifully stopped, despite the fact there wasn’t a soul in sight.

Turning right we drove down a road that at first glance looked just like the road we’d just been on. Weeds and little more took up the view.

Then I saw a rise in the land, a rise that wasn’t just an undulation in the flat New Orleans landscape. It was a man-made rise.

Of automobiles, stacked one atop the other, filling an entire field.

What do you do when people suddenly leave an area, leaving behind all of the symbols of their civilization?

I think this is a fairly unique event in American history. Floods have happened before and to large swaths of land surrounding the Mississippi River (which, btw, did not breech it’s banks in New Orleans), but this is the first time that I’m aware of where a huge portion of a major city has all of it’s population disappear, leaving so much behind.

What to do with it all?

As far as automobiles were concerned, I’ve already written about one image that I posted concerning cars towed to the area below an raised section of highway. That area, however, can only hold so many cars.

For better or worse, the city decided to re-open some long closed landfills off to the side of town. Cars were hauled from the streets to these landfills and dumped and stacked to form new car graveyards.

The cars likely still have gas in the tanks and their batteries under the hood, making this area ripe for a toxic mess all of it’s own.

The city has gotten some heat for the decision of the placement of these automobiles because it’s close to where the city’s Vietnamese community lives.

Members of the New Orleans Vietnamese community are, apparently, a very tight-knit group. They all evacuated together, traveling to the same city. Within two weeks the men of the community had decided they were going to return to their homes, despite it not being “legal” to do so yet. I’m guessing they realized they had no say in what happened to their community and homes if they weren’t there to protect them and raise their voices themselves.

So they returned. They, undoubtedly, lived in primitive conditions for months, without heat, electricity, running water, etc. Still they stuck together, helped repair each other’s homes and made them livable again.

Finally, the petitioned the utility companies to restore power and water to their homes. The utility companies balked at the idea, saying they needed proof that doing so was going to be economically feasible (i.e. profitable) considering to do so meant going through areas where there were no other people living.

The Vietnamese men were able to demonstrate sufficient numbers that the utility companies restored services to their homes.

Until I drove through these areas I didn’t realize how literal the phrase “massive cleanup effort” was.