Much Katrina Aid Wasted, GAO Report Says

More than a year after Hurricane Katrina devastated New Orleans and portions of the Gulf Coast, the government is still wasting millions of dollars in disaster aid, according to a report released Wednesday by the Government Accountability Office.

The GAO report finds evidence of double payments, aid given to foreign exchange students and a major failure to recover money paid out for illegitimate claims.

FEMA spokesman Pat Philbin said the agency has tried over the past year to eliminate waste by improving its registration process and upgrading its ability to check names and addresses.

"The agency will consider and evaluate any new findings that can assist in improving our processes and procedures," Philbin said.

At the same time that public interest groups are in court this week, trying to restart FEMA payments to thousands of Katrina evacuees, congressional investigators detailed instances of fraudulent payments to some Gulf Coast residents.

The GAO report says nearly $20 million was paid out to some 7,000 people who claimed their property was damaged by first Hurricane Katrina and then again by Hurricane Rita, which followed on the heels of the more powerful storm.

Some may in fact have been damaged by both storms, but the GAO says FEMA didn't have proper checks in place to flag duplicate claims.

FEMA also paid out nearly $3 million to more than 500 foreign exchange students. In several cases, the students actually informed FEMA of their international student status, and still received payments.

The GAO says rental aid was given to more than 8,000 storm victims who were already living rent-free in FEMA-provided trailers. In another case, FEMA provided free apartments to 10 individuals in Plano, Texas, while still sending them $46,000 to cover their own housing expenses.

At a Senate hearing to discuss the report's findings, Sen. Susan Collins (R-ME), chairwoman of the Homeland Security Committee, said a weaker-than-expected 2006 hurricane season has given the government the "luxury of time" to get disaster aid right.

"FEMA has yet to strike a proper balance between expedited assistance and good stewardship of taxpayers' funds. Current practices invite and enable fraud, harming the very people the program is designed to help," Collins said.

The ranking Democrat on the committee, Sen. Joseph Lieberman of Connecticut, said in some cases, people didn't intend to defraud the government.

"Some ineligible people who had no intent of gaming the government, but thought they might be eligible for assistance were granted payments, even though FEMA should have known they were not eligible and should have explained to them they were not eligible," Lieberman said.

Last week, a federal judge ordered FEMA to resume making housing assistance payments to thousands of Katrina evacuees after determining the government had botched the way it notified victims they weren't eligible to receive long-term housing aid. On Tuesday, the government appealed that ruling.

"Apparently FEMA doled out millions of dollars to people who did not deserve it and then denied assistance to many people with potentially legitimate needs without properly documenting why, making it difficult for applicants to appeal FEMA's decisions," Lieberman said.

GAO investigator Gregory Kutz told senators at the hearing that FEMA has recovered less than 1 percent of at least $1 billion wasted on fraudulent or unjustified claims. He described FEMA's approach as "shooting money out the door" and then trying to recoup it later and said only pennies on the dollars are typically recovered that way.

"I hope FEMA has learned the costly lesson," Kutz said.

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