Senate Hears Testimony on Katrina, Rita Waste

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Waste, fraud and abuse of federal money have occurred during the Hurricane Katrina recovery efforts. A Senate committee heard testimony Wednesday about rent subsidies going to people living in free trailers, and homeowners who claimed the same property damage for Hurricanes Katrina and Rita.

DEBORAH AMOS, host:

The Federal Emergency Management Agency wasted more than a billion dollars in a hurricane aid over the past 15 months and is unlikely to recover most of that money. That's according to congressional auditors who say they continue to find cases of fraudulent and improper payments made in response to Hurricane Katrina.

NPR's Pam Fessler reports.

PAM FESSLER: The litany of bad payments is, at times, mind-boggling. Investigators with the Government Accountability Office found that FEMA gave out $17 million in rental aide to people already living in FEMA trailers, where they don't have to pay rent. Other checks went to individuals staying in government-paid apartments.

Gregory Kutz of the GAO told the Senate Homeland Security Committee yesterday that many people filed disaster claims for the same property under both Hurricanes Katrina and Rita. He said investigators found $20 million in duplicate payments.

Mr. GREGORY KUTZ (Managing Director, Forensic Audits and Special Investigations, Government Accountability Office): It appears that some of these individuals were paid twice for the same television, refrigerator, washer and dryer.

FESSLER: Kutz said millions more in aide was given to hundreds of ineligible foreign students and workers. GAO investigator John Ryan told committee chairwoman Susan Collins that he was also still having trouble tracking 20 flat-bottom boats for which FEMA paid an unusually high price of more than $200,000.

Senator SUSAN COLLINS (Republican, Maine): Let me get this straight. The government paid twice what the market price should have been for these 20 boats and yet does not have legal title to a single one of the boats, and at least one of the boats isn't even in possession of FEMA. Is that correct?

Mr. JOHN RYAN (Assistant Director, Forensic Audits and Special Investigations, Government Accountability Office): That's correct. And I'll add that there's another boat still missing, and no one really knows where that's at.

FESSLER: Collins said she was exasperated by the misspending, especially because the needs after Hurricane Katrina were so great. Just last week, a federal judge found that FEMA had wrongly stopped housing benefits for thousands of victims and ordered that they be restored.

No one from FEMA was at the hearing to respond, but in a statement a spokesman said the agency has acknowledged problems with its assistance programs and is trying to fix them.

Democrat Joseph Lieberman of Connecticut asked Kutz whether the agency also might have found itself pulled in too many directions right after the storm.

Senator JOSEPH LIEBERMAN (Democrat, Connecticut): Did you find any evidence that somebody high up in FEMA said, get out the checks. If there's a mistake we'll come and deal with it later, but just - let's not get criticized for not making payments.

Mr. KUTZ: It's very possible. We didn't see any documented evidence of that.

FESSLER: But Kutz said FEMA clearly didn't have enough people early on to track down hundreds of millions of dollars in questionable payments and that doing so could have delayed checks for months.

Mr. KUTZ: And so the choice at that point was shoot the money out the door and try to come back and collect it later.

FESSLER: But he said that's proving to be very difficult now. So far, FEMA has recouped only $7 million of the estimated one billion dollars in overpayments. And that doesn't include thousands of dollars the agency sent to GAO investigators who used fake identities to file claims in an effort to test the system.

Kutz said the big problem is that FEMA's aide programs were uncoordinated and in some cases relied on different databases.

Mr. KUTZ: We found the same thing for the hotel program...

Sen. LIEBERMAN: Right.

Mr. KUTZ: ...the trailer program, the mobile home program. They're all stove piped programs within FEMA, and these people don't appear to talk very well.

FESSLER: He said any solution FEMA comes up with should be tested extensively before the next disaster.

Pam Fessler, NPR News, Washington.

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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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