MADELEINE BRAND, host:
This is DAY TO DAY. I'm Madeleine Brand. More than a billion dollars of taxpayer money was lost to fraud after hurricanes Katrina and Rita. That's the conclusion of the Independent Government Accountability Office. It actually sent in undercover agents who posed as victims and received money. The report also says that Federal Emergency Management Agency sent money to prison inmates, to people who gave multiple fake Social Security numbers. It paid for luxury vacations, football tickets, and even Girls Gone Wild videos. A House sub-committee took up the issue today. The Committee is chaired by Republican Congressman Michael McCaul of Texas. I spoke with him earlier.
Representative MICHAEL MCCAUL (Republican, Texas): We've been working with these federal investigators since February. At the time, the initial estimates - according to the FEMA director - were supposed to be somewhere between 10 to 100 million dollars. When they came back and discovered that there was a billion dollars in fraud, I was very shocked and appalled. And not so much even the amount of money, but where the money was going. This money was going to prisoners, both the federal and state level - to literally thousands of prisoners who applied while in jail - deceased individuals' names and Social Security numbers had been used to obtain benefits, damaged property, included a cemetery and a vacant lot. There're numerous examples of how out of control this federal assistance program has become.
BRAND: I think one of my favorites was a sex-change operation, actually, when he went for that. Some of it sounds so outrageous it's almost laughable, but a billion dollars - that is serious money.
Representative MCCAUL: It's very serious money, particularly as you're seeing cuts the Homeland Security grants going out to the states. And it's an affront on the American taxpayer, them having this hearing to expose what's happened that put some - sunlight, they say, is the best disinfectant - and try to put some controls in place before the next hurricane hits.
BRAND: And a billion dollars out of how much that was spent?
Representative MCCAUL: It was 16 percent of the total of the amount spent. This is in the Federal Disaster Relief Assistance Program.
BRAND: Is there some explanation in the fact that there is a lot of chaos after a huge disaster like Hurricane Katrina? That the goal is to just get the aid out as quickly as possible and then check it later, but that the immediate need is so great that you don't have time to make sure that the person asking you for money is actually on the level?
Representative MCCAUL: And I think that's what happened. In fact, we're looking at legislation. I think there is a way to put a database, if you will, that cross-references with the Social Security Administration. You can still do this expeditiously and yet stop this kind of fraud from taking place.
BRAND: Do you think it's possible to repair FEMA, or does it just need to be rebuilt from the bottom up?
Representative MCCAUL: Well, we have a reform bill out of Homeland Security Committee that we are pushing that does reform FEMA that puts the FEMA director at a cabinet-level status.
BRAND: So, what it was before, in other words.
Representative MCCAUL: Yes, in a lot of respects. One of the problems was as well is that Secretary Chertoff reallocated resources out of FEMA and put it to other parts of the agency. And we, in this bill, require him to make this an all-hazard agency that's both for natural disaster, but also for manmade - if God forbid we have a terrorist attack - you're going to have a similar response in place.
BRAND: Congressman Michael McCaul, thank you for joining us.
Representative MCCAUL: Well, thank you so much.
BRAND: Congressman McCaul is Chairman of the House Homeland Security Sub-Committee on Investigations. It's holding a hearing today on fraud at FEMA.
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