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Katrina fraud still being discovered

WASHINGTON — This week, three years after Hurricane Katrina, federal investigators charged five people with taking part in schemes to bilk the government for disaster-related benefits they didn't deserve.

Andrew Ealy III of Gonzales, La., was charged Wednesday with fraud for using false receipts and invoices to make claims for more than $200,000 in small business loans.

Marion Felders and Latrisha Green, both of Hammond, La., were indicted on three counts of wire fraud for making false claims that they were jobless as a result of the storm. Thaddeus Johnson Jr. and Susan Johnson, both of Clinton, La., were indicted on nine counts of using phony rent receipts to get hurricane-related housing aid.

They are just the latest in more than 900 prosecutions brought by the Hurricane Katrina Task Force, a U.S. Department of Justice operation created to clean out the breeding ground of fraud left behind by the 2005 storm.

"Disaster fraud targets disaster relief programs, disaster victims and members of the public who want to assist disaster victims by contributing to charitable relief organizations," the task force director, U.S. Attorney David R. Dugas, said.

The task force cases include false Web sites asking for the public's donations, misinformation in relief applications to government agencies, contractors taking advantage of agencies and hotel managers requesting funds for vacant rooms they claim to be providing shelter for displaced, all surfacing at the end of a disaster.

The tendency for fraud to emerge after natural disasters has much to do with the influx of calls to disaster relief agencies.

Overwhelmed by those calls, FEMA often times did not verify information, potentially opening the door for fraud, Dugas of Baton Rouge said.

In addition to the phone calls, FEMA was bombarded with 2.5- million applications for relief.

With the help of reports by the public to the natural disaster fraud hotline, Dugas said the task force has found disaster relief agency workers as well as others looking to make a buck. Dugas said about 10 percent of the defendants worked for relief outfits, including FEMA itself.

In a similar case, the task force prosecuted 86 American Red Cross employees in Bakersfield, Calif., for submitting applications with false information for personal financial gain.

In an attempt to prevent internal fraud, Melissa Temme of the Salvation Army said the organization uses extensive background checks for new hires and an auditing system to detect donations and disbursements.

Katrina fraud still being discovered 11/07/08 [Last modified: Thursday, November 4, 2010 9:17am]
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