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Audit: Millions in Katrina aid being wasted

The government is squandering tens of millions of dollars in Hurricane Katrina disaster aid, in some cases doling out housing payments to people living rent-free, investigators said Wednesday.

The Federal Emergency Management Agency has recouped less than 1 percent of the $1-billion that investigators contend it squandered on fraudulent assistance, according to the Government Accountability Office. Its report shows the disaster relief agency's struggles, one year after the deadly storm, to aid those in need while also preventing abuse.

Last week, a federal judge in Washington ordered the Bush administration to resume housing payments for thousands of people displaced by Katrina. The ruling, which FEMA is appealing, cited a convoluted process for applying for help.

"Our work shows for individual assistance payments, at least tens of thousands of individuals took the opportunity to commit fraud," said Gregory Kutz, who works for Congress' investigative arm. He said his previous $1-billion estimate of wasted aid was now "likely understated."

"I hope FEMA has learned the costly lesson and will make reforms for future disasters," Kutz said at a Senate hearing.

In its latest report, the GAO found numerous applicants received duplicate rental aid.

FEMA arranged for a free trailer for a family in Lacombe, La., in January, yet kept providing monthly rental payments in late January, February and April totaling $5,500 - a mistake resulting from poor communication within the agency, according to the report.

In addition, $20-million was wasted on thousands of people who claimed the same property damage from two hurricanes, Katrina and Rita. FEMA paid at least $3-million to more than 500 ineligible foreign students in the Gulf Coast, the report said.

FEMA spokesman Pat Philbin did not challenge the findings. He did say the agency has sought to upgrade the registration process and strengthen its procedures for verifying names and addresses.

Connecticut Sen. Joseph Lieberman, who will become committee chairman when Democrats take control of the Senate in January, said FEMA will be watched closely for signs of improvement.

"The record is clear that, going forward, FEMA has much work to do before we can be confident that it is providing assistance to those who are eligible and who need it, while denying it to those who do not," he said.

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