Beyond Katrina

Washington Post Katrina Article Stirs Some Buzz

The Washington Post story about wasted Katrina relief funds is creating some real buzz all over the internet and in news circles right now. Quite frankly, as one who tracks Katrina talk on a daily basis,  I've been amazed at the depth and scope of the conversation this article has provoked and not just nationally but globally. I'd venture to say the WaPo article has done more to bring back Katrina issues into awareness than anything else I've read in a while. So rock on   WaPo! It's good to have you back covering Katrina matters. BTW WaPo staff writers John Solomon and Spencer S. Hsu penned the article I'm referring to. You can catch it here. In the meantime, I've reprinted a post by fraud expert Ed Dickson, below (It was originally published at his excellent blog Fraud, Phishing & Financial Misdeeds.)

Margaret Saizan

Washington Post exposes another reason why Katrina victims are still suffering

By Ed Dickson                  

The hurricane disasters, and their commentary on social issues, continue to amaze me. To me, the rest of the world can learn a lot by studying the ongoing problems related to the disaster.

The amount of money wasted, or lost to fraud (over a billion and growing) is a sad commentary, when a lot of the victims are still living in the now (infamous) FEMA trailers.

Now a new allegation is being brought forth, which is that $854 million in aid promised by our allies, wasn't even accepted. I find this pretty interesting as people are suffering nearly two years, afterwards?

Even more shameful was that expert search and rescue personnel, were turned down, immediately after the hurricane, when they probably would have been extremely helpful:

And while television sets worldwide showed images of New Orleans residents begging to be rescued from rooftops as floodwaters rose, U.S. officials turned down countless offers of allied troops and search-and-rescue teams. The most common responses: "sent letter of thanks" and "will keep offer on hand," the new documents show.

This fact, given the problems in the initial response, amazes me.

Original Washington Post article, here.

I wonder how our allies, many of who have accepted similar aid from us in the past, felt when we turned their generous offers down?

More recently, the Post is reporting that Congress intends to look into this. The article regarding this can be read, here.

FEMA declares they are becoming stronger after realizing how much money was wasted in the hurricane disasters!

By Ed Dickson

Hope Yen at the AP has written an article based on a report by the Inspector General at Homeland Security that $3.6 billion in contracts were awarded to companies with ties to the Republican Party rather than to local companies, impacted by the Katrina/Rita hurricanes.

She quotes Senator Dorgan, who requested the audit, as saying:

"This confirms what we already knew about FEMA — there was a staggering level of incompetence, and the victims of Katrina, as well as taxpayers, are taking it on the chin," Sen. Byron Dorgan (news, bio, voting record), D-N.D., who requested the audit, said Monday.

Dorgan, who chairs the Democratic Policy Committee, said that it was ironic that the new contracts were aimed at helping small businesses in the region get back on their
feet, but instead "some very big interests got some very lucrative contracts."

"There are a lot of things wrong with this, so this report should be a warning signal to Homeland Security and FEMA," he said.

Government investigators already estimate over $1 billion in losses due to waste.

FEMA's response was:

In response, FEMA in the report disagreed that the wide price variations put taxpayers at risk. The agency contended that it was comfortable with bidders' financial viability based in part on past performance. In cases where contract prices appeared unreasonably high, those would be offset with lower payments later on subsequent work orders, FEMA officials said.

FEMA spokesman Aaron Walker said Monday that the agency welcomed the audit's findings and was working hard on improvements to better perform its duties "while being a conscientious steward of taxpayer dollars." He said that FEMA contracting officers did a "remarkable job" given their short time frame.

The audit will assist in making "the new FEMA stronger, more flexible and cost-effective," Walker said in a statement.

Full AP story with links to the Homeland Security report, here.

Both sides can argue, but one thing is apparent, which is we probably could have done a lot more for the victims with the resources we spent!

If mistakes like this ($1 billion and counting) were made at a private organization, do you think the people making them would still be employed?

Probably, not very likely! Perhaps, I could get "the Donald" to comment, but that's not very likely, either.

The political climate on wasted government money is heating up. Recently, I blogged about $2 billion, allegedly wasted by a company (recently sold off by Halliburton) called KBR:

The case of an alleged $2 billion government contract fraud/abuse in Iraq/Afghanistan

In this case, it appears that we could have better served those, who are serving US!

For more of Ed Dickson's essays at Beyond Katrina go here  or visit his blog, Fraud, Phising, and Financial Misdeeds.

About Ed Dickson:

Having worked around financial crimes for a number of years, Ed Dickson noticed that too many people were being victimized by Internet crime. His blog Fraud, Phishing and Financial Misdeeds is a resource to educate people on identity theft, but it also strives to educate the common person on the increasing problem of financial crimes related to technology and the Internet. Ed's goal is to make people AWARE of how to protect themselves.

Civil Servants Under Scrutiny for Credit Card Abuses

By Ed Dickson

Senator Grassley (Iowa) is introducing legislation to counter what he calls massive abuse with government credit cards.

He is quoted on his site as saying:

Every time we open these GAO reports we find more outrageous spending. Internet gambling and a Yankees baseball game don’t seem to be appropriate uses of tax payer money. The federal agencies don’t seem to be stepping up, so our legislation helps put some common sense controls on these credit cards.

The press release covers this in more detail:

Grassley said the legislation would also stipulate that cases of fraud be referred to the U.S. Attorney for prosecution and employees that egregiously misuse or commit fraud with a government charge card be fired. The bill would also increase oversight by providing that each agency Inspector General periodically conduct risk assessments and audits to identify fraud and improper use of credit cards.

Following the devastation of Hurricane Katrina, Grassley was concerned that provision raising the limit for emergency "micro-purchases" on government credit cards from $15,000 to $250,000 was ripe for waste, fraud and abuse and successfully fought to bring the limit back down. At the time, Grassley said that wasting taxpayer money does not help the victims of Hurricane Katrina.

Does this mean that government employees can commit fraud and waste taxpayer money without being fired, or prosecuted? If this happened in the private sector, the culprits would likely be fired and (possibly) prosecuted.

The sad thing is that Senator Grassley has attempted to introduce this legislation in the last two Congresses and it was never acted upon.

So far wasted taxpayer money not helping the Katrina victims, the GAO confirmed Senator Grassley's prediction. Here is a previous post on that matter:

More Allegations of Money Wasted in Katrina

Senator Grassley's press release on this matter, here.

Of note, Senators Norm Coleman of Minn., Joe Lieberman of Connecticut, and Susan Collins of Maine are supporting Senator Grassley in this legislation. Congressman Joe Wilson has filed similar legislation in the House of Representatives on government credit card abuse.

Civil servants should be held to at least the same standard as the people they are serving!

Publisher's Note: Martin Bosworth (consumer affairs) made mention of this post at http://blogs.consumeraffairs.com/bosworth/218/grassley-takes-on-govt-credit-card-spending-again.

For more of Ed Dickson's essays at Beyond Katrina go here  or visit his blog, Fraud, Phising, and Financial Misdeeds.

About Ed Dickson:

Having worked around financial crimes for a number of years, Ed Dickson noticed that too many people were being victimized by Internet crime. His blog Fraud, Phishing and Financial Misdeeds is a resource to educate people on identity theft, but it also strives to educate the common person on the increasing problem of financial crimes related to technology and the Internet. Ed's goal is to make people AWARE of how to protect themselves.

 

         

Should recent prosecutions for fraud in Katrina remind us of something?

By:  Ed Dickson

Bruce Alpert, of the Times Picayune did an excellent article about a lot of recent prosecutions for fraud in the aftermath of the hurricane disasters.

One woman, LaWanda Williams collected $267,377.15 in an identity theft scheme using several other people's information.

I wonder if any of the people (who had their information stolen) were denied benefits, as a result of LaWanda's activities?

And LaWanda is just one example of people's greed. FEMA and Army Corps of Engineers officials, Red Cross employees and many others took advantage of the situation.

In fact, fraud was being committed as far away as California, where 71 cases have been documented.

Bruce Alpert's article, here.

Bruce's article points out that this isn't the first time fraud occurred after a disaster. Similar fraudulent claims occurred after 9-11 and the Tsunami disaster.

The money lost to fraud is a symptom of the larger problem, which was a disaster preparedness system that failed. The resulting confusion enabled a lot of fraud to occur, and probably made it too easy to commit.

I doubt any of the people now being prosecuted thought they were going to be caught.

As the old saying goes - "an ounce of prevention is worth a pound of cure." Our focus needs to be towards preventing this from happening again.

For more of Ed Dickson's essays at Beyond Katrina go here  or visit his blog, Fraud, Phising, and Financial Misdeeds.

About Ed Dickson:

Having worked around financial crimes for a number of years, Ed Dickson noticed that too many people were being victimized by Internet crime. His blog Fraud, Phishing and Financial Misdeeds is a resource to educate people on identity theft, but it also strives to educate the common person on the increasing problem of financial crimes related to technology and the Internet. Ed's goal is to make people AWARE of how to protect themselves.

Blaming FEMA for the fraud in Katrina isn't going to solve the problem

By: Ed Dickson

There is no doubt about it - the Katrina and Rita debacle - was NOT a shining moment in our nation's history. Fifteen months later as New Orleans prepares to celebrate "Fat Tuesday" (Mardi Gras), more allegations of fraud and mismanagement are coming to light.

Two reporters (Michelle Roberts and Frank Bass) of the AP wrote an interesting article about how FEMA now wants $300 million back in claims paid for households that didn't exist, according to official pre-hurricane census figures.

Even more interesting is that they did their own analysis using the federal Freedom of Information Act, which deducts that a lot more than $300 million  might come out in the wash before all is said and done.

Here is what they said in their article:

But an Associated Press analysis of government data obtained under the federal Freedom of Information Act suggests the government might not have been careful enough with its checkbook as it gave out nearly $5.3 billion in aid to storm victims. The analysis found the government regularly gave money to more homes in some neighborhoods than the number of homes that actually existed.

The pattern was repeated in nearly 100 neighborhoods damaged by the hurricanes. At least 162,750 homes that didn't exist before the storms may have received a total of more than $1 billion in improper or illegal payments, the AP found.

Full story (ABC news version), here.

While there is no doubt a big problem exists, we need to put the overall issues in perspective and I'm not sure FEMA is entirely to blame.

David Garratt, FEMA's deputy director is saying that officials were in a "no win" situation. And while, I'm not here to defend FEMA, he probably has a valid point.

When the federal government got involved, fraud artists from all over the world were setting their sights on what they saw as a "lucrative opportunity."

A lot of the fraud that occurred didn't necessarily come from the areas affected by the hurricane.

Couple this, with a lot of pressure to right all the initial blunders in the disaster, which most of us were watching "live," and mistakes were made.

Sadly enough, fraud prevention systems in place, were deemed to cumbersome and disabled. Again, there was a lot of pressure (rightfully so) to take swift action to help a lot of people, who were in harm's way.

We can blame FEMA all we want, but the fact is that fraud is growing at a rapid rate, and the federal government isn't the only one with inadequate fraud prevention systems.

For example, in Southern California (pretty far from Louisiana), there was another interesting article about the taxpayers footing a $1.5 billion a year bill for fraud, here.

And while there seems to be a lot of government fraud, fraud in the private sector is growing by leaps and bounds, also. There is no doubt that identity theft (another growing problem) helped fuel the fraud in the hurricane disasters.

There is a lot of evidence to suggest that much of this fraud is enabled by information that has been data-mined on all of us, which isn't protected very well. Some suggest that technology and the information sector, which make a lot of money selling their wares are the root cause of all of this.

Unfortunately, those committing fraud are too keenly aware of this.

Blaming FEMA is unlikely to correct the overall problem. And if their fraud prevention systems were inadequate, perhaps we should be looking at who sold them the faulty systems?

Perhaps, when history is written, the Katrina disaster is a warning of the looming disaster we all face if we don't stop viewing fraud as a "victimless crime."

Fifteen months later (as Mari Gras approaches), there are still a lot of people suffering from the hurricane disasters.

I wonder how much good the money would have done for the true victims if it hadn't been stolen from underneath them?

For more of Ed Dickson's essays at Beyond Katrina go here  or visit his blog, Fraud, Phising, and Financial Misdeeds. 

About Ed Dickson:

Having worked around financial crimes for a number of years, Ed Dickson noticed that too many people were being victimized by Internet crime. His blog Fraud, Phishing and Financial Misdeeds is a resource to educate people on identity theft, but it also strives to educate the common person on the increasing problem of financial crimes related to technology and the Internet. Ed's goal is to make people AWARE of how to protect themselves.

 

Will We Ever Discover the True Losses in the Katrina Disaster?

By: Ed Dickson

The Government Accountability Office (GAO) has issued another report stating that the fraud losses in Katrina and Rita are a lot higher than previously disclosed to the public.

The report states:

• Almost $20 million in double payments was paid to people claiming damage to the same property in both hurricanes (Katrina and Rita).
• Almost $17 million in improper or fraudulent "rental assistance" payments given to people already receiving free housing.
• 500 foreign students received $3 million in aid.
• $156,000 was given to foreign workers on temporary visas.

Sadly enough, the report indicates that FEMA disabled a system (edit check in NEMIS) that would have caught people using duplicate information (social security numbers) to make claims in both hurricanes. In five of the six cases examined, the claimants didn't even have to provide proof that they had conducted repairs after receiving money for the first claim.

I have no personal experience with "edit check in NEMIS," but computers run pretty fast in today's world, and it doesn't make sense to me that an entire system designed to detect fraud was disabled?

Didn't we have enough personnel to do a manual check when duplicate social security numbers were noted? And even if this were so - why didn't FEMA take action (themselves) to identify the issues before the GAO investigated?

The use of other people's social security numbers is nothing new and probably could have been anticipated, fairly easily.

There is also a lot of missing equipment. The report shows that 34 percent of the property purchased to aid efforts has either been lost, or stolen. In the case of 2o flat bottom boats purchased - only two remain missing - however twice the retail price was paid to a vendor, who also failed to pay for 11 of the boats he sold to the government.

Even scarier, the report indicates that FEMA overstated the amount of found property reported in July hearings to Congress. This was based on an e-mail sent by DHS (Department of Homeland Security) on the eve of the hearings.

FEMA's estimate of the monetary impact of fraud in Katrina was $290 million, however if one is to believe the GAO report, the real losses surpass $1 billion.

With the stories that surfaced about prison inmates making claims and stolen information (social security numbers) being used in claims for addresses that were vacant lots - it's entirely possible that there is additional fraud that hasn't, or never will be discovered.

There were also a lot of stories of charities being defrauded and even fake charities being set-up. The GAO report only addresses the fraud losses incurred by the government.

GAO report, here.

Report Fraud, Waste and Abuse to the GAO, here.

FraudNET (Report Fraud, Waste and Abuse)

One might come to the conclusion that we wasted a lot of money on Katrina, but this is far from being true. In fact, a lot of people are still suffering as a result of these disasters, and the truth is that the money could have been used for better purposes.

This post, and others related to fraud awareness can be viewed at http://fraudwar.blogspot.com. For more of Ed's posts at Beyond Katrina go here.

About Ed Dickson:

Having worked around financial crimes for a number of years, Ed Dickson noticed that too many people were being victimized by Internet crime. His blog Fraud, Phishing and Financial Misdeeds is a resource to educate people on identity theft, but it also strives to educate the common person on the increasing problem of financial crimes related to technology and the Internet. Ed's goal is to make people AWARE of how to protect themselves.