Hurricanes Katrina and Rita Disaster Relief
Continued Findings of Fraud, Waste, and Abuse Gao ID: GAO-07-252T December 6, 2006Hurricanes Katrina and Rita destroyed homes and displaced millions of individuals. While the Federal Emergency Management Agency (FEMA) continues to respond to this disaster, GAO's previous work identified significant control weaknesses--specifically in FEMA's Individuals and Households Program (IHP) and in the Department of Homeland Security's (DHS) purchase card program--resulting in significant fraud, waste, and abuse. Today's testimony will address whether FEMA provided improper and potentially fraudulent (1) rental assistance payments to registrants at the same time it was providing free housing via trailers and apartments; (2) duplicate assistance payments to individuals who claimed damages to the same property for both hurricanes Katrina and Rita; and (3) IHP payments to non-U.S. residents who did not qualify for IHP. This testimony will also discuss (1) the importance of fraud identification and prevention, and (2) the results of our investigation into property FEMA bought using DHS purchase cards. To address these objectives, GAO data mined and analyzed FEMA records and interviewed city officials, university officials, and foreign students. GAO also traveled to Louisiana and Texas to inspect selected property items and to investigate improper housing payments to individuals living in FEMA-provided housing.
FEMA continued to lose tens of millions of dollars through potentially improper and/or fraudulent payments from both hurricanes Katrina and Rita. These payments include $17 million in rental assistance paid to individuals to whom FEMA had already provided free housing through trailers or apartments. In one case, FEMA provided free housing to 10 individuals in apartments in Plano, Texas, while at the same time it sent these individuals $46,000 to cover out-of-pocket housing expenses. In addition, several of these individuals certified to FEMA that they needed rental assistance. FEMA made nearly $20 million in duplicate payments to thousands of individuals who claimed the damages to the same property from both hurricanes Katrina and Rita. FEMA also made millions in potentially improper and/or fraudulent payments to nonqualified aliens who were not eligible for IHP. For example, FEMA paid at least $3 million to more than 500 ineligible foreign students at four universities in the affected areas. This amount likely understates the total payments to ineligible foreign students because it does not cover all colleges and universities in the area. FEMA also provided potentially improper and/or fraudulent IHP assistance to other ineligible non-U.S. residents, despite having documentation indicating their ineligibility. Finally, FEMA's difficulties in identifying and collecting improper payments further emphasized the importance of implementing an effective fraud, waste, and abuse prevention system. For example, GAO previously estimated improper and potentially fraudulent payments related to the IHP application process to be $1 billion through February 2006. As of November 2006, FEMA identified about $290 million in improper payments and collected about $7 million. GAO's previous work on the DHS purchase cards also showed significant problems with property accountability. Of 246 items we investigated that FEMA purchased for hurricane relief efforts using DHS's purchase cards, 85 items--or 34 percent--are still missing and presumed lost or stolen.
GAO-07-252T, Hurricanes Katrina and Rita Disaster Relief: Continued Findings of Fraud, Waste, and Abuse
This is the accessible text file for GAO report number GAO-07-252T
entitled 'Hurricanes Katrina and Rita Disaster Relief: Continued
Findings of Fraud, Waste, and Abuse' which was released on December 6,
2006.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Testimony:
Before the Committee on Homeland Security and Governmental Affairs,
U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EST:
Wednesday, December 6, 2006:
Hurricanes Katrina And Rita Disaster Relief:
Continued Findings of Fraud, Waste, and Abuse:
Statement of Greg Kutz,
Managing Director:
Forensic Audits and Special Investigations:
John J. Ryan,
Assistant Director:
Forensic Audits and Special Investigations:
GAO-07-252T:
GAO Highlights:
Highlights of GAO-07-252T, a testimony to the Committee on Homeland
Security and Governmental Affairs, U.S. Senate
Why GAO Did This Study:
Hurricanes Katrina and Rita destroyed homes and displaced millions of
individuals. While the Federal Emergency Management Agency (FEMA)
continues to respond to this disaster, GAO‘s previous work identified
significant control weaknesses”specifically in FEMA‘s Individuals and
Households Program (IHP) and in the Department of Homeland Security‘s
(DHS) purchase card program”resulting in significant fraud, waste, and
abuse.
Today‘s testimony will address whether FEMA provided improper and
potentially fraudulent (1) rental assistance payments to registrants at
the same time it was providing free housing via trailers and
apartments; (2) duplicate assistance payments to individuals who
claimed damages to the same property for both hurricanes Katrina and
Rita; and (3) IHP payments to non-U.S. residents who did not qualify
for IHP. This testimony will also discuss (1) the importance of fraud
identification and prevention, and (2) the results of our investigation
into property FEMA bought using DHS purchase cards.
To address these objectives, GAO data mined and analyzed FEMA records
and interviewed city officials, university officials, and foreign
students. GAO also traveled to Louisiana and Texas to inspect selected
property items and to investigate improper housing payments to
individuals living in FEMA-provided housing.
What GAO Found:
FEMA continued to lose tens of millions of dollars through potentially
improper and/or fraudulent payments from both hurricanes Katrina and
Rita. These payments include $17 million in rental assistance paid to
individuals to whom FEMA had already provided free housing through
trailers or apartments. In one case, FEMA provided free housing to 10
individuals in apartments in Plano, Texas, while at the same time it
sent these individuals $46,000 to cover out-of-pocket housing expenses.
In addition, several of these individuals certified to FEMA that they
needed rental assistance.
FEMA made nearly $20 million in duplicate payments to thousands of
individuals who claimed damages to the same property from both
hurricanes Katrina and Rita. FEMA also made millions in potentially
improper and/or fraudulent payments to nonqualified aliens who were not
eligible for IHP. For example, FEMA paid at least $3 million to more
than 500 ineligible foreign students at four universities in the
affected areas. This amount likely understates the total payments to
ineligible foreign students because it does not cover all colleges and
universities in the area. FEMA also provided potentially improper
and/or fraudulent IHP assistance to other ineligible non-U.S.
residents, despite having documentation indicating their ineligibility.
Finally, FEMA‘s difficulties in identifying and collecting improper
payments further emphasized the importance of implementing an effective
fraud, waste, and abuse prevention system. For example, GAO previously
estimated improper and potentially fraudulent payments related to the
IHP application process to be $1 billion through February 2006. As of
November 2006, FEMA identified about $290 million in improper payments
and collected about $7 million
Figure: GAO Improper Payment Estimate and FEMA Reported Overpayments
and Collections:
[See PDF for Image]
Source: GAO analysis and FEMA data.
[End of Figure]
GAO‘s previous work on the DHS purchase cards also showed significant
problems with property accountability. Of 246 items we investigated
that FEMA purchased for hurricane relief efforts using DHS‘s purchase
cards, 85 items”or 34 percent”are still missing and presumed lost or
stolen.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-252T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gregory Kutz at (202) 512-
7455 or kutzg@gao.gov
[End of Section]
Chairman and Members of the Committee:
Thank you for the opportunity to discuss our forensic audit and related
investigations into the Federal Emergency Management Agency's (FEMA)
response to hurricanes Katrina and Rita. In several prior hearings, we
testified that significant control weaknesses in FEMA's Individuals and
Households Program (IHP) and in the Department of Homeland Security's
(DHS) purchase card program have left the government vulnerable to
significant fraud, waste, and abuse. In February 2006,[Footnote 1] we
testified before this Committee that specific control weaknesses in the
IHP program resulted in improper expedited assistance payments and
nonexistent controls left the government vulnerable to substantial
fraud and abuse related to IHP. Several months later, in June
2006,[Footnote 2] we testified on additional work performed whereby we
projected that the weak or nonexistent controls resulted in an
estimated $1 billion dollars in potentially fraudulent and improper IHP
payments.[Footnote 3] Most recently, in July 2006,[Footnote 4] we
testified before this Committee that control weaknesses in DHS's
purchase card program had resulted in fraud, waste, and abuse,
including activity by FEMA related to hurricanes Katrina and Rita. Our
purchase card work also showed that poor controls over property
acquired primarily for hurricanes Katrina and Rita operations,
including laptops, printers, global positioning system (GPS) units, and
flat-bottom boats, resulted in lost, missing, or stolen assets. We have
issued companion reports[Footnote 5] following each of these
testimonies that included numerous recommendations on how to address
the weaknesses identified by our audit and investigative work.
As we previously reported, the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (Stafford Act)[Footnote 6] provides the basis
for IHP. IHP is a major component of the federal disaster response
efforts designed to provide financial assistance to individuals and
households that, as a direct result of a major disaster, have necessary
expenses and serious needs that cannot be met through other means. The
Stafford Act allowed registrants to receive financial assistance up to
a cap of $26,200 for disasters occurring in 2005. In early October
2006, FEMA reported to Congress that it had delivered approximately $7
billion in IHP aid for hurricanes Katrina and Rita. This IHP amount
included expedited assistance, temporary housing assistance, repair and
replacement of real and personal property, and other miscellaneous
categories.
Today's testimony reflects new findings related to additional work we
have performed since June 2006. The testimony will address whether FEMA
provided potentially improper and/or fraudulent (1) rental assistance
payments to registrants at the same time it was providing free housing
via trailers and apartments; (2) duplicate assistance payments to
individuals who claimed damages to the same property for both
hurricanes Katrina and Rita; and (3) IHP payments to nonqualified
aliens who did not qualify for IHP. This testimony will also discuss
(1) the importance of fraud prevention, and (2) the results of our
investigation into property bought by FEMA using DHS purchase cards,
which was subsequently lost or stolen. For purposes of this testimony,
potentially improper and/or fraudulent payments refers to payments made
by FEMA based on potentially improper and/or fraudulent registration
data submitted by IHP registrants.
To address these objectives, we compared information included in FEMA
databases; performed data mining on FEMA databases; and interviewed
officials in selected cities and universities, and foreign students. We
also traveled to Louisiana and Texas to physically inspect selected
items FEMA purchased for hurricane relief efforts. For details on our
scope and methodology, see appendix I. We conducted our audit and
investigations from June 2006 through November 2006. We conducted our
audit work in accordance with generally accepted government auditing
standards and conducted our investigative work in accordance with the
standards prescribed by the President's Council on Integrity and
Efficiency.
Summary:
Our audit and investigative work on controls over FEMA disaster relief
payments associated with hurricanes Katrina and Rita identified
additional potentially improper and/or fraudulent payments, including
the following:
* Nearly $17 million in potentially improper and/or fraudulent rental
assistance payments to individuals while they were living in trailers
also paid for by FEMA. For example, after FEMA provided a trailer to a
household--in January 2006--FEMA provided rental assistance payments to
the same household in late January, February, and April of 2006
totaling approximately $5,500.
* FEMA provided potentially improper and/or fraudulent rental
assistance payments to individuals living in FEMA-paid apartments. For
example, FEMA made nearly $46,000 in rental assistance payments to at
least 10 individuals living in apartments at the same time that the
apartments were being paid for by FEMA through the city of Plano,
Texas. Seven of 10 in this group self-certified to FEMA that they
needed rental assistance, despite the fact that they were living in
rent-free housing. Because of limitations in FEMA data, we were not
able to identify the full extent of potentially improper rental
assistance payments made to individuals in FEMA-paid apartments.
* Nearly $20 million in potentially improper and/or fraudulent payments
went to individuals who registered for both hurricanes Katrina and Rita
assistance using the same property. With few exceptions, FEMA officials
explained that victims of both disasters are entitled to only one set
of IHP payments for the same damaged property. However, FEMA officials
told us that they turned off the system edits that should have
identified these types of duplicate payments to increase the speed with
which FEMA could distribute disaster assistance. Consequently, FEMA
paid over 7,000 individuals IHP assistance twice for the same property-
-once for Hurricane Katrina and once for Hurricane Rita. These
individuals received double payments for expedited assistance, rental
assistance, and/or housing replacement. For example, FEMA records
showed that one registrant received two housing replacement payments of
$10,500 each, despite the fact that he had only one property to
replace.
* Millions of dollars of improper and potentially fraudulent payments
went to nonqualified aliens, including foreign students and temporary
workers. For example, FEMA improperly paid at least $3 million in IHP
assistance to more than 500 ineligible foreign students at four
universities. Further, FEMA provided IHP payments that included
expedited assistance and personal property totaling more than $156,000
to 25 individuals who claimed to be foreign workers on temporary visas.
FEMA made these payments despite having copies of the work visas for
several individuals, which should have alerted FEMA that the temporary
workers were not eligible for financial assistance. Because we did not
obtain information from all universities in the Gulf region and because
of unavailability of detailed data on other nonqualified legal aliens,
we were not able to determine the magnitude of potentially improper
and/or fraudulent payments in this area.
* The small amount of money that FEMA has been able to collect from
improper payments further demonstrates the need to have adequate
preventive controls. We previously reported that inadequate preventive
controls related to the IHP application process resulted in an
estimated $1 billion of potentially improper and/or fraudulent payments
through February 2006. In contrast, as of November 2006, FEMA had
detected through its own processes about $290 million in overpayments.
This overpayment amount, which FEMA refers to as recoupments,
represents the improper payments that FEMA had detected and had issued
letters requesting repayments. However, through November FEMA had only
collected nearly $7 million of the about $290 million identified for
recoupment. Collection of only $7 million of an estimated $1 billion of
fraudulent and improper payments clearly supports the basic point we
have previously made[Footnote 7] that fraud prevention is far more
efficient and effective than detection and collection.
* Regarding the DHS purchase card program, we found overall problems
with property items bought for hurricanes Katrina and Rita relief
efforts using government purchase cards. For example, FEMA is still
unable to locate 48 of the143 missing items (e.g., laptop and printers)
identified in our July 2006 testimony. Moreover, 37 items were missing
from an additional 103 items that we investigated. Thus, over a year
after being purchased, FEMA could not locate 85 of the 246 items (34
percent) that we investigated, and are presumed lost or stolen.
* Our investigation also revealed that although FEMA was in possession
of 18 of the 20 flat-bottom boats it had purchased for hurricane relief
efforts, FEMA had not received the title to any of these boats.
Further, FEMA could not provide any information about the location of
the remaining two boats, although local law enforcement officials
informed us that they found one of the boats in a shed at the house of
its previous owner.
Potentially Improper and/or Fraudulent Housing Assistance Payments
Related to Trailers and Apartments:
We found that FEMA provided nearly $17 million in potentially improper
and/or fraudulent rental assistance payments to individuals already
housed in other accommodations that FEMA provided through other
disaster assistance programs. The Stafford Act prohibits FEMA from
providing rental assistance payments under IHP to an applicant if
temporary housing has been provided by any other source.[Footnote 8]
Despite this prohibition, FEMA did not have an effective process in
place to compare IHP registrant data with data on individuals already
housed in FEMA-purchased trailers and FEMA-provided apartments. FEMA
also failed to adequately advise victims that they were prohibited from
receiving rental assistance for the same period they occupied rent-free
housing. Consequently, FEMA improperly paid nearly $17 million to over
8,600 registrants after they had already moved into FEMA trailers.
While the quality of FEMA data did not allow us to make similar
calculations for the amount and number of individuals receiving rental
assistance payments after they had been housed in FEMA-provided
apartments, the amount could be substantial.
In the aftermath of hurricanes Katrina and Rita, FEMA used various
programs to house displaced victims, including financial assistance for
rent and rent-free housing. Rent-free housing included trailers that
FEMA purchased and apartments that FEMA either paid for directly or
reimbursed state and local governments for after they paid landlords on
behalf of the disaster victims. According to a FEMA official, to
expedite apartment rental assistance, FEMA provided payments to over
100 different state and local governments for the provision of rent-
free apartments.
By comparing information in two of FEMA's databases--the FEMA Response
and Recovery Applicant Tracking System (FRRATS) and the National
Emergency Management Information System (NEMIS)--we calculated that
FEMA improperly made rental assistance payments--intended to cover out-
of-pocket rental expenses--totaling nearly $17 million to over 8,600
individuals after they had moved into FEMA-provided trailers.[Footnote
9] Some received multiple rental assistance payments even after they
moved into free FEMA-provided housing. In some instances, the payments
were made based on potentially fraudulent claims because recipients
typically have to certify to FEMA that they continued to need IHP
rental assistance.
Limitations in FEMA apartment data did not allow us to determine the
magnitude of potentially duplicate rental assistance payment to
individuals housed in rent-free apartments. In contrast to trailer
data, which FEMA maintains in the FRRATS database, we could not
validate accuracy or completeness of apartment data. According to FEMA
officials, the accuracy of apartment data was questionable because it
came from the over 100 state and local authorities who assisted in
delivering housing aid for FEMA. The completeness of data was also at
issue because FEMA did not ask states to collect registration data from
individuals in rent-free apartments until well after the aid was
provided, and therefore individuals who may have left the rent-free
apartments were not included in the data. Table 1 provides illustrative
examples of duplicate rental assistance payments to registrants in FEMA
trailers and rent-free apartments.
Table 1: Examples of Duplicate and Potentially Improper and/or
Fraudulent Housing Assistance Payments Related to FEMA Trailers and
Apartments:
Case: 1;
Amount of duplicate and improper payment: $46,000;
Type/ location of FEMA-provided unit: Apartment/ Plano, TX;
Details:
* 10 residents of an apartment complex applied and received rental
assistance;
* At the same time, FEMA provided rent-free housing at the apartment in
Plano, Texas;
* FEMA records indicated that seven registrants certified to FEMA that
they needed rental assistance, despite the fact that they lived in rent-
free apartments.
Case: 2;
Amount of duplicate and improper payment: 3,600;
Type/ location of FEMA-provided unit: Apartment/ Austin, TX;
Details:
* Registrant received free housing in September 2005 when the
registrant moved into an apartment the city of Austin paid for on
behalf of FEMA;
* FEMA made rental assistance payments in September 2005, February
2006, and May 2006 totaling more than $3,600 at the same time that it
paid $705 per month for the apartment.
Case: 3;
Amount of duplicate and improper payment: 1,700;
Type/ location of FEMA-provided unit: Apartment/ Houston, TX;
Details:
* Registrant received assistance in February and a smaller payment in
May 2006 covering rent from February through May 2006;
* Registrant received a rent-free apartment for the months of February,
April, and May 2006. We were unable to confirm whether the registrant
received rent-free housing in March 2006 due to incomplete data.
Case: 4;
Amount of duplicate and improper payment: 5,400;
Type/ location of FEMA-provided unit: Trailer/ Slidell, LA;
Details:
* Registrant received trailer in mid-March 2006;
* Registrant received two rental assistance payments totaling more than
$5,400 in April and May 2006 for the time the registrant lived in the
trailer.
Case: 5;
Amount of duplicate and improper payment: 5,500;
Type/ location of FEMA-provided unit: Trailer/ Lacombe, LA;
Details:
* Five members of the same household registered and received IHP
assistance using the same damaged address;
* FEMA delivered a trailer to the damaged property in January 2006, but
continued to provide rental assistance to four members of the same
family in January, February, and April 2006;
* One interviewee informed us that the rental receipt that a family
member provided to FEMA was fictitious;
* In addition to the $5,500 in improper duplicative payments for
trailer and rental assistance, the family also received over $6,000 in
potentially improper and/or fraudulent payments by submitting multiple
registrations.
Source: GAO analysis of FEMA's IHP trailer, data and apartment data
from selected cities.
[End of table]
* Case 1 relates to a series of potentially improper and/or fraudulent
IHP rental assistance payments totaling $46,000 made to 10 registrants
already housed in rent-free housing. In this case, FEMA paid nearly
$46,000 in rental assistance to 10 residents of an apartment complex in
Plano, Texas, from September 2005 through June 2006. However, at about
the same time period (October 2005 through March 2006), the city of
Plano made payments totaling more than $74,000 directly to the
apartment, for which it received reimbursements from FEMA. Of the total
amount paid, $46,000 was duplicative and therefore potentially improper
and/or fraudulent. Our review of FEMA records indicated that 7 of the
10 individuals certified to FEMA that they were in need of rental
assistance, even after they had been provided with free housing.
Further, FEMA records showed that 7 provided rental receipts and/or
leases that clearly indicated that the rent was paid by the city of
Plano.
* Case 5 relates to a family of five, all of whom registered for IHP
using the same damaged address. Four registrations were duplicative and
therefore payments on those registrations are potentially improper and/
or fraudulent. Further, despite the fact that FEMA had installed a
trailer on the damaged property in January 2006, FEMA continued to send
rental assistance payments in late January, February, and April 2006
totaling approximately $5,500. Further, a family member informed us
that the family had moved back into the damaged home prior to the
trailer being delivered. Consequently, when the trailer was delivered,
it simply increased the living space for the household, and it was used
by a family member who lived in the house prior to the hurricane.
Further, evidence we gathered during the course of the investigation
indicated that a rental receipt provided to FEMA to justify continued
need for rental assistance was fictitious, and that the family member
who submitted the receipt had never paid rent to the supposed landlord.
In addition to the $5,500 in improper duplicative rental assistance
payments, we found that the family members also received at least
$6,000 in other potentially improper and/or fraudulent IHP payments
arising from the duplicate registrations.
In the course of apartment-related audit and investigative work, we
also identified 14 individuals who improperly received more than
$75,000 in disaster assistance using one apartment building as their
hurricane-damaged address, even though the building had minimal damage
and residents were not forced to evacuate. We provide further details
in appendix II.
Potentially Improper and/or Fraudulent IHP Assistance Payments to
Individuals Claiming Damages from Both Hurricanes:
FEMA made nearly $20 million in duplicate payments to thousands of
individuals who submitted claims for damages to the same primary
residences from both hurricanes Katrina and Rita. With few exceptions,
FEMA officials explained that victims of both disasters should not
receive duplicate benefits for the same necessities and/or damages to
the same property. However, in order to process disaster claims more
quickly, FEMA disabled a system edit check in NEMIS that could have
alerted FEMA officials when the same individual applied for both
disasters using the same identifying information. This system change
resulted in nearly $20 million in duplicate payments being made based
on duplicate registrations for hurricanes Katrina and Rita.
In October 2005, FEMA officials informed us that the small amount of
time between the impact of hurricanes Katrina and Rita had necessitated
the issuance of new policy to prevent duplicate claims for the same
damaged property for both hurricanes. FEMA officials said that, with
few exceptions, the new policy specified that registrants were entitled
to one payment for the same damage and/or need. FEMA explained to us
that this was necessary because most individuals did not have an
opportunity to replace and/or repair damages they incurred from
Hurricane Katrina before Hurricane Rita struck, and because their
displacement was likely caused by both hurricanes. At the time, FEMA
officials informed us that they had available a system edit check in
NEMIS intended to alert FEMA system administrators when the same
individual applies for assistance for both disasters, so that FEMA
personnel could perform a manual review prior to payments being made.
Despite having a control available, we identified through our review of
FEMA's NEMIS that FEMA made payments to about 7,600 individuals who
used the same social security number (SSN) and hurricane-damaged
addresses for their Hurricane Katrina registration that they used for
their Hurricane Rita registration. Subsequently, FEMA officials
informed us that these duplicate payments occurred because FEMA
disabled the system edit check feature. FEMA stated that they
deactivated the system edit check in order to process disaster claims
more quickly, because the manual review process that they had intended
for these duplicate registrations would have held up many eligible
payments. Because of this, FEMA paid nearly $20 million in duplicate
payments to individuals who submitted duplicate registrations using the
same SSNs and damaged addresses. The nearly $20 million includes
duplicate payments for all areas of IHP assistance, including expedited
assistance, rental assistance, housing replacement payments, or a
combination of these. In five of the six cases where we performed
investigative work, the same individual received duplicate payments to
replace the same damaged property. The individuals also failed to
provide FEMA with evidence that they had replaced the items or
conducted repair work after Hurricane Katrina, only to have those items
or that work destroyed again by Hurricane Rita. In all cases, FEMA
performed its first physical inspection of the damaged property after
the passing of both hurricanes.
In addition to other IHP payment types, all six individuals we
investigated also received IHP personal property payments to compensate
them for lost or destroyed household items, twice--once for Hurricane
Katrina and again for Hurricane Rita. In one case, an individual
received multiple payments for more than $27,000--over the $26,200 cap-
-for personal property replacement alone. In total, this individual
received more than $51,800 in IHP assistance, of which at least $25,000
is potentially improper and/or fraudulent. According to FEMA records,
another registrant received two housing replacement payments of $10,500
each, despite the fact that the individual had only one property to
replace.
Potentially Improper and/or Fraudulent Payments to Nonqualified Aliens:
FEMA made at least $3 million dollars of improper and potentially
fraudulent payments to nonqualified aliens who were not eligible for
IHP financial assistance. U.S. law specifically prohibits nonqualified
aliens, such as foreign students and workers on temporary visas, from
receiving financial assistance in case of disaster.[Footnote 10]
However, FEMA did not have implementing controls in place, such as an
agreement in place with other government agencies, such as the Social
Security Administration (SSA), to identify nonqualified aliens and
prevent them from receiving such assistance. Consequently, FEMA paid at
least $3 million to foreign students from four selected universities.
FEMA also made payments to other nonqualified aliens, such as workers
on temporary visas. However, because of a lack of data on other
nonqualified aliens, we were unable determine the magnitude of any such
improper payments. FEMA made such payments even in cases in which FEMA
received information indicating that the alien applying for assistance
was not qualified to receive financial disaster assistance.
IHP Payments to Ineligible International Students:
The destruction caused by hurricanes Katrina and Rita affected
thousands of college students in the fall of 2005. As with other U.S.
citizens and qualified aliens, college students who were able to
demonstrate losses were eligible to receive IHP payments to assist them
in recovering from the disaster. However, U.S. law[Footnote 11] and
FEMA policy specifically prohibits students in the United States on
student visas from receiving IHP assistance. By comparing data provided
by four universities in Louisiana and Texas against registrant
information in NEMIS, we determined that FEMA improperly provided at
least $3 million in financial assistance, in the form of IHP payments,
to more than 500 students in the United States on student visas. This
amount could understate the total payments to ineligible foreign
students because we requested information on international students
from only four of the colleges and universities in the areas affected
by hurricanes Katrina and Rita.
Our interviews of school officials and several of the ineligible
students stated that they received misleading information from FEMA
personnel. Specifically, officials at several universities informed us
that FEMA personnel actively encouraged all students--including
international students--to register for IHP assistance. Despite being
ineligible for financial disaster assistance, many international
students with whom we spoke stated that FEMA officials told them they
were eligible to receive IHP payments and should apply for aid.
We found that FEMA made these payments despite evidence provided to
FEMA by students--specifically their student visas--that indicated that
they were not eligible for cash assistance. Further, consistent with a
finding we reported on previously, FEMA could have identified these
students if it had validated their identities with SSA prior to issuing
IHP payments. In fact, more than 400 of the students reported as
foreign by the four universities were also identified by SSA as non-
U.S. citizens. Table 2 displays some examples of ineligible students
and payments they received.
Table 2: Improper Payments Made to Ineligible International Students:
Case: 1;
Location: Louisiana;
Number of payments/ amount: 6/$25,500;
Type of payments: Expedited assistance, rental assistance,
transportation assistance, and personal property replacement.
Case: 2;
Location: Louisiana;
Number of payments/ amount: 6/$22,500;
Type of payments: Expedited assistance, rental assistance, housing
repair, and personal property replacement.
Case: 3;
Location: Louisiana;
Number of payments/ amount: 3/$17,700;
Type of payments: Rental assistance and personal property replacement.
Case: 4;
Location: Louisiana;
Number of payments/ amount: 4/$16,400;
Type of payments: Expedited assistance, rental assistance, and housing
repair.
Case: 5;
Location: Louisiana;
Number of payments/ amount: 3/$17,000;
Type of payments: Rental assistance and personal property replacement.
Case: 6;
Location: Louisiana;
Number of payments/ amount: 4/$10,900;
Type of payments: Expedited assistance, rental assistance, and
transportation replacement.
Case: 7;
Location: Texas;
Number of payments/ amount: 3/$7,700;
Type of payments: Expedited assistance, rental assistance, and personal
property replacement.
Case: 8;
Location: Louisiana;
Number of payments/ amount: 3/$6,500;
Type of payments: Expedited assistance, rental assistance, and personal
property replacement.
Source: GAO analysis of university data and FEMA IHP data.
[End of table]
* Case 4 concerns a student in New Orleans who received more than
$16,000 in FEMA payments, including payments for expedited assistance,
rental assistance, and personal property replacement. According to
NEMIS data, the student's damaged property was in the hardest-hit area
of the city, and therefore the student's qualification for IHP was
performed through geospatial mapping, while his identity was also
validated through a third-party contractor. The student told us that he
repeatedly informed FEMA personnel that he was an international student
on an F1 visa, and was told each time that he qualified for assistance.
In addition to receiving rental payments from FEMA, the student also
received a trailer in April 2006. The student stated that he received a
letter from FEMA in August 2006 asking for the money back. Further, he
is concerned because a FEMA representative informed him that he was not
immune to legal action for receiving payments he was ineligible for,
despite the fact that he had informed FEMA of his status all along.
* Case 6 involves an international student in New Orleans who received
nearly $11,000 in FEMA payments. The student had a student visa from
Brazil, and stated on his IHP registration that he owned a home in the
New Orleans area. The registrant informed us that he applied via phone,
and that he took care to inform the FEMA personnel that he was an
international student. According to this student, in this and
subsequent conversations with FEMA employees (one of whom was a
supervisor at a relief center he visited), he was repeatedly told that
he qualified for assistance despite his international student status.
Our review of FEMA records confirmed the student's assertion that he
provided FEMA with a copy of his visa. In fact, a copy of his visa was
scanned into NEMIS and had a note next to it stating "Proof of
Qualified Alien," despite the fact that the visa clearly showed he was
an international student and therefore ineligible.
* In case 8, a student in New Orleans at the time of Hurricane Katrina
received three payments totaling $6,500 covering expedited assistance,
rental assistance, and personal property replacement even though he
repeatedly told FEMA representatives that he was an international
student. The student registered for aid via FEMA's Web site using a
valid SSN. The student told us that the SSN was given to him because he
was allowed to work in the United States. He stated that during the
registration process, he did not find any information that made him
aware that he was not eligible for assistance. After registering
online, he stated that he also contacted FEMA call center employees and
made them aware that he was not a U.S. citizen and was in the country
on a student visa, and said he was told by call center employees that
he was eligible. The student informed us that during an inspection
process, the inspector certified that he was a qualified alien even
after he showed the inspector his visa. He subsequently received more
than $2,000 for property replacement based on the inspection. However,
because the student's visa was not scanned into FEMA's system, we could
not corroborate his statement that he repeatedly informed FEMA of his
status.
Payments to Other Nonqualified Aliens:
We also found that weaknesses in FEMA's controls resulted in improper
and/or potentially fraudulent IHP payments being made to other
nonqualified aliens, such as workers in the United States on temporary
work visas. Because of the unavailability of detailed data on other
nonqualified aliens, we were unable to calculate the magnitude of this
problem. However, our investigative work uncovered 25 cases where FEMA
provided improper payments to nonqualified temporary workers.
Specifically, we found that FEMA provided 50 disaster assistance
payments totaling nearly $156,000 to 25 individuals who worked at a
crab processing facility, despite the fact that FEMA records clearly
showed that 11 individuals were in the United States on temporary work
visas, and were therefore ineligible for IHP assistance.[Footnote 12]
These payments included expedited assistance payments of $2,000 and
payments of over $10,000 for replacement of property. Some registrants
received as much as $15,000 in IHP payments. In one instance, the
registrant's file at FEMA contained a copy of a FEMA flier specifically
indicating that aliens in the United States on work visas were not
eligible for IHP. Next to the flier was a copy of the registrant's
temporary work visa. Despite clearly having evidence that he was
ineligible for IHP payments, FEMA paid this registrant more than
$15,000 in IHP assistance.
Although we were not able to validate that all 25 registrants possessed
work visas, we were informed by the registrants' employer that all 25
employees brought their work visa documents with them to FEMA when they
filed the disaster claims. However, data from SSA indicated that only
14 of the 25 employees used valid SSNs on their FEMA
application.[Footnote 13] The remaining 11 individuals provided SSNs to
FEMA that were never issued or belonged to other individuals in order
to get IHP assistance. Payments made to the 11 workers who submitted
fictitious information to FEMA are therefore potentially fraudulent.
Ineffective Detective Controls Point to Need for Better Preventive
Controls:
We previously reported that inadequate preventive controls related to
the IHP application process resulted in an estimated $1 billion of
potentially improper and/or fraudulent payments through February 2006.
As of November 2006, FEMA had detected through its own processes about
$290 million in overpayments and had collected nearly $7 million of the
about $290 million identified as improper. Collection of only $7
million of an estimated $1 billion of potentially improper and/or
fraudulent payments clearly supports the basic point we have previously
made, that fraud prevention is far more effective and less costly than
detection and monitoring.
FEMA's Detection Controls Are Not Effective at Identifying All
Potentially Improper and/or Fraudulent Payments:
In June 2006, we testified that an estimated $1 billion was potentially
improper and/or fraudulent. We derived this estimate from statistical
sampling work we conducted on registrations submitted to FEMA as of mid-
February 2006. We also reported that this estimate potentially
understates the total potentially improper and/or fraudulent payments
because the scope of our statistical sampling work did not include
verifying for insurance or actual property damage, among others things.
As of November 2006, FEMA reported that it had identified about $290
million in overpayments to nearly 60,000 registrants. This overpayment,
which FEMA refers to as recoupments, represents the improper payments
that FEMA reported it had detected and for which it had issued
collection letters. According to FEMA officials, the payments
identified as improper were based on cases referred to the fraud
hotlines and registrations that met specific criteria of being more
likely improper.
Although FEMA had identified about $290 million in overpayments, to
date FEMA had collected nearly $7 million. We did not validate the
potential collection amount. However, the amount that FEMA had
collected on overpayments related to hurricanes Katrina and Rita
supports our prior statements that detective controls, while an
important element of a fraud prevention program, are more costly and
not as effective as preventive controls. As FEMA's historical
experience demonstrated, once a payment had been disbursed because of
weak preventive controls, it is difficult to identify individuals who
received the improper payments, contact those individuals, and collect
on those payments. As discussed previously, when system edit checks
that should occur during the processing of disaster registration are
circumvented, significant improper payments occur that require
extensive data mining and follow-up actions to identify and recover
improper payments.
In addition to the difficulties in collecting overpayments, there are
limitations to the ability of detective controls in identifying all
instances of overpayments. For example, our conversations with several
foreign students indicate that although some have received recoupment
letters, others have not.
FEMA Had Not Issued Recoupment Notice to GAO Registrations:
The limitations of detective controls are demonstrated through GAO's
own experience with the FEMA registration, payment, and recoupment
processes. As we testified previously, GAO submitted a number of
registrations using false identities and fictitious addresses to test
the effectiveness of FEMA's internal controls. We also testified that
we received payments on registrations we submitted. However, to date,
we had not received recoupment notices from FEMA indicating that it had
identified the undercover registrations that GAO submitted. After our
last testimony in June of 2006, we received another payment of more
than $3,200 for rental assistance on a property that did not exist. In
total, we received six payments on five registrations using falsified
information, without receiving any recoupment notices from FEMA.
FEMA Cannot Adequately Track Its Property:
We found weak accountability over FEMA property bought for hurricanes
Katrina and Rita relief efforts using government purchase cards. Our
investigation revealed that DHS overstated the number of items FEMA had
actually located on the day of our July16, 2006, testimony and that
additional items are missing. In total, of the 246 laptops, printers,
flat-bottom boats, and GPS units that we investigated for this
testimony, 85 items are missing and presumed lost or stolen. Moreover,
during the course of our investigation, we found that FEMA did not have
titles to any of the 20 flat-bottom boats it purchased for hurricanes
Katrina and Rita. The fact that FEMA could not locate two of the flat-
bottom boats raises additional concerns about DHS's accountable
property controls.
Missing Items FEMA Purchased for Hurricane Relief:
As part of our July 19, 2006, testimony, we reported that poor controls
over property acquired with DHS purchase cards may have resulted in
lost or misappropriated assets. Specifically, we reported that FEMA
could not account for 143 items purchased in September and October 2005
for Hurricane Katrina and Hurricane Rita relief efforts. On the morning
of the testimony, DHS sent your office an e-mail indicating that 87 of
the 143 items had been found.[Footnote 14] At the hearing, DHS's Chief
Financial Officer reiterated that most of the missing property had been
found, but acknowledged that the items had not yet been physically
verified.
Our investigation revealed that DHS's July 19 e-mail overstated the
number of items FEMA had located. By October 2006, a year after the
property was purchased, we could only account for 79 of the 87 items
that FEMA claimed it had found.[Footnote 15] In addition, of the 143
items that we reported as missing in our July testimony, 48 are still
missing and presumed lost or stolen. Moreover, 37 of items were missing
from an additional 103 new items we investigated. In total, of the 246
items we investigated for this testimony, 85 items (34 percent) are
lost or stolen.[Footnote 16] A November 27 DHS memo supports the
results of this investigation, acknowledging that many items purchased
for hurricane relief efforts are still missing. Figure 1 details the
results of our investigative work as of October 16, 2006.[Footnote 17]
Figure 1: Status of Property as of October 16, 2006:
[See PDF for image]
Source: GAO.
[End of figure]
Title and Location of Flat-Bottom Boats:
In our July 2006 testimony, we also reported on several issues
surrounding the purchase of 20 flat-bottom boats needed for hurricane
relief efforts. Specifically, we found that FEMA paid $208,000--about
twice the retail price--to a broker, who in turn obtained the boats (17
new and 3 used) from several different retailers. Further, although the
broker billed FEMA and was paid for all 20 of the boats, he failed to
pay one retailer that provided 11 of the boats. The retailer
subsequently reported the boats as stolen and did not provide FEMA with
title to the boats. Consequently, in our testimony, we concluded that
FEMA paid for, but did not receive title to, at least 11 of the boats.
However, upon further investigation, we found that FEMA also did not
have title to the remaining 9 boats. Thus, FEMA did not have title to
any of the boats. Specifically, our searches for boat titles found that
no transfer of title and/or registration had taken place on any of the
17 new boats, that is, the serial numbers were "not on file." Of the
remaining 3 used boats, title searches revealed that all 3 remain
registered to their previous owners.
Furthermore, FEMA could not provide us with any information about the
two boats that are still not in its possession as of October 2006.
However, using the serial numbers and manufacturer information on the
make and model, local law enforcement located one of the boats in a
shed at the house of its previous owner. According to the previous
owner, he sold the boat to FEMA and delivered it to the New Orleans
Convention Center in September 2005. In March 2006, he received a call
from the New Orleans Convention Center requesting that he retrieve his
abandoned boat. When he went to retrieve the boat, he found that the
tires on the boat's trailer were flat, the boat's battery had been
removed, and the anchor rope had been cut. This boat is one of the
three still registered under its previous owner's name and no
application for transfer of title has been recorded.
Conclusions:
Ineffective preventive controls for FEMA's IHP have resulted in
substantial fraudulent and improper payments. The additional examples
of potentially fraudulent and improper payments in our testimony today
further show that our estimate of $1 billion in improper and/or
fraudulent payments through February is likely understated. With
respect to property bought with government purchase cards, items not
found 1 year after they were purchased, and over 8 months after we
selected them for investigation, shows that ineffective FEMA property
accountability controls resulted in lost or stolen computers, printers,
and GPS units.
We have provided 25 recommendations to DHS and FEMA to improve
management of IHP and the purchase card program. FEMA and DHS had fully
concurred with 19 recommendations, and substantially or partially
concurred with the remaining 6 recommendations. DHS and FEMA also
reported that they have taken actions, or plan to take actions, to
implement many of our recommendations; however, we have not determined
if these actions adequately address our recommendations. If properly
implemented, our prior recommendations should help to address control
weaknesses identified in this testimony. As with prior work, we will
refer cases we deem to be potentially fraudulent to the Katrina Fraud
Task Force for further investigation.
Madam Chairman and Members of the Committee, this concludes my
statement. Special Agent Ryan and I would be pleased to answer any
questions that you or other Members of the Committee may have at this
time.
Contacts and Acknowledgments:
For further information about this testimony, please contact Gregory D.
Kutz at (202) 512-7455 or kutzg@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this testimony. The individuals who made major contributions to
this testimony were Kord Basnight, Gary Bianchi, Matthew Brown, Norman
Burrell, Jennifer Costello, Thomas Dawson, Dennis Fauber, Christopher
Forys, Alberto Garza, Adam Hatton, Christine Hodakievic, Ryan Holden,
Jason Kelly, John Ledford, Barbara Lewis, Jonathan Meyer, Andrew
McIntosh, Kristen Plungas, John Ryan, Viny Talwar, Tuyet-Quan Thai, and
Matthew Valenta.
[End of section]
Appendix I: Scope and Methodology:
To assess whether the Federal Emergency Management Agency (FEMA)
provided potentially improper and/or fraudulent rental payments to
individuals at the same time it was providing the registrant's free
lodging in FEMA trailers and rent-free (i.e., FEMA-provided)
apartments, we interviewed FEMA officials, reviewed Title 8 of the
United States Code, and reviewed the Stafford Act (Pub. L. 93-288) and
its implementing regulations. We obtained the FEMA Individuals and
Households Program (IHP) databases as of June 2006 and data on
individuals residing in FEMA trailers and rent-free apartments. We
performed data reliability assessment for these databases. In addition,
we validated that the FEMA IHP database was complete and reliable by
comparing the total payment against reports FEMA provided to the
Appropriations Committee on hurricanes Katrina and Rita disbursements.
We then compared FEMA paid housing data to IHP registration data to
determine whether FEMA provided duplicate benefits to the same
registrants. We also conducted field visits to Texas and Louisiana to
view the property and interview individuals who received IHP payments
after they had moved into free housing. While we were able to determine
the number of individuals staying in FEMA trailers who received
duplicate housing assistance, the data related to individuals staying
in FEMA-provided apartments were not sufficiently reliable for us to
perform the same analysis.
To determine whether FEMA made duplicate payments to individuals who
claimed damages for both hurricanes Katrina and Rita using the same
damaged addresses, we compared the social security numbers and damaged
addresses maintained in the FEMA databases for hurricanes Katrina and
Rita, and reviewed National Emergency Management Information System
(NEMIS) data on selected individuals.
To determine whether FEMA made potentially improper payments to
ineligible foreign students, we contacted officials at four Louisiana
and Texas universities and obtained the names and identifying numbers
of enrolled foreign students. We compared the listing of students
provided by the universities to FEMA payment data. We also interviewed
foreign students at those four schools receiving IHP assistance in
order to determine what guidance FEMA provided them on eligibility. We
also conducted investigative work to determine whether FEMA made
improper and potentially fraudulent payments to nonqualified aliens,
such as those in the United States on work visas. Because we did not
receive data on all foreign students and nonqualified aliens in the
United States, we were not able to determine the magnitude of
potentially improper and fraudulent payments to these individuals.
Further, because of data availability issues, our work was not designed
to identify illegal aliens receiving improper payments. We also
received FEMA data on its recoupment program, but did not validate data
on identified overpayments and collections provided to us by FEMA
officials.
To conduct our investigation into the Department of Homeland Security
(DHS) purchase card program, we traveled to New Orleans and Baton
Rouge, Louisiana, and Fort Worth, Texas, in September 2006, to
physically inspect selected property. If we could not physically
inspect the property during our visit, we requested that DHS, FEMA, or
the New Orleans Police Department send us a clear photograph of the
property and its serial number as proof of possession. We ultimately
requested that photographic evidence be sent to us no later than
October 16, 2006, nearly a year after most of the property was
acquired.
To obtain information on the case study detailed in appendix II, we
reviewed data from the U.S. Department of the Treasury's Financial
Management Service, FEMA's NEMIS database, the Texas Department of
Motor Vehicles, the Social Security Administration, and the U.S. Postal
Service, and we conducted field investigations.
We conducted our audit and investigations from June 2006 through
November 2006. We conducted our audit work in accordance with generally
accepted government auditing standards and conducted our investigative
work in accordance with the standards prescribed by the President's
Council on Integrity and Efficiency.
[End of section]
Appendix II: Potentially Improper and/or Fraudulent Rental Assistance
Payments Case Study:
When Hurricane Katrina came ashore in late August 2005, 15 of the 16
total units in a single Gulfport, Mississippi, apartment building were
occupied by tenants. The landlord of this building told us that damage
to the apartment building was minimal. Although one apartment had a
broken window and some personal property damage, the only real effect
of the hurricane was water damage from rain and water seepage from
missing roof tiles. The landlord also said that anyone who left after
Hurricane Katrina did so voluntarily, and that they were not required
(e.g., forced) to leave as a result of damage by the storm.
During a visit to the apartment building, we spoke to the landlord
about an individual we identified as receiving potentially improper
rental assistance payments. Subsequently, we conducted additional data
mining on the apartment address to determine whether other tenants
applied for and received FEMA disaster assistance. We found that 8
tenants of this apartment building received FEMA disaster assistance.
The remaining 7 tenants did not file any disaster assistances claims,
as a result of being displaced because of uninhabitable or inaccessible
living quarters as a result of Hurricane Katrina. In addition, we were
able to confirm with the building landlord that 6 additional
individuals who did not live at the apartment building at the time of
hurricane Katrina also made disaster assistance claims. Table 3 lists
14 individuals who improperly received disaster assistance using the
apartment building as their hurricane-damaged address.
Table 3: Apartment Building Tenants Receiving Disaster Assistance:
Individual: 1;
Date applied: 9-6-2005;
Notes: Lived at apartment during storm;
IHP assistance: $4,358.
Individual: 2;
Date applied: 9-6-2005;
Notes: Never lived at address;
IHP assistance: 3,810.
Individual: 3;
Date applied: 9-7-2005;
Notes: Lived at apartment during storm;
IHP assistance: 26,200.
Individual: 4;
Date applied: 9-9-2005;
Notes: Lived at apartment during storm;
IHP assistance: 772.
Individual: 5;
Date applied: 9-9-2005;
Notes: Lived at apartment during storm;
IHP assistance: 1,725.
Individual: 6;
Date applied: 9-10-2005;
Notes: Lived at apartment during storm;
IHP assistance: 7,160.
Individual: 7;
Date applied: 9-12-2005;
Notes: Moved out before storm;
IHP assistance: 4,358.
Individual: 8;
Date applied: 9-12-2005;
Notes: Lived at apartment during storm;
IHP assistance: 4,358.
Individual: 9;
Date applied: 9-14-2005;
Notes: Lived at apartment during storm;
IHP assistance: 2,000.
Individual: 10;
Date applied: 9-16-2005;
Notes: Never lived at address;
IHP assistance: 2,000.
Individual: 11;
Date applied: 9-19-2005;
Notes: Evicted before storm;
IHP assistance: 8,716.
Individual: 12;
Date applied: 9-21-2005;
Notes: Never lived at address;
IHP assistance: 2,000.
Individual: 13;
Date applied: 9-24-2005;
Notes: Moved out before storm;
IHP assistance: 4,358.
Individual: 14;
Date applied: 9-24-2005;
Notes: Lived at apartment during storm;
IHP assistance: 4,358.
Individual: Total;
Date applied: [Empty];
Notes: [Empty];
IHP assistance: $76,173.
Source: GAO analysis of FEMA data.
[End of table]
FOOTNOTES
[1] GAO, Expedited Assistance for Victims of Hurricanes Katrina and
Rita: FEMA's Control Weaknesses Exposed the Government to Significant
Fraud and Abuse, GAO-06-403T (Washington, D.C.: Feb. 13, 2006).
[2] GAO, Hurricanes Katrina and Rita Disaster Relief: Improper and
Potentially Fraudulent Individual Assistance Payments Estimated to Be
Between $600 Million and $1.4 Billion, GAO-06-844T (Washington, D.C.:
June 14, 2006).
[3] To reach this estimate we followed a probability procedure based on
random selections. Therefore, our sample is only one of a large number
of samples that we might have drawn. Since each sample could have
provided different estimates, we expressed our confidence in the
precision of our particular sample's results as a 95 percent confidence
interval. The 95 percent confidence interval surrounding the estimate
of $1 billion ranges from $600 million to $1.4 billion.
[4] GAO, Purchase Cards: Control Weaknesses Leave DHS Highly Vulnerable
to Fraudulent, Improper, and Abusive Activity, GAO-06-957T (Washington,
D.C.: July 19, 2006). This work was performed jointly with the DHS
Office of Inspector General.
[5] GAO, Expedited Assistance for Victims of Hurricanes Katrina and
Rita: FEMA's Control Weaknesses Exposed the Government to Significant
Fraud and Abuse, GAO-06-655 (Washington, D.C.: June 16, 2006); GAO,
Hurricanes Katrina and Rita: Unprecedented Challenges Exposed the
Individuals and Households Program to Fraud and Abuse; Actions Needed
to Reduce Such Problems in Future, GAO-06-1013 (Washington, D.C.: Sept.
27, 2006); and GAO and DHS Inspector General, Purchase Cards: Control
Weaknesses Leave DHS Highly Vulnerable to Fraudulent, Improper, and
Abusive Activity, GAO-06-1117 (Washington, D.C.: Sept. 28, 2006).
[6] 42 U.S.C. §5121-§5206.
[7] GAO, Individual Disaster Assistance Programs: Framework for Fraud
Prevention, Detection, and Prosecution, GAO-06-954T (Washington, D.C.:
July 12, 2006).
[8] 42 U.S.C. §5155, C.F.R. §206.101.
[9] FEMA officials stated that they did not believe that the initial
rental assistance payment, provided to cover the first few months of
rental housing, should be considered a duplication of benefits if it
was provided to trailer residents. FEMA officials argued that this
amount is designed to assist disaster victims in moving from temporary
emergency housing into a normal apartment or home lease situation. The
United States District Court for the Eastern District of Louisiana
expressed approval when FEMA permitted claimants to reapply for three
months of IHP rental assistance even though they had already received
IHP rental assistance for that period where the claimants certified
that the first IHP rental assistance was used for essential needs other
than lodging and/or that they had not been notified the money could
only be used for lodging. McWaters v. FEMA, Civ. Action. No. 05-5488
(Order and Reasons dated 12/12/05 and 6/16/06). The court also
permitted short term lodging program participants to remain in their
rent free lodging two weeks after receiving their rental assistance or
the disapproval of their claim. Id.
[10] 8 U.S.C. §1611 allows the U.S. government to provide nonfinancial,
in kind emergency disaster relief, including short term shelter to
temporary legal aliens (nonqualified aliens) after a disaster, but
prohibits them from receiving financial assistance.
[11] 8 U.S.C. §1611.
[12] According to the owner of the crab processing facility, the
remaining 14 individuals were also in the United States as temporary
workers, a fact that we were unable to validate. We have referred the
25 individuals to the Katrina Fraud Task Force for further
investigation.
[13] Foreign workers who are admitted legally into the United States
are issued SSNs.
[14] In our testimony, we reported as missing 107 laptop computers, 22
printers, 12 flat-bottom boats, and 2 GPS units. DHS's e-mail claimed
that FEMA found 74 of the 107 missing laptops, all 12 missing flat-
bottom boats, and 1 of the 2 missing GPS units. The e-mail also stated
that FEMA was in the process of locating the missing printers.
[15] Specifically, we found 69 printers and 10 boats.
[16] We were able to locate eight printers because we discovered that
the bar codes FEMA reported as being assigned to the serial numbers on
the printers had actually been affixed to different items.
Consequently, when FEMA staff tried to locate these printers using
their own bar code information, they could not find them--even though
the printers actually were in FEMA's possession.
[17] After October 16, FEMA sent us additional photographs of laptops,
printers, and GPS units. However, because we received this information
after our October 16 deadline, we did not include it as part of our
final property count for the purposes of this testimony.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site.
To have GAO e-mail you a list of newly posted products every afternoon,
go to www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
