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Authorities Face “Mountain” Of Katrina Fraud

From a shocked Associated Press:

The 17th Street Canal flood gates are seen in New Orleans, in this July 10, 2006 photo.

Katrina fraud stretches far beyond Gulf

By SHARON COHEN, AP National Writer

An Illinois woman mourns her two young daughters, swept to their deaths in Hurricane Katrina’s floodwaters. It’s a tragic and terrifying story. It’s also a lie.

An Alabama woman applies for disaster aid for hurricane damage. She files 28 claims for addresses in four states. It’s all a sham.

Two California men help stage Internet auctions designed to help Katrina relief organizations. Those, too, are bogus.

More than 18 months after Hurricane Katrina decimated the Gulf Coast, authorities are chipping away at a mountain of fraud cases that, by some estimates, involve thousands of people who bilked the federal government and charities out of hundreds of millions of dollars intended to aid storm victims.

The full scope of Katrina fraud may never be known, but this much is clear: It stretches far beyond the Gulf Coast, like the hurricane evacuees themselves. So far, more than 600 people have been charged in federal cases in 22 states — from Florida to Oregon — and the District of Columbia.

The frauds range in value from a few thousand dollars to more than $700,000. Complaints are still pouring in and several thousand possible cases are in the pipeline — enough work to keep authorities busy for five to eight years, maybe more

The GAO has referred more than 22,000 potential cases of fraud to the Katrina task force, though Dugas says the majority probably will not pan out. In a recent audit, the GAO also concluded FEMA had recovered less than 1 percent of some $1 billion investigators claim was fraudulent aid

A recent Associated Press analysis of government data obtained under the federal Freedom of Information Act suggested the government might not have been cautious enough as it doled out nearly $5.3 billion in aid to storm victims. The analysis found the government made more home grants than the number of homes in one of every five neighborhoods after Katrina…

In Mississippi, for instance, three people, including a Florida contractor, recently pleaded guilty to falsifying records of Katrina debris cleanup and billing the federal government $716,677 for the work.

Charges also have been filed against organized rings in Florida, Texas and Oregon.

The Oregon case offers a textbook example: Ten people have pleaded guilty to applying for disaster checks. In their scheme, a few ringleaders recruited friends, neighbors and relatives, then split the proceeds. They collected about $324,000.

None had any connection to Katrina…

The federal government isn’t confronting this problem alone. The Louisiana attorney general’s office has received more than 2,000 complaints related to contractor fraud and made dozens of arrests. Louisiana State police have made nearly 50 arrests for suspected insurance fraud. And the Red Cross has investigators ferreting out scams.

The Red Cross says 104 people have been charged with cheating the charity in hurricane-related fraud; 86 have been convicted so far, according to Devorah Goldburg, an agency spokeswoman.

About three-quarters of those accused were temporary contract workers at a Red Cross call center in Bakersfield, Calif., she says. Hired to authorize cash payments to storm victims, they allegedly helped family and friends file phony claims.

Some 2,500 other fraud cases representing about $5 million in losses have been referred to law enforcement as potential cases to prosecute, while nearly 21,000 allegations totaling another $34 million are being checked out, Goldburg says…

Besides false claims, types of fraud include extortion, bank larceny, overbilling, public corruption, identity theft and using fictitious Social Security numbers or those of the deceased…

Among task force cases in the last several months:

• In Illinois, Tina Marie Winston claimed she watched as her daughters, 5 and 6, drowned in the raging waters. She also said her New Orleans home had been swamped. Winston has no children and was living hundreds of miles away when Katrina struck. A judge acknowledged Winston’s mental troubles but sentenced her to four years in prison for defrauding FEMA and others scams.

• In California, two Romanian nationals were charged with helping stage bogus Internet auctions that duped victims into thinking their contributions — bids for items such as a motorcycle that was never awarded — would help Katrina relief groups. Losses exceeded $150,000. Leontin Salageanu pleaded guilty; Teodor Manolache is a fugitive.

• In Louisiana, Jesse Pingno, former police chief of Independence, and Brian Lamarca, a former captain, await sentencing after pleading guilty to overbilling FEMA for overtime and vehicle use after Katrina.

• In Alabama, Lawanda Williams was sentenced to 75 months in prison for using false Social Security numbers and different names to claim losses in Mississippi, Alabama, Louisiana and Florida. Her Alabama home was not damaged. Authorities say she collected $277,377 and will have to pay restitution and forfeit items she bought including real estate, a mobile home, three cars and a 50-inch TV.

• In Washington, D.C., Jeffrey Alan Rothschild was sentenced to 8 1/2 years in prison after pleading guilty to trying to acquire more than $100,000 in disaster aid, and admitting other financial crimes. Rothschild created false identities, obtaining some from a legal directory. He was able to get 38 FEMA checks, using mailboxes in Florida, Tennessee, New York and Virginia…

Garratt, the FEMA official, says changes already have been made. An instant verification system that was available online during Katrina has been expanded to include phone calls. FEMA says about 60 percent of Katrina disaster aid requests came by phone — and were a major source of bogus claims

It’s hilarious that the same media that moaned about how the authorities were taking too long because they were verifying the claims are now being accused of being negligent.

A recent Associated Press analysis of government data obtained under the federal Freedom of Information Act suggested the government might not have been cautious enough as it doled out nearly $5.3 billion in aid to storm victims.

And who’s fault was that?

This article was posted by Steve on Sunday, April 1st, 2007. Comments are currently closed.

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