Fraud Files: For scammers, Superstorm Sandy a chance to make a buck

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Ever since Superstorm Sandy ripped up parts of the East Coast, residents and the government officials trying to help rebuild those hard-hit communities have faced a second wave of damage: from scammers.

Though the government aid has been slow to trickle in over the past year, already the cases of fraud have piled up and officials are warning that as more money gets freed up, more will try to bilk the system.

And that’s on top of the scams that vulnerable homeowners have faced following the Oct. 29, 2012 disaster which claimed 147 lives and caused $65 billion in damage. Authorities cautioned the public to watch out for predators targeting Sandy victims through bogus charities and price gouging at gas stations, as well as home repair and insurance scams.

While no total dollar amount has been attributed to the fraud post-Sandy, there have been numerous documented cases of people trying to pickpocket the government.

“Being a victim does not open the door to defraud the government in times of need,” Acting Monmouth County, N.J., Prosecutor Christopher Gramiccioni told

Gramiccioni’s county was among the hardest hit by the storm, but has also started to go after those trying to exploit the system. The Monmouth County Superstorm Sandy Fraud Task Force, Department of Homeland Security and Gramiccioni’s office have worked together to root out the first round of fraudsters.

In February, the task force launched an investigation into allegations that William Nagle Jr., a 51-year-old Sea Bright, N.J., man, abused FEMA’s Transitional Shelter Assistance program after Sandy flooded his apartment complex.

Authorities say the storm damaged the first floor of the apartment building, knocking out electricity and damaging hot water units. Nagle’s third floor apartment was temporarily uninhabitable for two months. All tenants in the complex were let back into their apartments on Dec. 29, 2012.

But according to the June 17-dated criminal complaint, authorities say Nagle tried to dupe the feds by seeking out 68 nights’ worth of temporary housing valued at $12,114.25 in hotel stays from Jan. 14 to March 23, when he did not need it.

The government charged him with third degree theft by deception, and he faces up to five years in prison if convicted.

So far, Gramiccioni’s office has opened 210 cases against suspected scammers. They’ve made 10 arrests and gotten four indictments.

In April, the state of New Jersey reached a settlement with two gas stations that agreed to collectively pay $46,000 to resolve allegations of price gouging. C.S. George & Sons, Inc. and Shiv Shivam, Inc., were among two of the 24 businesses sued by New Jersey Attorney General Jeffrey Chiesa and the State Division of Consumer Affairs for allegedly inflating the price of goods during Sandy. It was another example of how far people would be willing to go to make a quick buck off the disaster, authorities said.

Gramiccioni told he expects a “second wave” of unscrupulous scammers to surface soon as millions of dollars tied in federal aid, insurance claims and other Sandy-related disaster assistance becomes available.

“We can all pull together in times of crisis to help one another, but that combined effort to aid and assist comes with the understanding that no one will take advantage of the situation,” he said.

In New York, Attorney General Eric Schneiderman announced that 25 service stations in the metro area had reached monetary settlements totaling nearly $170,000 with the state for price gouging motorists after Sandy struck.

Schneiderman, who made the announcement in May, has since gone after people he believes filed fraudulent insurance claims for property damages.

In a case similar to the hotel fraud files of New Jersey, Empire State authorities charged Queens, N.Y., resident Caterina Curatolo for allegedly stealing more than $87,000 in undeserved benefits by falsely claiming her home was damaged in the storm and then spending 269 days at a hotel on the taxpayer’s dime.

On a federal level, cracking down on crooks looking for ways to exploit emergency aid falls on FEMA’s shoulders, under a plan adopted by Congress and signed by President Obama in January.

By June, FEMA – the Federal Emergency Management Agency – announced it had deployed 1,693 people to help with Sandy recovery and had approved more than $1.40 billion in disaster assistance. With so many federal funds flowing freely, the opportunity to scam the government – and taxpayers -- grew.

“While the vast majority of people who have registered and received FEMA assistance have genuine needs, the rush to get millions in disaster assistance to those affected by Superstorm Sandy, sadly, presents opportunities for dishonest people to defraud taxpayers,” FEMA warns on its website. “Fraud increases the cost of recovery after a disaster and gives money to those without disaster-related losses, emergency management officials warn.”

But some lawmakers like Sen. Tom Coburn, R-Okla., have recently questioned the program and the distribution of federal funds entirely.

In an Oct. 25-dated letter to Department of Housing and Urban Development Secretary Shaun Donovan, Coburn questioned the progress of the $60.4 billion aid package Congress passed.

“It’s been nearly 10 months since disaster aid was appropriated, and I am troubled by the fact that so little money has reached the people who need it,” he wrote, pointing specifically to New York and New Jersey.

Coburn said he had a problem with the pace of the recovery and argues that the process of getting federal funds to those who need it isn’t working.

The fiscal hawk, who regularly calls out the federal government for wasting money, says in this case funds are being held up by D.C. red tape. Coburn is pushing for it to be fast-tracked and divvied up to those hardest hit by Sandy who are still -- 365 days later -- waiting for help.