Feds Say FEMA Continues to Waste Millions of Dollars in Disaster Aid

WASHINGTON – After hurricanes Katrina and Rita hit, 10 people in Plano, Texas, got free apartment housing from the Federal Emergency Management Agency and still got $46,000 to cover expenses.

Over 7,000 people claimed damages for both storms on the same property and received $20 million from the federal government.

And more than 500 foreign students at four universities in hurricane-hit areas who were ineligible for government aid saw $3 million dispersed among them.

The cost of FEMA reining in waste, fraud and abuse when responding to deadly storms: Priceless.

Officials from the Government Accountability Office testified before Congress Wednesday that FEMA continues to lose tens of millions of dollars through improper or fraudulent hurricane relief payments.

Click here to read the GAO report.

The agency wasted at least $1 billion through February of this year on such cases and found the agency has no plans for recouping that money. Of the $290 million in improper payments made post-hurricanes, as of last month FEMA got only $7 million back.

Meanwhile, last week a federal judge in Washington ordered the Bush administration to resume housing payments for thousands displaced by Katrina, criticizing FEMA for a convoluted application process. FEMA is appealing that ruling.

"Apparently, FEMA doled out millions of dollars to people who did not deserve it and then denied assistance to many people with potentially legitimate needs without using proper procedures," said Sen. Joe Lieberman, the ranking Democrat on the Senate Committee on Homeland Security and Governmental Affairs. "Today's testimony further confirms the gross inadequacies of FEMA's control system."

The committee held a hearing Wednesday on FEMA actions in the wake of the two deadly hurricanes last year.

Senate committee Chairwoman Susan Collins, R-Maine, said that while the disasters highlighted many flaws in the nation's emergency response and preparedness, "no flaw has been more persistent and more damaging to effective relief for disaster victims and to public confidence in their government — than the rampant fraud, waste, and abuse that have plagued federal relief and recovery programs."

"FEMA has yet to strike a proper balance between expedited assistance and good stewardship of taxpayer funds," Collins added.

Greg Kurtz, managing director of forensic audits and special investigations at the GAO, along with assistant director of that division, John J. Ryan, testified before the Senate panel Wednesday, stressing that the beleaguered agency is still struggling to find ways to distribute aid fast to those who need it, while still preventing abuse.

"Our work shows for individual assistance payments, at least tens of thousands of individuals took the opportunity to commit fraud," said Gregory Kutz, adding that the $1 billion estimate of wasted aid was "likely understated."

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

He later added: "Absent effective fraud prevention, once money is improperly disbursed, the government can only hope to collect pennies on the dollar," Kutz said in criticizing FEMA's "shoot money out the door" approach.

The GAO also found that FEMA couldn't locate 85 of the 246 missing laptops, printers and other items that employees purchased with government-issued credit cards for Katrina disaster work. In one case, FEMA purchased 20 flat-bottom boats, but could not find two of them and lacked the legal titles to any of them.

Millions of dollars went to nonqualified "aliens," according to GAO, including foreign students and temporary workers. At least $3 million was given to foreign students at four storm-affected universities. More than $156,000 was given to 25 people claiming to be foreign workers in this country on temporary visas. FEMA had work visas for some of those workers, and those visas said some were not eligible for financial assistance.

FEMA says that in the 15 months since Katrina, it has made "great strides" in correcting some of the problems. Those improvements include an upgraded registration application that prevents duplicate registrations, and adding identity verification so that registrations for assistance are subjected to the same stringent criteria.

“Following Hurricane Katrina, FEMA acknowledged weaknesses in the processes and systems that resulted in ineligible individuals receiving assistance," FEMA communications director Pat Philbin said in a statement. "Although FEMA has not had an opportunity to review GAO’s latest report, FEMA continues to focus our rebuilding efforts to greatly improve our reliability, accuracy and response in providing aid to disaster victims."

The Associated Press contributed to this report.