Video: Katrina fraud 'significant'

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updated 2/10/2006 7:37:01 PM ET 2006-02-11T00:37:01

The first investigation of how the Federal Emergency Management Agency (FEMA) did in paying benefits to Hurricane Katrina victims suggests massive fraud and the waste of millions of dollars of millions of taxpayer money.

Even given the scope of the disaster and FEMA’s need to get money to victims quickly, experts say the Government Accountability Office report is damning. The GAO found “significant fraud and abuse.” Investigators studied more than 200 cases, and say in 70 percent of them aid recipients gave bogus Social Security numbers — numbers that belonged to dead people, to someone else or to no one at all.

And when investigators checked out addresses given in these cases, about 40 percent were bogus — vacant lots or nonexistent apartments.

“What surprises me is the scope of the fraud, the magnitude of the fraud,” says John Copenhaver, a former director of FEMA’s regional office in Atlanta.

The report says FEMA basically did nothing to verify the identity or address of hundreds of thousands of aid recipients. One individual managed to collect 18 emergency payments of $2,000 using the same name, 18 different Social Security numbers and 12 bogus addresses.

“What this tells me,” says Sen. Susan Collins, R-Maine, “is that FEMA has no controls and that millions of dollars are being wasted.”

GAO also found that FEMA was in such disarray that almost half of those who received a $2,000 debit card got paid a second time.

None of this shocks evacuee Florencelee Jackson. She fought for months to get the aid she deserved but says she heard others talk of how easy it was to game the system. 

“If you had a name, an address, a Social Security number,” says Jackson, “you got money. I call it free money.”

The GAO also found that some money was not exactly spent for essentials, but at a massage parlor, a casino and at “Condoms to Go.”

Friday night, FEMA defended its performance, saying this was an emergency, many evacuees didn't have proper identification and anyone who defrauded taxpayers will be prosecuted.

Lisa Myers is NBC’s senior investigative correspondent.

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