Video: Massive FEMA fraud

By Chip Reid Correspondent
NBC News
updated 6/13/2006 7:34:38 PM ET 2006-06-13T23:34:38

As requests for emergency assistance poured in after Hurricane Katrina, one applicant listed as his address the Greenwood Cemetery in New Orleans. FEMA promptly issued a check for $2,358 for rental assistance.

That's just one of thousands of examples of alleged fraud and abuse described in a new report by the investigative arm of congress — abuse that cost taxpayers about $1 billion.

“The examples are so egregious,” says Sen. Susan Collins, R-Maine, and chairman of the Homeland Security Committee, “that what they tell us is that FEMA didn't perform even basic checks to safeguard taxpayers' money.”

One person applied for aid 13 times, using 13 bogus addresses, and received a total of $139,000.

The report says FEMA didn't even try to verify the identity of people who applied for aid by phone and says FEMA's fraud controls are “weak or nonexistent.”

More than 2,000 people applied for aid from prison and received about $12 million.

The report also finds that FEMA debit cards, which were supposed to be used for necessities, were used for a week-long Caribbean vacation, a $600 tab at a gentleman's club and a visit to Hooters, which included a $200 bottle of champagne.

Former FEMA official John Copenhaver says in the rush to get money to victims, mistakes are inevitable.

"Any time you have to balance speed of assistance with accuracy, you're going to have problems," Copenhaver says.

In a statement Tuesday, FEMA says it's “already reforming capabilities for how it will serve disaster victims this storm season.”

But Sen. Collins says the fraud is so pervasive she doubts FEMA will be ready for a hurricane season that's already here.

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