updated 6/15/2006 2:42:37 PM ET 2006-06-15T18:42:37

They weren’t Katrina victims, but that didn’t keep them from raking down more than a billion dollars in aid intended for hurricane survivors.

And just how did the thousands of phony applicants spend the $1.4 billion in taxpayer-funded assistance? They paid for divorces, vacations, tickets to pro football games and jewelry; one con-artist even bought a sex-change operation, according to a report issued Wednesday by the Government Accountability Office, the agency that monitors government spending.

The GAO found that applicants used fake names, addresses for damaged property and social security numbers of prison inmates to get aid, The Associated Press reported.

In one case, more than $2,000 went to a man who allegedly listed a cemetery as his home. In another instance, at least $20,000 was given to a Louisiana prisoner who listed a post office box as damaged property. In yet another example, FEMA gave $2,358 in rental assistance to someone and then turned around and paid him another $8,000 to stay 70 nights at a hotel in Hawaii.

The FEMA windfall was intended to help hurricane victims pay for food, clothes, housing and other essentials.

"This is an insult to the victims of Katrina and Rita," said Rep. Michael McCaul (R-Texas). "The ultimate victim is the American taxpayer."

Donna Dannels, FEMA's acting director for recovery, told a House of Representatives Homeland Security subcommittee that the agency has taken steps to reduce the number of improper and fraudulent claims.

She said the agency has a new identity verification system for registrations by telephone and has eliminated the use of debit cards for emergency assistance. For hurricanes Katrina and Rita, FEMA gave victims $2,000 in emergency assistance.

Dannels said that amount will be reduced for future disasters to a more "conservative amount."

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