New Orleans agency probed in Katrina scam

/ Source: The Associated Press

Federal agents descended Monday on a nonprofit hired by New Orleans to run a home cleanup program after Hurricane Katrina and were photographed carting off boxes, days after a U.S. attorney announced an investigation involving the organization.

Recent local media reports have scrutinized ties between the former director of the New Orleans Affordable Homeownership (NOAH) Corp. and some top-earning contractors and raised questions over whether some of the cleanup work billed to the city was actually performed.

Agents from the FBI, IRS and offices of the inspectors general of the U.S. Department of Housing and Urban Development and the city were at the nonprofit's office Monday morning, FBI spokeswoman Sheila Thorne confirmed. She gave no details, but said agents didn't show up to execute a search warrant.

City unable to document work
Mayor Ray Nagin told the City Council last week that the city had been unable to document work on 90 of the roughly 870 projects NOAH claimed to have done. The city was billed for 46 of those 90 projects and would ask contractors involved to document any work done or provide reimbursement, he said.

On Friday, U.S. Attorney Jim Letten confirmed that an investigation involving the nonprofit was under way. Although he did not discuss the focus of the investigation, he said he hoped people with "relevant information" would come forward.

A newspaper's photo showed agents wheeling boxes from the building where NOAH operated. NOAH was hired by the city to run a program meant to help low-income and elderly victims of Hurricane Katrina.

The attorney for the City Council, Russ Herman, said Friday that several council members had received subpoenas from the U.S. attorney's office to produce documents related to NOAH. On Monday, he added that he believed the full seven-member council had received subpoenas.

Herman said he planned to discuss the situation with council members in an executive session Wednesday.

Mayor 'deeply concerned'
City Attorney Penya Moses-Fields said it would be inappropriate for the city to comment on whether any subpoena from the U.S. attorney's office had been received by the mayor's office, NOAH's board of directors or staff, or any of the council members.

In an Aug. 1 letter to NOAH chairman Ed Shanklin, Nagin said he was "deeply concerned about the allegations." He called for NOAH to cease operations and turn over inventories of property, bank accounts and assets. The board fired the nonprofit's four employees last week.

Messages left at a listing for Ed Shanklin were not returned Monday.

NOAH was created in 1989 and funded mainly by government grants. The city has said it paid about $1.8 million under the house-gutting program, which it says was shut down last year.