Hurricane Katrina

FRAUD COMMITTED BY

HURRICANE KATRINA

VICTIMS

INTRODUCTION

On August 29, 2005, Hurricane Katrina came ashore. The hurricane affected the states of Louisiana, Texas, Alabama, Florida and Mississippi. In its wake, the hurricane left over 1200 dead (Dodd, 2006). It was estimated that there were half a million refugees, over one million without power, and up to $100 billion in damage (Gibbs et al., 2005).

In its attempt to get assistance to the victims quickly, the Federal Emergency Management Agency (FEMA), left itself open to wide spread fraud and abuse (United States Government Accountability Office, 2006). It is estimated that FEMA lost over $1 billion dollars to fraud and errors (Hall, 2006).

Purpose of the Study

The purpose of this study is to look at (1) how the fraud was committed, (2) what were the weaknesses that allowed the fraud, and (3) conclude what guidelines should be put in place to minimize fraud of emergency assistance funds in the future.

Scope of the Study

The study investigates how participants feel about the fraud that was committed by the Katrina victims and if, because of this fraud, the government should continue to supply aid to disaster victims. The study goes on to ask the participants how they feel about continuing to help those who have been caught defrauding the system in the past and also if assistance should be held up long enough to verify claimants before monies are paid out.

Sources and Methods

Research was conducted to gather all the facts presented in this study. In addition, a survey (shown in the appendix) was conducted with various residents of Corpus Christi at the businesses where the team members are employed. The following Segmented 100% Bar Chart shows the breakdown of the demographics of the surveyed participants.

Figure 1

PERCENTAGE BREAKDOWN OF DEMOGRAPHICS

FOR THE SURVEY PARTICIPANTS

Marital Status Sex Age Income Ethnicity

Married 61% Male 31% 18-35 38% Under 20K 10% Caucasian 42%

Single 24% Female 69% 36-50 43% 20K to 29K 15% Asian American 7%

Divorced 14% 51-65 19% 30K to 39K 16% Latin American 45%

Widowed 1% Over 65 0 40K to 49K 9% African American 6%

50K to 59K 18%

60K and Up 32%

Source: Primary

How the Fraud was Committed

The fraud that took place with the assistance funds was due to insufficient guidelines on several levels. These levels include government agencies, dishonest public, and businesses that should have been helping with the support to the victims.

Government Agencies

"Sloppy mistakes and con artists cost FEMA at least $1 billion in questionable disaster-relief claims in the six months after last year's devastating Gulf Coast hurricanes, according to a report by government investigators" (Hall, 2006). Not only did the lack of procedures allow fraudulent activity to take place, but FEMA employees also performed questionable activities. "Rep. Bennie Thompson, D-Miss., the top Democrat on the House Homeland Security Committee, called the fraud and abuse "symptoms of a much larger illness" at FEMA, which also has been criticized for spending hundreds of millions of dollars on trailers that were never used and other waste" (Hall, 2006). Other abuses were also found by government agencies. "Homeland Security Department employees, including Secret Service agents and FEMA workers, wasted hundreds of thousands of dollars on iPods, beer-making equipment, a flat-screen TV, dog booties and clothing after Hurricane Katrina hit the Gulf Coast last fall" (Hall, 2006).

Dishonest Public

Although FEMA holds a lot of the responsibility for the abundance of abuse on the assistance funds, those dishonest persons who took advantage of the system are also to blame. "People fooled FEMA into giving them money by using bogus Social Security numbers of dead people, the Government Accountability Office (GAO) found" (O'Matz, 2006). "In some cases they told FEMA the addresses of damaged properties were post office boxes or vacant lots or they collected multiple payments by slightly altering the spelling of their name or addresses" (O'Matz, 2006).

Businesses Contracted to help Katrina Victims

When disasters such as Hurricane Katrina hit, many businesses bid for contracts with the government to help get the area back to normal. "But the cash also carries the potential for waste, fraud and abuse. Already, some work has been doled out through no-bid contracts to the usual cast of politically connected companies" ("For an Honest Rebuilding Effort," 2005).

The Weaknesses that Led to the Fraud

The weaknesses that led to the fraud were mostly due to the governments attempt to get the needed assistance to the victims quickly with as little hassles as possible. The fraud committed by the victims were due to guidelines not followed for all applications for assistance, insufficient verification of social security numbers, and insufficient verification of disaster addresses.

Different Guidelines for Processing Assistance Applications

"When a victim registered for assistance using the internet, guidelines were in place for verification. FEMA subjected internet registrations to a limited verification process whereby a FEMA contractor used credit and other information to validate the identity of registrants" (United States Government Accountability Office, 2006).