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Editor: Mike Bothwell
Profession: Qui Tam Attorney

Category: Qui Tam Legal News

A report is due out today that shows that FEMA has exercised no oversight on the money handed out to Katrina victims.

According to a USA Today article on the pending report, FEMA lost at least $1 billion to con artists and fraudsters. Some of the debit cards for Katrina victims went to professional football season tickets, pornography, Dom Perignon champagne, and "an all-inclusive, one-week Caribbean vacation".

The investigation found that the Federal Emergency Management Agency, harshly criticized for its poor response to Hurricanes Katrina and Rita, lacked basic mechanisms to discourage rampant fraud. FEMA, the accountability office said, needs to immediately put "adequate safeguards" in place to "build the American taxpayers' confidence that federal disaster assistance only goes to those in need."

• Roughly $5.3 million was paid to people who gave only post office boxes as their address. In one case, FEMA sent $2,358 to someone who claimed a damaged house in a New Orleans cemetery; in another, FEMA sent $4,358 to someone who listed his residence as a UPS store.

• Millions more was sent to more than 1,000 people who used names and Social Security numbers of inmates in prisons along the Gulf Coast and across the country. In one case, FEMA sent $4,358 to a Mississippi prisoner who gave officials his correct mailing address -- at the prison where he'd been locked up since 2004.

• FEMA reimbursed people for rent at the same time it was paying for them to stay in a hotel. For example, the agency paid $8,000 for someone to stay in a California hotel for five months and also sent that person $6,700 in rental assistance for the same period.

• One person received 26 FEMA payments totaling $139,000 using 13 different Social Security numbers and 13 addresses, eight of which did not exist.

It is amazing that the executive and judicial branches have made it so hard for qui tam plaintiffs to recover this type of fraud, waste and abuse for the taxpayers when the need is so obvious. Indeed, it is still a bit shocking that my colleagues and I predicted this from the outset of the disaster.

It is a sad state of affairs when skeptical qui tam lawyers watch a natural disaster such as hurricane Katrina, assume that the federal government is going to be ripped off by contractors, and it proves to be true.

The executive branch needs to be more supportive of qui tam actions and the whistleblowers that bring them and the courts need to revisit the Scylla and Charybdis of Rule 9(b) and bizarre public disclosure rulings. Otherwise, as NBC reported the executive branch will continue to lose money to fraud, waste and abuse due to it failure to perform even the most rudimentary checks and provide basic safeguards for taxpayers' money.

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.

"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 False Claims Act is the number one tool for fighting fraud and returning this money to the U.S. coffers. It is time to allow the qui tam whistleblowers to do the job Congress gave them and take the shackles off the FCA.