Accounting problems, fund mismanagement and outright fraud all played a role in how the first $85 billion in Hurricane Katrina disaster aid was spent, according to reports from the Government Accountability Office and the Homeland Security Department.
Two audits found that up to 900,000 of the 2.5 million applicants who received aid under the Federal Emergency Management Agency emergency cash assistance program -- a $2.3 billion program, which included the distribution of $2,000 debit cards to evacuees -- were based on duplicate or invalid Social Security numbers, or fake names and addresses.
The audits were released by the Senate Homeland Security Committee, which is investigating the federal government's preparation for and response to the disaster. While no dollar figure is estimated on the amount of the total abuse, a GAO auditor testified that the amount was certainly in the millions of dollars.
Even when FEMA's automated computer system picked out what might be fraudulent applications, payments were at times still sent, the report said, and several auditors easily received their own $2,000 relief checks, using fake address and fabricated stories. Of that particular program, FEMA spokespeople said that the agency decided to take a "calculated risk" in responding to a catastrophic situation.
While much of the reports centered on the doling out of debit cards, the two audits also questioned the decisions behind a number of other expenses in the days immediately after Katrina -- $438-a-night hotel rooms in New York City; the renting of beachfront condominiums in Panama City, Fla., for $375 a night; and a poorly executed plan to house refugees aboard a trio of Carnival Cruise Lines ships.
Separately, the Justice Department announced that federal prosecutors have filed fraud, theft and other charges against more than 200 people accused of scams related to Gulf Coast hurricanes. Forty people have pleaded guilty so far, according to the report from the Hurricane Katrina Fraud Task Force, and at least 60 fraudulent Web sites have been shut down.The GAO report is available at
