Fraud
March 2, 2007
A Baltimore man who already served prison time for mail fraud has been indicted in a scheme that bilked more than 900 investors, including Hurricane Katrina victims from the Mississippi Gulf Coast, out of $8 million, the U.S. attorney's office said Thursday. David McDowell Robinson, 56, was arrested Thursday, a day after a federal grand jury indicted him on wire and mail fraud charges, reports The Associated Press. The company solicited investments of up to $10,000 and promised returns of up to 30 percent, saying it would provide short-term "gap financing" to homebuyers or to people refinancing their homes to generate the returns. Robinson instead paid investors with funds received by other investors, creating a classic Ponzi scheme, prosecutors said.
December 5, 2006
A Louisiana State Police employee and 11 others have been arrested in connection with the theft of 256 computers purchased by federal authorities after Hurricane Katrina to replace storm-damaged computers at government buildings, hospitals and other facilities, according to The Associated Press. Only 43 of the stolen Dell computers, valued at about $900 each, had been recovered as of Monday morning, police said.
December 4, 2006
The chief and a captain of the Independence (La.) Police Department have been accused of trying to defraud the federal government in connection with work they said the department did in the wake of Hurricane Katrina, the U.S. attorney's office said. The Associated Press reports that Chief Jesse Pingno and Capt. Brian Lamarca were charged Friday with one count each of theft of government property, U.S. Attorney Jim Letten said. Prosecutors allege that Pingno and Lamarca submitted inflated bills for overtime and vehicle use to FEMA, which agreed to reimburse agencies for overtime and equipment use after Katrina hit on Aug. 29, 2005.
October 12, 2006
Mississippi Senator Trent Lott, a Republican and former majority leader, is one of thousands of homeowners on the Gulf Coast who have been fighting with their insurers over payments for damage in Hurricane Katrina. He said he inserted a provision into legislation, signed by President Bush last week, directing the Department of Homeland Security to investigate potential fraud by the insurance industry, reports The New York Times. Lott said he was also drafting legislation to challenge the industry's exemptions from antitrust laws and had asked his staff to investigate the industry's tax rates. Lott's claim for the loss of his $400,000 house in Pascagoula was rejected by State Farm.
A Florida contractor has been returned to Mississippi to face an embezzlement charge stemming from a hurricane restoration project. The Associated Press reports that Don Gene Clemons, 55, of Pensacola, Fla., was jailed Thursday at the Jackson County Adult Detention Center. Clemons allegedly entered into a contract with Jackson County homeowners and was advanced $45,000 to rebuild a home after it was severely damaged by Hurricane Katrina, according to the sheriff's department. On March 29, the homeowners filed a report with the sheriff's department alleging embezzlement.
September 27, 2006
Five Detroit area women, an Indiana man and a Mississippi woman fraudulently obtained nearly $30,000 in relief money intended for Hurricane Katrina victims and used the cash to buy cars, narcotics and other items, the federal government alleged in criminal complaints filed Tuesday. The government alleges that none of them had been directly affected by the Aug. 29, 2005 storm that slammed the Gulf Coast, The Detroit News reports. But each obtained between $2,000 and $12,750 in Federal Emergency Management Agency aid, mainly by falsely claiming they lived in New Orleans when the storm hit, according to complaints filed in U.S. District Court.
September 22, 2006
A south Alabama woman pleaded guilty to bilking the federal government out of $277,377 in Hurricane Katrina disaster relief funds. Lawanda Trena Williams, 32, pleaded guilty to making false claims to the government, wire fraud and aggravated identity theft, reports The Associated Press. Williams claimed Katrina damages in 30 separate cases, used false Social Security numbers and various names and addresses in Alabama, Mississippi, Louisiana and Florida to receive thousands of dollars in aid, according to prosecutors.
September 18, 2006
Maryland State Police say a woman scammed a church, nonprofit organizations and individual donors on Maryland's lower Eastern Shore out of thousands of dollars by making up a story about her children dying during Hurricane Katrina. The Associated Press reports that police said 45-year-old Sandra Sue Suiter was arrested last week on suspicion of fraud. Suiter is accused of trying to solicit, and in some cases receiving, charitable donations after claiming that her 3-year-old twins were killed in Slidell, La., during Katrina, investigators said.
September 8, 2006
State and federal criminal justice officials united in delivering a message Thursday that they will show "zero tolerance" for illegal abuses of Louisiana's Road Home home-rebuilding grant program and that thumbprint identifications will be taken for all applicants to help stem fraud. The Times-Picayune reports that the approach is a collaborative effort among federal and state officials that encourages citizens to report fraud, waste, abuse and mismanagement of money from the federally financed $10 billion pool. State Attorney General Charles Foti said the dishonest practices targeted by the measure include contractors defrauding homeowners or dishonest homeowners filing false claims for assistance.
June 16, 2006
In the six months after Hurricane Katrina, the Federal Emergency Management Agency paid about $26,000 in relief funds to 10 applicants who used the names and Social Security numbers of inmates in the Alabama prison system, according to a top official with the Government Accountability Office. The payments, made under a program that provides post-disaster help to individuals and families, were among millions of dollars spent on claims filed in the names of more than 1,000 state and federal prisoners throughout the Gulf Coast region, according to the Press-Register.
June 14, 2006
The government doled out as much as $1.4 billion in bogus assistance to victims of Hurricanes Katrina and Rita, and was hoodwinked to pay for season football tickets, a tropical vacation and even a divorce lawyer, congressional investigators have found. In the Government Accountability Office's report, prison inmates, a supposed victim who used a New Orleans cemetery for a home address, and a person who spent 70 days at a Hawaiian hotel were able to wrongly get taxpayer help, according to The Associated Press.
May 11, 2006
Federal investigators from several departments, along with state and local officials on the Gulf Coast, will spend years combing through thousands of tips for possible contracting fraud in the aftermath of Hurricane Katrina, witnesses told a House panel Wednesday. Already, more than 260 people — including some government employees — have been charged with a range of crimes because of investigations by the Homeland Security and Justice departments, the FBI and the Secret Service, among others, reports GovExec.com. However, additional personnel, including investigators and prosecutors, will be needed. The task force is headquartered in Baton Rouge, La., and because all departments and agencies — from federal to local levels — share databases, once allegations lead to charges, each investigator is notified to see if additional inquiries are being conducted elsewhere, Alice Fisher, chair of Justice's Hurricane Katrina Fraud Task Force said. Because some contracts will continue for years, the task force's effort will continue indeterminably, as will the need for continued support and personnel.
May 5, 2006
While removing enough debris to cover Britain, contractors working on hurricane recovery have overbilled the government in a $63 billion operation that will get more expensive, according to a House report Thursday. Mileage claims were overstated to get extra fees, debris was mixed improperly to inflate prices and companies sent bills twice for removing the same loads, Democrats on the House Government Reform Committee found. Rep. Henry Waxman, D-Calif., who compiled the report for the hearing on Hurricane Katrina contracting, also complained about layers of subcontractors that drove up costs, The Associated Press reports. A major contractor would take a large cut and pay smaller amounts to the subcontractors, down to the company with the truck hauling debris to the dump.
April 12, 2006
Professional engineer James K. "Ken" Overstreet said his assessments of property damaged by Hurricane Katrina were altered without his permission and, in several cases, his signature was forged on documents insurance companies used to minimize or deny policyholder claims, reports The (Biloxi) Sun Herald. Overstreet worked as a contractor for S&B Infrastructure. In turn, S&B contracted with Rimkus Consulting Group Inc. to supply damage assessments to insurance companies. S&B, he said, parroted orders from Rimkus. "If they could get by with changing the wind to surge, they would do it," said Overstreet, who has talked with the state Attorney General's Office in connection with a Hurricane Katrina insurance-fraud investigation. "If you had affidavits in there where people saw houses blowing down, sometimes they'd just take those out entirely. They took out whole exhibits."
March 27, 2006
In a major shake-up of its relief operations in New Orleans, the American Red Cross dismissed two key supervisors as part of a wide-ranging inquiry into the improper diversion of relief supplies after Hurricane Katrina, a Red Cross official said. The New York Times reports that the supervisors — volunteers, as are 95 percent of Red Cross personnel — were in charge of the organization's kitchens and shelters, which have assisted tens of thousands of the hurricane's victims. The move came a day after the interim president of the Red Cross said the organization was investigating accusations of impropriety, including possible criminal activity.
March 24, 2006
The American Red Cross, the largest recipient of donations after Hurricane Katrina, is investigating wide ranging accusations of impropriety among volunteers after the disaster, The New York Times reports. John F. McGuire, the interim president and chief executive of the Red Cross, and Sen. Charles E. Grassley, the Iowa Republican who is chairman of the Senate Finance Committee, said some of the actions might have been criminal. The accusations include improper diversion of relief supplies, failure to follow required Red Cross procedures in tracking and distributing supplies, and use of felons as volunteers in the disaster area in violation of Red Cross rules.
March 23, 2006
Police in New York arrested a Queens woman yesterday, saying she had falsely claimed to be a victim of Hurricane Katrina and had taken thousands of dollars in aid from state and federal agencies, reports The New York Times. The woman, Donna Fenton, 37, was charged by Brooklyn prosecutors with several counts of welfare fraud and grand larceny, the latest additions to a long record of fraud, arrests and legal disputes stretching from Mississippi to New York. Fenton was the subject of an article in The Times on March 8, more than a month after Brooklyn prosecutors, prompted by suspicious officials at the city's welfare agency, began investigating her.
A Mississippi couple who got conflicting reports from an engineering firm about how their home was destroyed during Hurricane Katrina filed a lawsuit Wednesday accusing State Farm Insurance Co. of manipulating those reports to deny their claim. The Associated Press reports that the lawsuit, which comes as Mississippi's attorney general investigates insurance companies for "fraudulent" handling of post-Katrina claims, is one of many spawned by a fierce debate over whether homes were destroyed by the Aug. 29 hurricane's wind or water.
March 22, 2006
Two men pleaded guilty Tuesday in U.S. District Court in Hattiesburg, Miss., to charges of conspiracy to commit bribery of a federal official for allegedly making a deal to falsify debris removal documents after Hurricane Katrina, The Associated Press reports. Mitchell Glen Kendrix, of Memphis, Tenn., and Paul Darrell Nelson of Lisbon, Maine, could be sentenced each to up to five years in prison and a $250,000 fine. Prosecutors said Kendrix was working as a quality assurance representative for the U.S. Army Corps of Engineers at the Hintonville dump site in Perry County, Miss., when he allegedly accepted payments from Nelson, a debris removal subcontractor.
March 21, 2006
The number of people from the Bakersfield, Calif., who have been indicted in a scheme that bilked thousands of dollars from an American Red Cross fund designated for Hurricane Katrina victims has risen to 61, federal authorities said. The Associated Press reports that eight people were indicted last week in federal court in Fresno on charges of wire fraud and filing fake claims to the Federal Emergency Management Agency. During the aftermath of Katrina, the Red Cross rushed to set up call centers across the country that provided qualifying victims with a personal identification number they then presented to receive aid funds from Western Union, prosecutor Stanley A. Boone said. The Red Cross contacted the FBI after it performed an audit and discovered an unusually high number of claims were being paid out at Western Union outlets in the Bakersfield area, even though not many evacuees had moved there.
March 20, 2006
Acknowledging that it wrongly distributed tens of millions of dollars in hurricane relief last year, the Federal Emergency Management Agency has said that it would try to recoup aid from thousands of individuals or families who fraudulently or otherwise wrongly collected money. The New York Times reports that officials at the agency said it was a routine step taken after any disaster because in the rush to distribute emergency aid, benefits were occasionally paid twice to the same family or to people who were ineligible.
March 14, 2006
Eric Thorson has helped Congress investigate abuse of taxpayers by the Internal Revenue Service and accounting fraud at Enron. Now, the Dayton Business Journal reports that he'll turn his attention to management problems at the Small Business Administration. If confirmed by the Senate, which appears likely, Thorson will become the SBA's inspector general. The first item on his to-do list would be to go to the Gulf Coast and investigate the SBA's disaster loan program. Given the record amount of loans approved for hurricane victims there, "we can expect there to be an unprecedented number of attempts to defraud the program," he says.
See Dayton Business Journal article
March 6, 2006
A Galveston hotel operator was charged with fraudulently billing the government $232,000 to house supposed hurricane evacuees who were actually regular guests, relatives or friends — or who never stayed at the Texas spot at all. The Associated Press reports that federal prosecutors said the indictment against Daniel Yeh, 52, was the first to accuse a hotel operator of defrauding the Federal Emergency Management Agency's public assistance program.
March 3, 2006
A former FEMA worker is among seven more Louisiana residents facing federal charges for alleged disaster-aid fraud. A grand jury on Thursday indicted Keosha N. Martin, 24, a former application assistant who helped disaster victims apply for benefits from FEMA, The (Baton Rouge) Advocate reports. The indictment alleges that Martin twice filed for benefits for herself and once for another unnamed Baton Rouge resident — even though neither had any storm damage from hurricanes Katrina or Rita. The indictments boost the number of people charged with post-hurricane fraud in Baton Rouge’s federal court to 42; at least 225 people have been arrested nationwide, Baton Rouge U.S. Attorney David Dugas said.
March 2, 2006
With thousands of cars and trucks damaged by Hurricane Katrina entering the marketplace, Congress should create a federal database to track such vehicles to prevent them from being sold to unsuspecting consumers, industry officials said Wednesday. The Associated Press reports that auto dealers and consumer groups said varying car title laws across the country have allowed some unscrupulous dealers and wholesalers to sell flood-damaged vehicles that have corroded wiring as well as defective brakes and air bags. Katrina damaged nearly 600,000 vehicles, the groups estimated, and thousands have been refurbished and sold to consumers in recent months.
In the largest food stamp payout in U.S. history, a half-million families received $400 million in benefits. But a state social services agency investigation in Louisiana has shown that some cheated to get that aid, WBRZ-TV in Baton Rouge reports.
February 27, 2006
Hurricane Katrina recovery brought more to the Gulf Coast than volunteers wanting to help storm victims. Law enforcement, bankers and storm victims, themselves, are seeing and sometimes feeling, the sting of a number of scams perpetrated, particularly against senior citizens, The Mississippi Press reports. While scams have been around a long time, the more creative ones surfaced along with the storm and talk of billions of recovery dollars.
February 15, 2006
A Florida man was ordered to pay $10,000 and was banned from using any Katrina-related Web sites in connection with an investigation into unlawful solicitations said to be for the benefit hurricane victims. WKMG-TV in Orlando reports that Florida Attorney General Charlie Crist announced the successful conclusion of a civil lawsuit filed against Robert Moneyhan, who created katrinahelp.com, katrinadonations.com, katrinarelief.com, katrinarelieffund.com and katrinacleanup.com as the storm was poised to hit the Gulf Coast. Crist sued Moneyhan in September, alleging that he failed to register prior to soliciting donations and that the Web sites misrepresented that "100 percent of all donations (would be) used for relief" of storm victims.
February 13, 2006
Thousands of applicants for federal emergency relief money after Hurricanes Katrina and Rita used duplicate or invalid Social Security numbers or bogus addresses, suggesting that the $2.3 billion program was a victim of extensive fraud, a congressional auditor will report today. The New York Times reports that the examination of the Expedited Assistance program determined that the Federal Emergency Management Agency failed to take even the most basic steps to confirm the identifies of about 1.4 million people who sought expedited cash assistance, leaving the program vulnerable to the "significant fraud and abuse," the Government Accountability Office will report.
About 150 criminal defendants have been charged by federal prosecutors since Katrina struck on Aug. 29, a USA TODAY review of court and Justice Department records shows. A Government Accountability Office review set for release today concluded that FEMA's disaster aid program is riddled with fraud, a finding that suggests prosecutors could eventually file thousands of additional cases.
February 7, 2006
Mississippi’s Attorney General Jim Hood has launched an investigation into possible fraud by insurance companies in handling Hurricane Katrina claims, The (Biloxi) Sun Herald reports. An insurance adjuster told investigators that he sent claims in for payment, but the company cut the amounts actually paid. The adjuster has since left the business, Hood said.
February 1, 2006
A Florida man accused of collecting almost $40,000 in donations by falsely claiming he was flying Hurricane Katrina relief flights has pleaded guilty to fraud. The Associated Press reports that Gary S. Kraser, 51, created a Web site on which he told of evacuating people needing immediate medical attention. He provided vivid details, such as witnessing the electrocutions of dogs by downed power lines and saving the life of a 7-month-old baby who needed transplant surgery. He said he even "tipped wings" with Air Force One during one flight.
January 31, 2006
Thousands of vehicles that sat in the murky waters left by hurricanes Katrina and Rita are starting to show up on the used-car market. National Public Radio reports that most states require that flooded cars be labeled as such on the title. But scam artists have found loopholes in the system. They re-register cars in states with looser title laws -- sometimes two or three states -- until the warning that the car was flooded is gone. This fraudulent practice is known as "title washing."
January 30, 2006
Two FEMA disaster assistance employees working in New Orleans have been arrested on federal bribery charges, accused of accepting $10,000 each in exchange for letting a contractor submit inflated reports on the number of meals it was serving at a Hurricane Katrina relief base camp there. The New York Times reports that the charges against Andrew Rose and Loyd Hollman, both of Colorado, came after they told a contractor hired on a $1 million deal to provide meals in Algiers, La., that he could submit falsified invoices for extra meals, a Justice Department statement said.
January 24, 2006
The FBI has uncovered fraud by public officials in the wake of Hurricane Katrina and has created a task force to investigate corruption as federal money pours into the Gulf Coast region, Mississippi's top agent told the Associated Press on Monday. Federal money has been pumped at an unprecedented rate into the Gulf States since Katrina struck on Aug. 29, and Louisiana and Mississippi are set to receive billions in aid.
January 12, 2006
Federal prosecutors rang up another conviction Wednesday in their probe of a scheme to skim hundreds of thousands of dollars from a huge energy-efficiency contract awarded during former New Orleans Mayor Marc Morial's tenure at City Hall. The Times-Picayune reports that under an agreement with prosecutors, Michael Garnett, a subcontractor who did work under the $81 million Johnson Controls Inc. deal, pleaded guilty to misprision of a felony for knowing about crimes related to the scheme but failing to inform authorities, U.S. Attorney Jim Letten said. Garnett is the fifth subcontractor to enter a guilty plea related to the Johnson Controls contract, Letten said.
January 9, 2006
A federal task force has arrested 143 persons nationwide for bribery, extortion and fraudulent claims on hurricane disaster funding, and at least 1,000 investigations are ongoing in New Orleans, The Washington Times reports. Most of the cases involve false claims to aid earmarked for victims of hurricanes Katrina and Rita, but several extortion cases already are in the court system.
December 15, 2005
A Georgia man was arrested Tuesday and charged with wire fraud and false use of Social Security numbers to obtain federal disaster relief money, reports The (Baton Rouge) Advocate. U.S. Attorney David Dugas said Wednesday that Drewey Pierre Whittaker, 44, formerly of Villa Rica, Ga., was arrested in Albany, Ga. According to Dugas, the complaint alleges that 50 disaster unemployment debit cards were mailed to a post office box in Villa Rica, an Atlanta suburb. The debit cards had been issued by the Louisiana Department of Labor as Disaster Unemployment Assistance, a program funded by the Federal Emergency Management Agency.
December 12, 2005
A contractor hired to clean up and dispose of debris from Hurricane Katrina at a Hattiesburg, Miss. mall has been charged with stealing merchandise from a lingerie store and taking a Make-A-Wish Foundation playhouse. The Associated Press reports that Mark Saddis, of East Coast Construction Co., was charged with two counts of felony theft in Knoxville, Tenn., after stolen Victoria's Secret merchandise from Turtle Creek Mall was recovered there, Knoxville police spokesman Darrell DeBusk said.
December 7, 2005
A Red Cross volunteer in Texas and his sister were arrested Tuesday on charges of stealing more than 100 debit cards from the charity to obtain goods fraudulently, a plot that may have cost the Red Cross more than $230,000 donated for Katrina victims. The New York Times reports that the stolen cards were used to buy jewelry, cars, clothing, shoes and other items the two sometimes gave as gifts, authorities said. This is the second major fraud case involving a Red Cross volunteer or contract worker to emerge since Katrina struck.
November 21, 2005
When the Federal Emergency Management Agency and the American Red Cross reached out helping hands after Hurricane Katrina in Jackson, Miss., tens of thousands of people grabbed on, The New York Times reports. But in giving out $62 million in aid, they both overlooked a critical fact: the storm was hardly catastrophic here, 160 miles from the coast. The only damage sustained by most of the nearly 30,000 households receiving aid was spoiled food. Though most of the money appears to have been given out legally, the U.S. Attorney's office is investigating at least 1,000 reports of fraud, including accusations that people lied about damage or where they lived. State and local officials are criticizing FEMA and the Red Cross as doling out money without safeguards, but they also blame their fellow citizens.
Storm Hit Little, but Aid Flowed to Inland City
October 25, 2005
Congressman Bennie G. Thompson, D-Miss., the ranking member of the House Homeland Security Committee, has asked the Department of Homeland Security inspector general to investigate whether an international office-supply company is illegally presenting itself as a small business in order to win federal contracts, according to an online news release posted on Yahoo! Finance. The company, Corporate Express, received a Katrina-related printing services contract worth roughly $800,000 from FEMA.
October 13, 2005
A memo offers the Department of Transportation inspector general's plan to prevent fraud and waste during Katrina's reconstruction work.
DoT Inspector General memorandum
October 12, 2005
Inspectors general from several agencies and officials from the Government Accountability Office told a House subcommittee that they will conduct several audits to prevent fraud and waste in spending on Katrina-related contracts, the Associated Press reports. The announcements came as a number of bills aimed at assuring accountability in the Gulf Coast reconstruction process also are pending in Congress.
Government auditors pledge to investigate Katrina contracts
October 7, 2005
In remarks offered before the FEMA chief's testimony, Sen. Joseph Lieberman said that the agency's no-bid contracts have "created opportunities for fraud, waste and abuse."
Sen. Joseph Lieberman's statement
October 4, 2005
The Washington Post reports that the Office of Management and Budget terminated a new rule that increased the amount a federal employee could charge to government credit cards to $250,000 in expenditures related to Hurricane Katrina relief. Watchdog groups had warned that the rule could lead to fraud and abusive spending.