FEMA Paid $1.5 Billion in False Aid, Report Says

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris.

The government has given out as much as $1.4 billion in fraudulent assistance to the victims of Hurricanes Katrina and Rita. That's what investigators from the Government Accountability Office told lawmakers today on Capitol Hill.

As NPR's Allison Keyes reports, some representatives were up in arms. One called it an obscene squandering of taxpayer dollars.

ALLISON KEYES reporting:

Some lawmakers shook their heads in disbelief as GAO's Managing Director of Forensic Audits and Special Investigations, Gregory Kutz, listed some of the bills FEMA was duped into paying.

Mr. GREGORY KUTZ (General Accounting Office): One individual stayed at a vacation resort in Orlando from September 2005 to November of 2005. The total cost to FEMA was $12,000.

KEYES: Kutz says others hoodwinked the Federal Emergency Management Agency through debit cards meant to help Katrina victims.

Mr. KUTZ: Examples include five New Orleans Saints 2006 season tickets, a $200 bottle of Dom Perignon champagne purchased at Hooters restaurant. And Girls Gone Wild videos.

KEYES: Kutz says undercover government investigators found no meaningful controls set up to detect or prevent fraud. He also testified that some of the problem could have been avoided if FEMA had done what he calls Fraud Prevention 101 before the storms, things like making sure those who apply for help had valid Social Security numbers or that applicants really lived where they claimed to, and that such addresses were in the affected area.

Ms. DONNA DANNELS (Acting Deputy Director of Recovery, FEMA): FEMA's challenge is again to find the appropriate balance of providing timely assistance while taking the necessary precautions to ensure against fraud, waste and abuse.

KEYES: FEMA's Acting Deputy Director of Recovery, Donna Dannels, told lawmakers the agency had a terrible choice to make in the face of chaos.

Ms. DANNELS: We just made the calculated decision that we were going to help as many people as we could, and that we would have to go back and identify those people who we either paid in error or that defrauded us and deal with that.

KEYES: But lawmakers blasted Homeland Security Secretary Michael Chertoff and FEMA head R. David Paulison for not attending. Mississippi Congressman Bennie Thompson noted that Dannels was essentially a scapegoat, but still questioned her closely.

Representative BENNIE THOMPSON (Democrat, Mississippi): Ms. Dannels, I personally think you've been put under the bus by being brought here. We absolutely need, at a minimum, the FEMA director and optimally, we need the Secretary to answer these questions.

KEYES: Dannels tried to explain that FEMA is already working to solve the problem.

Ms. DANNELS: We are taking many steps -

Representative THOMPSON: I recognize you're under the bus, so now, you know, just -

Ms. DANNELS: So now you're going to drive it a little faster, right?

Representative THOMPSON: Yeah. Yeah.

Ms. DANNELS: I understand.

KEYES: New Jersey Representative Bill Pascrell asked Dannels point blank whether the problem is one of leadership, budget or staffing.

Ms. DANNELS: It's now become a fleet of busses. I would say that there are a large number of things that contribute.

Representative BILL PASCRELL (Democrat, New Jersey): Ms. Dannels, which is it?

Ms. DANNELS: Sir, I think that's a very difficult question to ask a career person.

KEYES: Dannels was emphasizing that she doesn't have the same kind of policy role that a political appointee does. She insisted that FEMA was appreciative of the GAO's findings and that it would continue improving its mechanisms to identify and investigate fraud. But many lawmakers called for further hearings, this time into the possible fraud of contractors who dealt with FEMA during the storms.

Allison Keyes, NPR News, Washington.

NORRIS: And you can read the full GAO report at our web site, NPR.org. Transcript provided by NPR, Copyright NPR.