Audits: Millions of dollars in Katrina aid wasted

$2,000 aid called ‘calculated risk’
Offering the $2,000 emergency aid “was a calculated risk taken in a catastrophic situation where many people were forced from their homes, often without any identification or basic necessities,” she said. “It was the right thing to do.”

On the plus side, an initial review by Homeland Security inspector general Richard Skinner found that FEMA’s decision to sign a contract with Carnival Cruise Lines for Hurricane Katrina housing shortly after the Aug. 29 storm “was reasonable under the urgent circumstances.”

The six-month, $236 million deal with Carnival for three full-service cruise ships — which initially sat half empty for several weeks on the Gulf Coast — had been criticized by lawmakers of both parties as a prime example of wasted spending in Hurricane Katrina-related contracts.

However, Skinner said the decision to use cruise ships appeared to be a wise economical choice “in a high-cost area such as New Orleans so long as occupancy remains high.” A review of the contract’s specific terms was continuing.

“While we have found many instances where contractors performed their work efficiently and in good faith, we have also found instances where there were problems,” Skinner said. “In some cases, the government will have little legal recourse to recoup payments to contractors for payments under questionable contracts.”

Theft at Red Cross center
The GAO report said the largest investigation of hurricane-related fraud centered on a Red Cross call center in Bakersfield, Calif., in which some employees schemed to steal the emergency money for themselves and others. Prosecutors said 53 people have been charged in this probe.

The prosecutions and a public education campaign appear to have persuaded some people to return money to which they may not have been entitled, the Justice Department report said.

Hurricane Investigations (pdf format) White House report, Katrina: Lessons learned GAO report on Katrina & Rita fraud and waste GAO report on hurricane MRE sales on eBay GAO report on hurricane charity DHS I.G. Senate testimony on waste DHS I.G. report on armed guard services DHS I.G. report on cruise ship rentals DHS I.G. report on mobile and modular homes

FEMA and the Red Cross reported receiving more than $8 million in returned funds, along with letters confessing to fraud or seeking to arrange installment plans to pay back the money, the report said.

Five dozen Web sites that either asked for money or sought to harvest personal information for identity theft also have been shut down, the report said.

A separate GAO report released Monday also found a handful of instances in which hurricane victims improperly sold free military foodstuffs known as Meals-Ready-to-Eat on eBay. In a one-day “snapshot” investigation, eight of 12 eBay sellers GAO investigated were selling MREs.

“If military MREs are sold to the general public on eBay, then they are clearly not reaching their intended recipients and represent a waste of taxpayer dollars and possible criminal activity,” the audit stated.

MORE FROM KATRINA: THE LONG ROAD BACK

Katrina: The Long Road Back Section Front

Apologetic Nagin visits N.Y. Bush sees rebirth from ‘sadness’ of Katrina Special report: Rebuilding lives Katrina exodus felt far and wide A tangled tale of Katrina survival ‘New Orleans is still crying’ Brian Williams: We were witnesses Developers' past includes fraud Special report: Rising from Ruin Dateline video blogs: Covering Katrina Katrina: The Long Road Back Section Front   Add Katrina: The Long Road Back headlines to your news reader: