Disaster relief firm's 9/11 fraud not prosecuted

updated 7:22 a.m. ET June 16, 2006

NEW YORK - As firefighters searched for survivors after the Sept. 11 attacks, heat from the World Trade Center’s smoldering ruins burned the soles off their boots. They needed new ones every few hours, and Chris Christopherson made sure they got them.

The disaster specialist was proud to dispatch replacement boots from the Long Island warehouse of a company paid by the government to manage rescue supplies donated by Americans. Then came the moment that crushed Christopherson’s faith.

His employer dispatched trucks to the warehouse and loaded hundreds of thousands of dollars worth of donated bottled water, clothes, tools and generators to be moved to Minnesota in a plot to sell some for profit, according to government records and interviews.

Dan L’Allier said he witnessed 45 tons of the New York loot being unloaded in Minnesota at his company’s headquarters. He and Christopherson complained to a company executive, but were ordered to keep quiet. They persisted, going instead to the FBI.

The two whistleblowers eventually lost their jobs, received death threats and were blackballed in the disaster relief industry. But they remained convinced their sacrifice was worth seeing justice done.

They were wrong.

Once-secret documents obtained by The Associated Press detail how the company, Kieger Enterprises of Lino Lakes, Minn., went unpunished for the Sept. 11 thefts after the government discovered FBI agents and other government officials had stolen artifacts from New York’s ground zero.

In the dark
As a result, most Americans were kept in the dark about a major fraud involving their donated goods even as new requests for charity emerged with disasters like Hurricane Katrina. And Christopherson and L’Allier were left disillusioned.

“I wouldn’t open my mouth again for all the tea in China,” L’Allier said. Added Christopherson, a 34-year-old father of two: “I paid a big price.”

The government ultimately gave the whistleblowers $30,000 each after expenses, their share in a civil settlement against KEI. They say the sum was hardly worth their trouble.

Federal prosecutors eventually charged KEI and some executives with fraud, including overbilling the government in several disasters, but excluded the Sept. 11 thefts. Officially, the government can’t fully explain why.

KEI had worked for years for the government, providing disaster relief services during tornadoes, floods and other catastrophes. It was picked to manage the New York warehouse for the government’s main Sept. 11 relief contractor.

Thomas Heffelfinger, the former U.S. attorney in Minnesota who prosecuted KEI, said he never intended to charge the company for the ground zero theft, and instead referred that part of the case to prosecutors in New York.

“At the heart of the KEI case was financial fraud,” Heffelfinger said. “It was so bad we didn’t need the theft.”

Heather Tasker, a spokeswoman for the U.S. attorney’s office in New York, declined to discuss the KEI case. The whistleblowers, however, said they’ve never been contacted by New York prosecutors.

FBI documents indicate the government, in fact, was preparing to charge KEI with Sept. 11 thefts.

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