Control weaknesses of billions in emergency relief
payments to victims of hurricanes Katrina and Rita left
the government vulnerable to fraud and abuse, the
Government Accountability Office has said following an
audit of FEMA’s Individuals and Households Program.
Facing the need to give assistance quickly and easily and
under control, the agency paid $2,000 in IHP payments to
affected households through its expedited assistance
program, GAO said.
It said as of December 2005, FEMA had paid out $5.4 billion
in IHP payments, with $2.3 billion of that in the form of
EA payments via checks, fund transfers, and some debit cards.
However, GAO identified flaws in the process for registering
victims and making them eligible for EA payments.
Limited automated controls were in place for online registration
to verify applicant identity, and independent verification
was lacking for phone registration, GAO said.
As a test, GAO falsified identities, bogus addresses, and
fabricated disaster stories to register for IHP. It said that
while FEMA’s automated system frequently identified potentially
fraudulent registrations, such as multiple registrations with
identical social security numbers but different addresses, the
manual processes in place to review these registrations did not
prevent EA and other payments from being issued.
Other control weaknesses included the lack of validation of
damaged property addresses for both online and telephone
registrations, according to GAO-06-403T.
It said thousands of registrants used SSNs that were never
issued or belonged to deceased or other individuals, and that
visits to more than 200 claimed damaged properties in Texas
and Louisiana revealed that at least 80 of these properties
were bogus, some of them turning out to be vacant lots or
nonexistent apartments.
FEMA made duplicate EA payments to about 5,000 of the 11,000
debit card recipients, GAO said, adding that it identified
instances where the cards were used to pay for adult entertainment,
bail bond services and to purchase weapons or jewelry.
