Hurricanes Katrina and Rita Disaster Relief:

Continued Findings of Fraud, Waste, and Abuse

GAO-07-300: Published: Mar 15, 2007. Publicly Released: Mar 15, 2007.

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The Federal Emergency Management Agency (FEMA) continues to respond to hurricanes Katrina and Rita. GAO's previous work identified suspected fraud, waste, and abuse resulting from control weaknesses associated with FEMA's Individuals and Households Program (IHP) and the Department of Homeland Security's (DHS) purchase card program. Congress asked GAO to follow up on this previous work to determine whether potentially improper and/or fraudulent payments continued to be made. GAO testified on the results of our audit and investigative efforts on December 6, 2006. This report summarizes the results of our follow-up work.

In our December 6, 2006, testimony, GAO stated that FEMA made tens of millions of dollars of potentially improper and/or fraudulent payments associated with both hurricanes Katrina and Rita. These payments include $17 million in rental assistance paid to individuals to whom FEMA had already provided free housing through trailers or apartments. In one case, FEMA provided free housing to 10 individuals in apartments in Plano, Texas, while at the same time it sent these individuals $46,000 to cover out-of-pocket housing expenses. In addition, several of these individuals certified to FEMA that they needed rental assistance. FEMA made nearly $20 million in duplicate payments to thousands of individuals who claimed damages to the same property from both hurricanes Katrina and Rita. FEMA also made millions in potentially improper and/or fraudulent payments to nonqualified aliens who were not eligible for IHP. For example, FEMA paid at least $3 million to more than 500 ineligible foreign students at four universities in the affected areas. This amount likely understates the total payments to ineligible foreign students because it does not cover all colleges and universities in the area. FEMA also provided potentially improper and/or fraudulent IHP assistance to other ineligible non-U.S. residents, despite having documentation indicating their ineligibility. Finally, FEMA's difficulties in identifying and collecting improper payments further emphasized the importance of implementing an effective fraud, waste, and abuse prevention system. For example, GAO previously estimated improper and potentially fraudulent payments related to the IHP application process to be $1 billion through February 2006. As of November 2006, FEMA identified about $290 million in overpayments and collected about $7 million. Finally, GAO's work on DHS purchase cards showed continuing problems with property accountability, including items GAO investigated that could not be located 1 year after they were purchased.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To prevent improper payments to nonqualified aliens, the Secretary of Homeland Security should direct the Director of FEMA to develop processes to identify and deny assistance to nonqualified aliens who register for IHP assistance using valid Social Security numbers through data comparisons with agencies that maintain data on legal aliens with Social Security numbers.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response: Federal Emergency Management Agency

    Status: Closed - Implemented

    Comments: Consistent with the intent of our recommendation, in January 2010, FEMA upgraded its computer systems and implemented many automated system controls to prevent assistance from being provided to all non-qualified individuals (including aliens). These automated system controls include querying private sector databases to check that SSNs (1) are valid, (2) and match the registrant's name. FEMA's new automated system controls should prevent assistance payments being issued to non-qualified aliens.

    Recommendation: To prevent improper payments to nonqualified aliens, the Secretary of Homeland Security should direct the Director of FEMA to provide clear guidance and training to FEMA and contractor employees on the specific types of aliens eligible for financial disaster assistance, and identify nonqualified aliens.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response: Federal Emergency Management Agency

    Status: Closed - Implemented

    Comments: In response to this recommendation, FEMA established the IHP Assistance Group to provide clear, consistent and timely guidance regarding IHP policies and case processing procedures, including alien eligibility requirements, to the National Processing Service Center (NPSC) front line workers through a dedicated phone system. In 2009, all NPSC staff involved in manual case processing received training, which will be given on a refresher basis going forward. The establishment of the IHP Assistance Group and NPSC refresher training should aid FEMA employees and contractors identify the specific types of aliens eligible for financial disaster assistance and therefore prevent improper payments.

    Recommendation: With respect to duplicate assistance payments across multiple disasters, the Secretary of Homeland Security should direct the Director of FEMA to implement and/or enable controls to prevent duplicate payments to the same individual from different disasters for the same damage done to the same address.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response: Federal Emergency Management Agency

    Status: Closed - Implemented

    Comments: In January 2010, FEMA implemented a new version of their National Emergency Management Information System (NEMIS). Controls include improvements such as additional warning flags to caseworkers regarding duplicate applications and increased information for caseworkers on potential duplicate applicants. The upgrade to FEMA's information system should help reduce duplicate payments to the same individual from different disasters.

    Recommendation: To prevent rental assistance payments from being provided at the same time that FEMA provides free housing (including trailers, mobile homes, and apartments), the Secretary of Homeland Security should direct the Director of FEMA to provide clear guidance to IHP registrants, including rental assistance registrants, indicating how the payments are to be used.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response: Federal Emergency Management Agency

    Status: Closed - Implemented

    Comments: Consistent with the intent of our recommendation, in July 2008 FEMA issued a booklet titled "Help After a Disaster - Applicant's Guide to the Individuals & Households Program." This booklet is a program guide designed to help IHP applicants understand the program and the application and eligibility process including guidance on how to use benefit payments. Specifically, the guide states that money received from IHP for housing must be used for eligible expenses only as identified by FEMA.

    Recommendation: To prevent rental assistance payments from being provided at the same time that FEMA provides free housing (including trailers, mobile homes, and apartments), the Secretary of Homeland Security should direct the Director of FEMA to develop processes for comparing IHP registrant data with FEMA direct housing assistance data to prevent IHP registrants from receiving payments for rental assistance covering the time they are living in FEMA-provided housing.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response: Federal Emergency Management Agency

    Status: Closed - Implemented

    Comments: In January 2010, FEMA upgraded their National Emergency management Information System (NEMIS) - used by caseworkers when disaster assistance payments are to be awarded - to display all housing assistance an applicant has received, including direct housing assistance. This information allows FEMA caseworkers reviewing requests for assistance to view all housing actions in a single location, improving their ability to identify potential overlapping assistance.

    Recommendation: With respect to property bought with DHS purchase cards, if FEMA cannot locate this property in a reasonable time period, it should work with DHS to reconcile its tracking system data and declare these items lost or stolen.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response: Federal Emergency Management Agency

    Status: Closed - Implemented

    Comments: In February 2008, FEMA completed a reconciliation of its tracking system data for property purchased after Hurricane Katrina with DHS purchase cards and declared missing property items as lost.

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