GAO Audit Finds Huge FEMA Fraud

WASHINGTON -- Problems with the distribution of federal disaster assistance after hurricanes Katrina and Rita caused potential fraud and waste topping $1 billion, an audit by the Government Accountability Office (GAO) found, according to CNN.

Debit cards given to people displaced by the storms were improperly used to buy diamond jewelry, a vacation in the Dominican Republic, fireworks, a $200 bottle of champagne at a Hooters in San Antonio and $300 worth of "Girls Gone Wild" videos, the audit found, according to CNN.

According to the GAO, $1,000 from a FEMA debit card went to a Houston divorce lawyer, $600 was spent in a strip club and $400 was spent on "adult erotica products," all of which auditors concluded were "not necessary to satisfy legitimate disaster needs," CNN reported

The GAO concluded that at least $1 billion in disaster relief payments by the Federal Emergency Management Agency were improper and potentially fraudulent because the recipients provided incomplete or incorrect information when they registered for assistance. And the GAO said the scope of the problem may be even larger, because it only looked at the validity of registration information and not at other forms of potential fraud, CNN reported.

FEMA spokesman Aaron Walker on Tuesday told The Associated Press that the agency's priority in a disaster is "to get help quickly to those in desperate need of our assistance."

"Even as we put victims first, we take very seriously our responsibility to be outstanding stewards of taxpayer dollars, and we are careful to make sure that funds are distributed appropriately," Walker told the AP.

The agency told the AP it has found more than 1,500 cases of potential fraud after the hurricanes and has taken those cases to the Homeland Security inspector general.

Results of the GAO's audit will be presented Wednesday to an investigative panel of the House Homeland Security Committee. FEMA is part of the Department of Homeland Security, CNN reported.

-- NYSSCPA.org News Staff

Posted on 6/14/06