FEMA promises to reduce aid fraud

WASHINGTON — Scorned by government accountants for doling out an estimated $1 billion of fraudulent hurricane aid, the Federal Emergency Management Agency promised on Wednesday to verify the identity of disaster victims before giving them money and housing.

No more debit cards for victims, at least not this hurricane season. No more double payments to applicants. Social Security numbers will be verified before the money flows. And somebody will be checking to see if recipients actually live in disaster zones.

At least that's what a FEMA official told skeptical members of a House panel who were shocked anew by the latest report of millions of dollars wasted on prisoners, undamaged property and fraudulent applicants living large on taxpayer dollars.

The agency learned some hard lessons after spreading money to people who didn't deserve it in Florida in 2004 and in Gulf Coast states in 2005, said Donna M. Dannels, FEMA's acting director of recovery. Now it is moving to implement safeguards while preparing for new storms.

At a hearing on Wednesday, members of the House Subcommittee on Investigations pummeled Dannels with questions about how FEMA could have been so easily defrauded last year after disclosures by the South Florida Sun-Sentinel and other warning signs revealed misspending going back to 2004.

Dannels said FEMA was trying new verification systems last year but was simply overwhelmed by the sheer scale of disaster when Hurricanes Katrina and Rita swept across the Gulf Coast. The agency was faced with a vast population of victims, some pulled from rooftops without even shirts on their backs or any form of identification.

"We did, in fact, put in place never-before-used and untested (verification) processes that clearly, because they were untested, were subject to error and fraud," she said.

"Our system was overwhelmed. People could not get through on our 800 phone number. So we just made a calculated decision that we were going to help as many people as we could, and that we would have to go back and identify the people we had either taken careof or who were defrauding us and deal with them."

Since then, the agency hired a contractor to help spot fraudulent applications over the Internet and abandoned the practice of handing out debit cards for emergency spending. New computer systems have been designed to prevent duplicate applications and verify Social Security numbers. FEMA's data contractor is supposed to help verify residential ownership and occupancy.

FEMA has recouped $16.8 million of disaster relief that was improperly awarded, the agency reports.