FEMA squandering millions in Katrina aid, audit says

WASHINGTON — The government is squandering tens of millions of dollars in Hurricane Katrina disaster aid, in some cases doling out housing payments to people living rent-free, investigators said Wednesday.

The Federal Emergency Management Agency has recouped less than 1 percent of the $1 billion that investigators contend it squandered on fraudulent assistance, according to the Government Accountability Office. Its report shows the disaster relief agency's struggles, one year after the deadly storm, to rush aid to those in need while also preventing abuse.

Last week, a federal judge in Washington ordered the Bush administration to resume housing payments for thousands of people displaced by Katrina. The ruling, which FEMA is appealing, cited a convoluted process for applying for help.

"Our work shows for individual assistance payments, at least tens of thousands of individuals took the opportunity to commit fraud," said Gregory Kutz, who works for Congress' investigative arm. He said his previous $1 billion estimate of wasted aid was "likely understated."

"I hope FEMA has learned the costly lesson and will make reforms for future disasters," Kutz said at a Senate hearing.

In its latest report, the GAO found that numerous applicants received duplicate rental aid. In one case, FEMA provided free apartments to 10 people in Plano, Texas, while sending them $46,000 for out-of-pocket housing expenses.

FEMA arranged for a free trailer to a family in Lacombe, La., in January, yet kept providing monthly rental payments in late January, February and April totaling $5,500 — a mistake resulting from poor communication within the agency, according to the report.

In addition, $20 million was wasted on thousands of people who claimed the same property damage from two hurricanes, Katrina and Rita. FEMA paid at least $3 million to more than 500 ineligible foreign students in the stricken Gulf Coast, the report said.

FEMA spokesman Pat Philbin did not challenge the findings. He did say the agency has sought to upgrade the registration process and strengthen its procedures for verifying names and addresses.

"FEMA continues to focus our rebuilding efforts to greatly improve our reliability, accuracy and response in providing aid to disaster victims," Philbin said. "The agency will consider and evaluate any new findings."

Among the audit's findings:

• Even though the GAO found at least $1 billion in disaster aid waste, FEMA has identified about $290 million in improper payments and recouped just $7 million.