NCPA - National Center for Policy Analysis


August 14, 2006

Recent disclosures about the level of corruption and fraud related to the Hurricane Katrina relief efforts show a pattern of dishonesty and "greed" among businesses, government and the general population, says the Pittsburgh Tribune-Review.

Some examples cited by the New York Times illustrate the wide-ranging nature of the corruption:

  • An estimated 1,100 prison inmates across the Gulf Coast collected in excess of $10 million in rental assistance and disaster-relief money; the Federal Emergency Management Agency (FEMA) also distributed millions of tax dollars to people who used names and Social Security numbers belonging to state and federal prisoners.
  • A hotel owner in Sugar Land, Texas, has been charged with submitting $232,000 in invoices for evacuees who allegedly never stayed at his hotel, billing FEMA for purportedly empty rooms or rooms occupied by paying guests or hotel employees.
  • A Department of Labor employee in Louisiana, appropriately named Wayne Lawless, has been charged with handing out nearly 100 falsified disaster unemployment benefit cards in exchange for kickbacks of up to $300 per card.
  • In New Orleans, two FEMA officials have pleaded guilty to pocketing $20,000 in bribes in exchange for inflating the number of meals a contractor was serving to relief workers.

All told, what the above represents is "one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history," reports the Times, "costing taxpayers up to $2 billion."

The $2 billion guesstimate might well prove to be just the proverbial tip of the iceberg and by the time the Katrina accounting is over, it won't be surprising if the fraud and boondoggles hit $5 billion, says the Tribune-Review.  

Source: Ralph R. Reiland, "Greed widens Katrina's sinkhole," Pittsburgh Tribune-Review, August 14, 2006.


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