More Than $1 Billion in Fraud Exposed McCaul Holds Hearing Exposing Massive Waste, Fraud and Abuse in the Aftermaths of Katrina and Rita

(Washington, D.C.) - Congressman Michael McCaul, Chairman of the Subcommittee on Investigations for the Homeland Security Committee, worked with federal investigators for the last six months to uncover some of the worst waste, fraud and abuse of federal taxpayer funds in U.S. history.

To date, as a result of this investigation more than 7,000 cases have been referred to the Justice Department for prosecution, which will work to deter fraud in the future.

"In all my years as a federal prosecutor and now as a Member of Congress, I have never heard of such criminal behavior as the kind committed in the wakes of Hurricanes Katrina and Rita," stated McCaul. He went on to say, "This is a bad day for the hard working American taxpayer, who has been fleeced by the actions of these criminals and by the lack of FEMA fraud prevention."

On Wednesday, McCaul held a hearing in his subcommittee to expose the Federal Emergency Management Agency’s lack of controls and verification technology as FEMA officials handed out billions of dollars to those who fraudulently applied for assistance after these disasters.

"Basically, if you had access to a phone, that’s all you needed," stated McCaul. "It seems all you had to do was call the FEMA hotline, tell them you needed money and they gave it to you. There was no accountability or verification as to where the money went or who got it."

According to a Government Accountability Office (GAO) report, these lack of controls on the disbursement of federal taxpayer funds led to more than $1 billion that should never have been given out by FEMA. Unfortunately, the worst is possibly waiting to be uncovered as these figures represent fraud estimates for only one portion of the FEMA benefits that were incorrectly distributed.

Some of the money which was supposed to be spent helping people recover from the hurricanes went, instead, to the following:

• $10.8 million to prisoners who called requesting hurricane assistance from jail,
• vacations to Orlando and Hawaii,
• Caribbean cruises,
• adult entertainment,
• people who listed their address as a cemetery,
• people who listed their damaged property address as a post office box,
• a down payment on a home in Georgia.

Congressman McCaul was not satisfied with how the FEMA representative at the hearing answered his questions as to how the agency could allow such criminal behavior to occur with taxpayer money.

"The FEMA representative could not give me or any other Member at the hearing a straight answer," said McCaul.

The Chairman said he hopes to have more hearings on this issue and told members of the media that, "If FEMA doesn’t fix the problems highlighted at my hearings, I’ll fix them with legislation I’m already working on in Congress."

As we enter into another hurricane season, Congressman McCaul has legislation ready that will address the egregious flaws in FEMA’s disaster assistance registration process, and will seek to prevent these mistakes from happening in the future.

"Our job is not just to expose the problems, but make sure those problems don’t occur again," said McCaul.