Fraud, Phishing and Financial Misdeeds: Search results for katrina

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Monday, January 16, 2006

Hurricane Audits

In the wake of Katrina, Rita and Wilma hurricanes, we saw a lot of instances of fraud being committed against the government and charitable organizations.

Apparently, the government (President's Council) is looking into some of the potential fraud and to quote Scott Amey, General Counsel of the Project for Government Oversight (POGO), “Some of the audit findings confirm our worst fears -- agencies were ill-prepared to meet the country’s contracting needs. These audits ensure that contractors did not exploit mistakes that may have been made in the chaotic rush following the hurricanes.”

Here is the report from Pogo: Investigations into Katrina Waste and Fraud Detailed.

In the rash of disasters (especially these and the Tsunami) fraud seem to occur from individuals making false claims to organized phishing scams and fake charity sites being set up.

I wrote a lot of posts regarding fraud at the time of Katrina. In case anyone is interested:

Being Prudent in Donating Money (Katrina)

Katrina Fraud Status

Fraud Relating to Katrina in Full Swing

Status of Fraud in Katrina

Advance Fee Scams with Katrina

Katrina Fraud Far and Wide

Katrina Commission

Identity Theft/Check Fraud in Katrina

FBI Reports Fraudulent Activity on Internet Related to Hurricane ...

With all the evidence of people lacking any morals taking advantage of the hardships these disasters created, it is a prudent move to investigate and (hopefully) prosecute these actions.

It's a rotten thing to take advantage of people's hardships and undermine efforts to help them. They deserve whatever punishment is handed down to them.

Here is POGO's website: Beth Daley - Government Oversight.

Tuesday, April 26, 2005

Headlines Page

Saturday, September 17, 2005

Katrina Fraud Far and Wide

From sea to shining sea, people who lack morals and virtue are taking advantage of the Katrina Disaster. Up until now, when posting on this subject (Fraud in the Wake of Katrina), I have focused on some of the more organized scams. Here are a series of stories from local sources, which show some of the smaller frauds being committed.

Here is a story about a woman in Wilmington, North Carolina, who posed as a victim of Katrina, received money from the Red Cross and was later arrested. The story is courtesy of WECT in Wilmington.

http://www.wect.com/Global/story.asp?S=3835315&nav=2gQc

In another story from WFIE in Indiana, they are catching people posing as victims of Katrina. The article also states that "debit cards meant to help victims of Hurricane Katrina have been used at Victoria's Secret, Circuit City and Hooters."

http://www.14wfie.com/Global/story.asp?S=3854158&nav=3w6o

Here is a story from the LA Times, who is reporting that 25 people in Houston, Texas have been arrested for claiming money they were not entitled to.

http://www.latimes.com/news/nationworld/nation/la-na-fraud17sep17,1,301513.story?coll=la-headlines-nation

Last, but not least (we needed to hit the other shining sea), Sign on San Diego is reporting the arrest of three people in Burbank, California. They were posing as Red Cross Workers and soliciting donations.

http://www.signonsandiego.com/news/state/20050917-0457-ca-redcrossphonies.html

This story doesn't have anything to do with fraud, but to me it shows a total lack of justice, as well as, common decency by the New Orleans Police. A 73 year old grandmother was arrested for allegedly "looting" food from a Deli. She had taken about $65.00 worth of food to survive. The bottom line is that the food was going to spoil and I'm sure the Deli intends to file an insurance claim.

The woman was finally released after some attorneys took her case pro bono (free). Despite their assistance, this 73 year old woman was imprisoned in a correctional facility for sixteen days.

So far as looting, there were people stealing firearms, which were used to commit violent crimes and disrupt the rescue effort. It amazes me that given the problems the day after Katrina, the New Orleans Police were guarding a Deli. This is shameful and they should be held accountable for their actions!

On a lighter note, she would have probably been in real trouble if she had been caught "looting" a Donut shop.

There were also reports of the Police looting in New Orleans. Over the years, there have been numerous reports of corruption and abuses within this department.

Here is an article reporting Police involvement in the looting:

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1001051261

For the story from Yahoo, click on the title of this post.

Sunday, September 04, 2005

Being Prudent in Donating Money (Katrina)

Here is information on how to give directly to organizations involved in the Katrina Relief Effort. Going through a third party can lead to fraud, or at the very least all of your money may not reach it's intended purpose. Third party fund raising organizations often pay people to solicit and take a cut of the proceeds.

The FBI is warning about fraudulent spoofing, phishing and pharming activity already associated with Katrina. For more information, here is a previous post, I did:

http://fraudwar.blogspot.com/2005/09/fbi-reports-fraudulent-activity-on.html

If you give on line, which is a great way, please ensure that the URL (http://) is correct. A common ploy in fraud is to alter the URL and impersonate a recognized and trusted name.

Also, please note, I have a donation box on my blog. This is to support the site and is sometimes used to help victims, who solicit my assistance. Please do not donate any money for Katrina here.

Here is a list, along with proper URL's and some telephone numbers, of organizations that are directly involved in the Katrina Relief Effort.

The United Way, http://national.unitedway.org/, 800 272-4630.

American Red Cross, http://www.redcross.org/, 800-HELP-NOW

Salvation Army, www.salvationarmyusa.org, 800-SAL-ARMY

Network for Good, www.networkforgood.org.

Habitat for Humanity, http://www.habitat.org/, 800-HABITAT.

Samaritan’s Purse, http://www.samaritanspurse.org/, 800 665-2843.

Save the Children, http://www.savethechildren.org/, 800 728-3843.

Humane Society of America, http://www.hsus.org/, 888 259-5431.

Feed the Children, http://www.feedthechildren.org/, 800-525-7575.

America’s Second Harvest, http://www.secondharvest.org/, 800 771-2303.

Craig's List is also doing an outstanding job in getting the information out to help the victims. Here is a link with more resources and recognized charities:

http://neworleans.craigslist.org/about/help/katrina_aid.html

Here are three resources, one can use to check the validity of any organization soliciting donations for Katrina.

Better Business Bureau Wise Giving Alliance, http://www.charitynavigator.org/.

Charity Navigator, http://www.charitywatch.org/.

American Institute for Philanthropy, http://www.guidestar.org/.

Also, here is another post I did with information from the FTC (Federal Trade Commission) on how to give wisely and ensure the money get's to the right place.

http://fraudwar.blogspot.com/2005/09/ensuring-katrina-victims-receive-your.html

As always, if you suspect fraud, please report it. Here is a site linked to the FBI, where you can do so: http://www.ic3.gov/.

Tuesday, July 17, 2007

A look into labor abuses in the aftermath of Hurricane Katrina

Photo courtesy of Ruffit at Flickr

It never ceases to amaze me that we keep seeing additional allegations of abuse, fraud and waste come to light as a result of the Katrina hurricane, and it's aftermath.

Brian Beutler of the Media Consortium (courtesy of AlterNet) wrote a pretty telling article of the abuses dealt to laborers, who went to New Orleans to assist in the reconstruction/clean-up effort.

Brian reports:

In the two years since the disaster, there have been thousands of testimonials -- issued to both government officials and private advocates -- about a wide taxonomy of abuses.The most frequent complaint workers cite is withheld wages, but almost as numerous are accusations of employee intimidation, toxic and hazardous working conditions, immigrant abuse, trafficking, exploitation and monetary extortion.

Many workers, who went to New Orleans were paid a small percentage of what they were promised:

On December 30, 2005, Wilson received $865 in pay for the 94 hours of work he did from November 20, through Dec 7. For a similar stretch between January 5 and January 18, he was paid only $206.10. In each case, he should have been paid about $1,500.

According to the article, the Bush Administration suspended affirmative action and documentation requirements for immigrant workers. They also removed the requirement to pay "prevailing wages."

The end result of this was that visiting American citizens and local residents were underbid by foreign workers, who probably weren't legal. Of course, no one can say this for sure because it wasn't checked out (very well) at the time. However if this wasn't the case why did Senator Mary Landrieu (Democrat LA)request that ICE agents be dispatched to look into the problem?

This resulted in even more people doing a dirty job not getting paid:

The result was astounding. On payday, subcontractors, faced with undocumented workers seeking cash, often called ICE to report their own operations, causing frightened workers to either scatter or face deportation to their home countries without pay.

Likewise, employee recruiters, dispatched by subcontractors to foreign countries, would offer often-destitute men and women the promise of good work and fair wages at any number of reconstruction jobs in New Orleans.

Congressman Dennis Kucinich held hearings into this to determine, whether or not the Department of Labor (DOL), did their job in controlling some of this abuse.

Many believe, they did not.

For those, who like me continue to be fascinated by the social issues in the Katrina disaster, Brian's full article can be read, here.

My personal opinion is that they need to be studied, carefully. A lot of citizens (and apparently non citizens) suffered, not because of a lack of resources, but because of what appears to be a "few greedy people."

I've written quite a bit about Katrina (in my own personal study of what went wrong). My previous posts can be read, here.

Another great place to learn more about the social issues surrounding Katrina is Margaret Saizan's Beyond Katrina.

Tuesday, December 12, 2006

Will We Ever Discover the True Losses in the Katrina Disaster?

The Government Accountability Office (GAO) has issued another report stating that the fraud losses in Katrina and Rita are a lot higher than previously disclosed to the public.

The report states:

Almost $20 million in double payments was paid to people claiming damage to the same property in both hurricanes (Katrina and Rita).
Almost $17 million in improper or fraudulent "rental assistance" payments given to people already receiving free housing.
500 foreign students received $3 million in aid.
$156,000 was given to foreign workers on temporary visas.

Sadly enough, the report indicates that FEMA disabled a system (edit check in NEMIS) that would have caught people using duplicate information (social security numbers) to make claims in both hurricanes. In five of the six cases examined, the claimants didn't even have to provide proof that they had conducted repairs after receiving money for the first claim.

I have no personal experience with "edit check in NEMIS," but computers run pretty fast in today's world, and it doesn't make sense to me that an entire system designed to detect fraud was disabled?

Didn't we have enough personnel to do a manual check when duplicate social security numbers were noted? And even if this were so - why didn't FEMA take action (themselves) to identify the issues before the GAO investigated?

The use of other people's social security numbers is nothing new and probably could have been anticipated, fairly easily.

There is also a lot of missing equipment. The report shows that 34 percent of the property purchased to aid efforts has either been lost, or stolen. In the case of 2o flat bottom boats purchased - only two remain missing - however twice the retail price was paid to a vendor, who also failed to pay for 11 of the boats he sold to the government.

Even scarier, the report indicates that FEMA overstated the amount of found property reported in July hearings to Congress. This was based on an e-mail sent by DHS (Department of Homeland Security) on the eve of the hearings.

FEMA's estimate of the monetary impact of fraud in Katrina was $290 million, however if one is to believe the GAO report, the real losses surpass $1 billion.

With the stories that surfaced about prison inmates making claims and stolen information (social security numbers) being used in claims for addresses that were vacant lots - it's entirely possible that there is additional fraud that hasn't, or never will be discovered.

There were also a lot of stories of charities being defrauded and even fake charities being set-up. The GAO report only addresses the fraud losses incurred by the government.

GAO report, here.

Report Fraud, Waste and Abuse to the GAO, here.

FraudNET (Report Fraud, Waste and Abuse)

One might come to the conclusion that we wasted a lot of money on Katrina, but this is far from being true. In fact, a lot of people are still suffering as a result of these disasters, and the truth is that the money could have been used for better purposes.

I plan to explore this more in detail in future posts, but for now, I'll pass on a site that is devoted to the real victims in these disasters:

Beyond Katrina: The Voice of Hurricane & Disaster Recovery

Monday, September 12, 2005

Katrina Fraud Status

As the Gulf Coast starts to make progress in creating a sense of normalcy, it is apparent that the cyberscum of the world are still doing their very best to profit from the misery of others. With all the reports of fraud out there, I decided to put together a summary of what I see going on.

According to an article from SAP INFO, Christopher Faulkner of CI Host revealed that more than 1,000 domain names have been registered for Katrina and that a lot of them are either being used to set up malicious websites, or being auctioned off for as much as $50,000.00.

I wonder if any of the auction proceeds will go to the victims? I would like think so, but it's probably not very likely.

Here are some other interesting items that Faulkner says are going on:

"One particular type of spam, called fee-based spam, details information about private organizations claiming to have "rescue teams" based in Alabama, Mississippi and Louisiana. For a fee that ranges from $500 to $1,000, they would deploy their people on-site to locate lost loved ones, Faulkner said. "But they don't do anything, but take the money and run."

"Internet service providers and Web-hosting companies have taken down some of the malicious Web sites, including hurricanekatrinapix.com, hurricanekatrinarelief.com and katrinadamage.com."

"CI Host has been conducting spam filter testing for Katrina-related spam e-mails and phishing activities for its 220,000-hosted Web sites. The company has been blocking between 8,000 and 10,000 Katrina-related spam or phishing e-mails per hour."

In another story from the AP, three people in a shelter in Laurel, Mississippi were caught posing as FEMA personnel. While posing as FEMA personnel, they were gathering people's personal information to use in identity theft. According to Sheriff (Larry Dykes), they will be held without bail because they are considered a flight risk. Sounds like a Sheriff, I would vote for!

Here is another updated statistic. On a post, I did a few days ago the FBI was saying there were 2300 sites related to Katrina. They are now saying there are 4,000 sites. In both estimates, they stated that 60 percent of them are coming from overseas, which is a sign that they could be fraudulent.

Please note that earlier in this post, Christopher Faulkner stated 1,000 domain names had been registered. With the FBI's report that there are now 4,000 sites, I'm not sure if Faulkner was referring to domain names registered in the United States, while the FBI was saying the number of worldwide sites? In the end, it's possible that this activity is so growing so rapidly that we are seeing conflicting reports and statistics. It will be interesting to see the final numbers.

Before I sign off, it was announced by the Red Cross (Mary Elcano, General Counsel) that they have hired a security company to monitor fraud activity related to Katrina. Any fraud they discover will be turned over to the Justice Department and the Red Cross might also seek civil damages (restitution) against those who try to wrongfully profit from this disaster.

The story from SAP INFO can be viewed by clicking on the title of this post.

Here is another post I did on people stealing FEMA uniforms and identification to commit robberies in New Orleans: http://fraudwar.blogspot.com/2005/09/robbers-posing-as-fema-personnel.html

Saturday, September 10, 2005

Fraud Relating to Katrina in Full Swing

As predicted, the cyberscum element is jumping on the fraud band wagon in the wake of the Katrina disaster. According to Louis Reigel (FBI assistant director Cybercrimes), "There were roughly 2,300 Katrina-related sites by midday Thursday. The number had more than doubled just since Tuesday. New sites are popping up faster than we can pound them down. The number of sites and the money being donated already exceeds what the FBI saw following the tsunami."

Before I move on with this post, you can help the FBI deal with cyberscum by reporting suspicious activity on line at the Internet Fraud Complaint Center. Although, you are unlikely to get a reply, or find out what happens due to the confidential nature of criminal investigations, the information can be valuable intelligence to the authorities.

In fact, U.S. Attorney General Alberto R. Gonzales has announced that they will form the "Hurricane Katrina Fraud Task Force." The task force will be run by Assistant Attorney General Alice Fisher and will include resources several agencies including the Postal Inspectors, FBI and Federal Trade Commission.

Of the roughly 2300 suspected sites, the FBI has only been able to look at 800 of them. The majority of them (60 percent) are international. Please note that not all of these are fraud related, but many will probably prove to be scam sites.

Here is a story that hit the press about someone, who was already caught. Matthew Schmeider of Pittsburgh, Pennsylvania sent out thousands of SPAM e-mails from the phony international aid group dubbed "Mercy Corps." When he was caught, he admitted he was going to use some of the money himself, but of course, he also intended to send some of it to legitimate charities. Schmeider had only received $150.00 in donations when he was confronted by the authorities.

As I have said in previous posts, the best way to a donation is directly to charities that are recognized as legitimate. There are third party entities that solicit, but if you give to them, they take a cut of the proceeds for their efforts. There is a previous post I did, which has a lot of resources on legitimate charities and how to check out if any charity is legitimate: http://fraudwar.blogspot.com/2005/09/being-prudent-in-donating-money.html.

On the State level, Florida and Missouri are already taking action. The Florida Attorney General (Charlie Crist) filed a civil lawsuit against a Robert Moneyhan for allegedly creating several Katrina related sites, which were not legitimate charitable operations. Missouri's Attorney General (Jay Nixon) has also filed against a man in St. Louis (Frank Weltner) for similar reasons.

The level of activity being reported is astronomical and seems to be everything from Spam marketing scams for sexual aids to phishing and pharming activity related to financial and identity theft. Security experts are also warning that "cybernasties" (trojans, malware, spyware etc.) are being embedded in pictures of the disaster sent out on Spam e-mails. Best bet is to not open anything with pictures and never download anything that is suspicious.

Here is a link to a page from Scambusters (which is highly recommended) on a lot of the Katrina Scams: http://www.scambusters.org/hurricanekatrinascams.html.

Saturday, September 03, 2005

FBI Reports Fraudulent Activity on Internet Related to Hurricane Katrina

On September 1st, the FBI issued a warning after noting a lot of sites soliciting for charitable donations for the victims of Hurricane Katrina. It is expected that we will see a lot of SPAM e-mails regarding this subject popping up in our inboxes also.

Some of the websites and SPAM could lead to phishing and pharming activity related to identity theft. Of course, they might also lead to charity fraud, or even a combination of both activities.

Here are their recommendations:

• Do not respond to any unsolicited (SPAM) incoming e-mails.
• To ensure contributions to U.S. based non-profit organizations are used for intended purposes, go directly to recognized charities and aid organization’s websites, as opposed to following a link to another site.
• Attempt to verify the legitimacy of non-profit organizations by utilizing various Internet-based resources which may assist in confirming the existence of the organization, as well as its non-profit status.
• Be leery of e-mails claiming to show pictures of the disaster areas in attached files, as the files may contain viruses. Only open attachments from known senders.

If you note any of this activity, please report it at www.IC3.gov.

The victims of Katrina deserve and need our help. It's unfortunate that this disaster has brought out the bad in many people. It is up to all of us to ensure that every dollar donated helps the poor souls, who have suffered a terrible disaster in their lives.

Here is another FBI Alert on the London Bombings. As was done after the Tsumani disaster, the Advance Fee (419) scammers were soliciting for people to claim money for a person who perished in the bombings.

Here is a link to the alert:

http://www.ifccfbi.gov/strategy/wn050822.asp.

Unfortunately, if they haven't started already, I'm sure the Advance Fee (419) scammers will develop a scam for Katrina also.

To view the FBI Alert on Katrina, click on the title of this post.

Monday, September 05, 2005

Katrina Commission

This weekend, I've been blogging for Katrina. Since this blog is primarily about fraud, I've tried to cover issues relevant to the subject matter I write about. Since most of the fraud is yet to come, I'm stepping outside my normal subject matter for the time being.

Please note until the people are safe, we should be focused on that task. There is nothing more important than people. Even before we are very far in this crisis (which took a large public outcry to speed up government resources) when history is written, many opportunities will be revealed.

As a former Marine, I kept expecting to see the Marines from Camp Lejeune, as well as, the 82nd Airborne from Fort Bragg dispatched to deal with this crisis. Having been stationed at Camp Lejeune and having done joint exercises with the 82nd Airborne, I am acutely aware that they probably could have had their lead elements in place within hours.

Several days into it, after a lot of public outcry, our Commander in Chief dispatched these elements (along with sister elements from Kentucky and California) and guess what? Their lead elements were in place within a few hours. If we were having problems mobilizing the National Guard, which isn't intended to be a "force in readiness", other options should have been considered.

Perhaps fewer would have been murdered and raped if they knew they were going to face an armed Soldier, or Marine? After all, the individuals, who took advantage of the confusion and mayhem, were not the heroes and in fact, I would deem them low-life cowards. There is no doubt that the people in certain areas in the aftermath of Katrina faced situations that parallel any combat situation, we have faced in recent history.

This isn't meant to downplay the brave men and women in the thick of the crisis, who tried to do their best in spite of the overwhelming odds. They performed in an admirable manner and deserve the respect and thanks of the nation for their efforts. I would vote to recognize the Coast Guard, who are some of the real heroes who came out of this. They set all time records, worked without rest and saved a lot of people in spite of odds that were against them. There are other people that need recognition also. This includes the doctors, nurses, fire fighters, police, private citizens and other emergency personnel that didn't evacuate to save human lives.

There were a lot of good people on the ground and they had to been wondering when their relief would arrive.

We cannot change history and we must remain focused on dealing with the human perspective of this crisis, but at a later date, we will need to learn from our mistakes. Perhaps, the politically correct society, where every job is segmented and restricted is to blame? There are many saying that there were too many chiefs, with differing views of their responsibility and no one wanted to step on each other's toes? This is a sad commentary on our society today and at some point, we must deal with it. In any crisis, the keywords must be improvisation and adaptation if we are to emerge in a good light.

Some are also saying that our lack of response was due to racism. While possible, I would offer a opinion that it in the end, it probably had more to do with their financial status, or that they were poor. Sadly, money talks in our society and it can do wonders for those who have it, no matter what race they are. Whether it was racisim, money or a combination of the two, this is sonething that most Americans do not tolerate and isn't in the nature of our collective being.

About four hours ago, Senator Hillary Clinton called for a Katrina Commission. I would call for all our politicians to join her in a bipartisan effort to examine and evaluate what went wrong in this crisis. In the world that we live in today, our very survival might depend on it. Now is the time to forget our differences and focus on our similarities, which is that we are all Americans and part of what many consider the greatest society today.

After all, might the established protocols (based on bickering and pettiness) have caused the failures exposed in the Katrina crisis? Bashing each other (depending on which end of the political area we are on) will solve nothing and will only lead to further breakdowns, which will prevent us from learning from our mistakes.

Tuesday, March 13, 2007

Civil Servants under scrutiny for credit card abuses

Senator Grassley (Iowa) is introducing legislation to counter what he calls massive abuse with government credit cards.

He is quoted on his site as saying:

Every time we open these GAO reports we find more outrageous spending. Internet gambling and a Yankees baseball game don’t seem to be appropriate uses of tax payer money. The federal agencies don’t seem to be stepping up, so our legislation helps put some common sense controls on these credit cards.

The press release covers this in more detail:

Grassley said the legislation would also stipulate that cases of fraud be referred to the U.S. Attorney for prosecution and employees that egregiously misuse or commit fraud with a government charge card be fired. The bill would also increase oversight by providing that each agency Inspector General periodically conduct risk assessments and audits to identify fraud and improper use of credit cards.

Following the devastation of Hurricane Katrina, Grassley was concerned that provision raising the limit for emergency "micro-purchases" on government credit cards from $15,000 to $250,000 was ripe for waste, fraud and abuse and successfully fought to bring the limit back down. At the time, Grassley said that wasting taxpayer money does not help the victims of Hurricane Katrina.

Does this mean that government employees can commit fraud and waste taxpayer money without being fired, or prosecuted? If this happened in the private sector, the culprits would likely be fired and (possibly) prosecuted.

The sad thing is that Senator Grassley has attempted to introduce this legislation in the last two Congresses and it was never acted upon.

So far wasted taxpayer money not helping the Katrina victims, the GAO confirmed Senator Grassley's prediction. Here is a previous post on that matter:

More Allegations of Money Wasted in Katrina

Senator Grassley's press release on this matter, here.

Of note, Senators Norm Coleman of Minn., Joe Lieberman of Connecticut, and Susan Collins of Maine are supporting Senator Grassley in this legislation. Congressman Joe Wilson has filed similar legislation in the House of Representatives on government credit card abuse.

Civil servants should be held to at least the same standard as the people they are serving!

Sunday, February 11, 2007

Blaming FEMA for the fraud in Katrina isn't going to solve the problem

There is no doubt about it - the Katrina and Rita debacle - was NOT a shining moment in our nation's history. Fifteen months later as New Orleans prepares to celebrate "Fat Tuesday" (Mardi Gras), more allegations of fraud and mismanagement are coming to light.

Two reporters (Michelle Roberts and Frank Bass) of the AP wrote an interesting article about how FEMA now wants $300 million back in claims paid for households that didn't exist, according to official pre-hurricane census figures.

Even more interesting is that they did their own analysis using the federal Freedom of Information Act, which deducts that a lot more than $300 million might come out in the wash before all is said and done.

Here is what they said in their article:

But an Associated Press analysis of government data obtained under the federal Freedom of Information Act suggests the government might not have been careful enough with its checkbook as it gave out nearly $5.3 billion in aid to storm victims. The analysis found the government regularly gave money to more homes in some neighborhoods than the number of homes that actually existed.

The pattern was repeated in nearly 100 neighborhoods damaged by the hurricanes. At least 162,750 homes that didn't exist before the storms may have received a total of more than $1 billion in improper or illegal payments, the AP found.

Full story (ABC news version), here.

While there is no doubt a big problem exists, we need to put the overall issues in perspective and I'm not sure FEMA is entirely to blame.

David Garratt, FEMA's deputy director is saying that officials were in a "no win" situation. And while, I'm not here to defend FEMA, he probably has a valid point.

When the federal government got involved, fraud artists from all over the world were setting their sights on what they saw as a "lucrative opportunity."

A lot of the fraud that occurred didn't necessarily come from the areas affected by the hurricane.

Couple this, with a lot of pressure to right all the initial blunders in the disaster, which most of us were watching "live," and mistakes were made.

Sadly enough, fraud prevention systems in place, were deemed to cumbersome and disabled. Again, there was a lot of pressure (rightfully so) to take swift action to help a lot of people, who were in harm's way.

We can blame FEMA all we want, but the fact is that fraud is growing at a rapid rate, and the federal government isn't the only one with inadequate fraud prevention systems.

For example, in Southern California (pretty far from Louisiana), there was another interesting article about the taxpayers footing a $1.5 billion a year bill for fraud, here.

And while there seems to be a lot of government fraud, fraud in the private sector is growing by leaps and bounds, also. There is no doubt that identity theft (another growing problem) helped fuel the fraud in the hurricane disasters.

There is a lot of evidence to suggest that much of this fraud is enabled by information that has been data-mined on all of us, which isn't protected very well. Some suggest that technology and the information sector, which make a lot of money selling their wares are the root cause of all of this.

Unfortunately, those committing fraud are too keenly aware of this.

Blaming FEMA is unlikely to correct the overall problem. And if their fraud prevention systems were inadequate, perhaps we should be looking at who sold them the faulty systems?

Perhaps, when history is written, the Katrina disaster is a warning of the looming disaster we all face if we don't stop viewing fraud as a "victimless crime."

Fifteen months later (as Mari Gras approaches), there are still a lot of people suffering from the hurricane disasters.

If you would like to learn more about this, Margaret Saizan's site (Beyond Katrina) is a great resource.

I wonder how much good the money would have done for the true victims if it hadn't been stolen from underneath them?

Saturday, December 30, 2006

The Road Home for Katrina Victims is Frustrating

With all the allegations of "poorly spent money" in the hurricane disasters, it's become apparent that a lot of money hasn't reached the people, who need it.

For instance, take the "Road Home Program", which has paid a company called ICF International over $60 million to issue $4 million in checks. The program is intended to assist victims in getting back into "livable housing," and will manage the distribution of $7.5 billion in federal relief money.

ICF International is a "consulting firm" based in Fairfax, Virginia. According to Wikipeida, it's services have been used by the U.S. Environmental Protection Agency, the Department of Homeland Security, the Department of Energy, the United States Postal Service, and Housing and Urban Development.

The program has it's own website, which states:

The Road Home program was created by Governor Blanco, the Louisiana Recovery Authority, and the Office of Community Development. The program is funded by the U.S. Department of Housing and Urban Development.

There has been a lot of criticism that ICF has been slow to fill positions for the project. Interestingly enough, there are a lot of positions (still not filled) advertised on their website.

The Times Picayune did an excellent assessment of the lack of program staffing, here.

The "Road Home" website also states that it dispels a lot of myths about the program, but it appears not everyone is "buying their version" of what is going on.

Because of the allegations of "mismanagement," the Louisiana House and Senate have passed two resolutions to terminate ICF's $756 million contract. They are also calling for an investigation into "possible conflicts of interest."

The Times Picayune reported:

The House and Senate, in separate unanimous votes, also passed House Concurrent Resolution 34 by Rep. Cedric Richmond, D-New Orleans, ordering a special legislative panel of New Orleans lawmakers and the Louisiana Recovery Authority -- the state agency overseeing recovery operation in the state -- to investigate ICF's handling of the contract. It was amended by Rep. Jim Tucker, R-Algiers, to also urge the federal Securities and Exchange Commission to probe ICF's public stock offering, shortly after winning the state contract, for possible conflicts of interest.

The Times Picayune article, here.

Sue Sturgis, who writes for Facing South, has also written some interesting commentary on the program.

Ms. Sturgis points out that ICF initially was involved in a contract to help the state decide how to spend federal grant money, which conceptualized the "Road Home Program." During this time frame, ICF decided to seek the "lucrative program administration project."

When the Louisiana Board of Ethics raised concerns that this contract might be perceived as giving ICF an unfair advantage in getting the larger contract, ICF ended the initial one. The payout for the first contract was $900,000, while the Road Home Program could pay ICF up to $756 million.

She also brings out other concerns the Board had with some of the banking relationships that were being proposed by ICF to administer the funds.

Facing South article, here.

Whether conflicts of interest exist remains to be seen. What can be clearly seen is that taxpayer money intended to help Katrina victims isn't getting to those who need it very quickly.

Red tape and excuses aren't going to be acceptable when there are a lot of people still living in "not very nice" conditions.

And until this matter is rectified, there are going to be "voices" calling for some "accountability."

Some of these voices are getting pretty loud.

This month, federal investigators plan to release audit results on contracts given to "so called" politically connected firms in the Katrina crisis. Speculation has it that these audits are going to reveal additional concerns about how money was squandered in the Katrina aftermath.

Tuesday, December 26, 2006

More Allegations of Money Wasted in Katrina

Recently, I blogged about - whether or not - we would ever discover how much money was wasted in the Katrina disaster. Unfortunately, this statement is turning out to be more accurate that I would have liked it to have been.

Hope Yen of the AP is reporting:

Federal investigators have already determined the Bush administration squandered $1 billion on fraudulent disaster aid to individuals after the 2005 storm. Now they are shifting their attention to the multimillion dollar contracts to politically connected firms that critics have long said are a prime area for abuse.

In January, investigators will release the first of several audits examining more than $12 billion in Katrina contracts. The charges range from political favoritism to limited opportunities for small and minority-owned firms, which initially got only 1.5 percent of the total work.

Government officals (past and present) are now alleging that the dollar amount wasted could exceed $2 billion.

AP story (courtesy of the Washington Post), here.

It will be interesting to see how this plays out and what evidence is brought to light as a result of this.

The sad truth is that there are still a lot of people suffering as a result of this disaster. And it doesn't make sense that they should be when this kind of money was available.

Here is a post, I wrote about the results of a recent GAO (Government Accountability Office) audit:

Will We Ever Discover the True Losses in the Katrina Disaster?

Sunday, September 03, 2006

The FBI Will Pay for Information on Katrina Fraud

There is no doubt that there was a lot of fraud in the hurricane disasters a year ago. The Clarion Ledger (Mississippi) is reporting that the FBI will pay for information on Katrina related fraud:

Mississippi public corruption cases are on the rise in the wake of Hurricane Katrina, and the FBI will have 10 full-time agents investigating Katrina-related fraud by December.

Authorities are encouraging the public to come forward with tips and are offering cash rewards.

"If you see something, you hear something or learn something, even if you believe it's insignificant, if that little light goes on in the back of your head, that 'boy, this just doesn't look right,' don't be afraid to call," said John Raucci, the FBI's special agent in charge in Mississippi.

He said sometimes seemingly insignificant details can crack a federal case.

Cases of fraud are increasing in south Mississippi as billions of dollars in federal funds are authorized for the recovery effort. Raucci said publicizing the reward system is one way to help combat fraud.

"I myself can authorize up to $25,000 for any information," Raucci said. "That's just me out of my budget. I can go back to headquarters with one phone call and get $100,000. There are also other types of cases where you can actually get a percentage."

Full story, here.

I'm not sure if they are running a similar program in Louisiana. There are probably a few people who deserve to caught there, also.

Of course - there are also people - who report crime because it is the right thing to do. If everybody reported it for that reason - it would go a long way towards making our world a better place to live.

Sunday, February 12, 2006

No Wonder We are Facing a Budget Crisis

No wonder our government is facing a budget crisis. Programs designed to help those in need seem to be suffering from rampant fraud.

Eric Lipton of the New York Times is reporting:

"Thousands of applicants for federal emergency relief money after Hurricanes Katrina and Rita used duplicate or invalid Social Security numbers or bogus addresses, suggesting that the $2.3 billion program was a victim of extensive fraud, a Congressional auditor will report Monday."

According to FEMA, one third of the applications had information that wasn't correct. This is probably a pretty good indicator of fraud.

Hmmm...a 2.3 billion dollar program AND one third of the applications had information that wasn't correct, this translates to a potential 691 million in fraud. Of course, this is only a approximate figure.

AND this doesn't include all the charity organizations that were probably fraud victims, also. Of course, the sad truth is that fraudsters were posing as charity organizations, also.

Here is the story from the New York Times:

Auditors Find Huge Fraud in FEMA Aid

None of this should be surprising, there were a lot of reports of fraud (all across the country) on fraud in the wake of the hurricane disasters this year.

Here are some of the posts, I did at the time:

Katrina Fraud Status

Fraud Relating to Katrina in Full Swing

Katrina Fraud Far and Wide

Here is a more recent one, I did on a different subject, but indicative that our social programs are suffering from rampant fraud:

Back to Work Programs a Fraud Heaven for Scammers

If a third of the FEMA dollars and 40-50 percent of Childcare dollars in California are being paid out to fraudulent claims, there is no wonder the government is having financial difficulties.

The only solution to this mess is GREATER ACCOUNTABILITY by those administering these programs. On the other end of the spectrum, laws need to be enacted to severely punish greedy people who take advantage of disaster situations AND prosecution efforts need to meet a standard that makes the activity dangerous.

The sad things is that WE all are victims of this activity because it's our tax dollars paying for it. Americans are some of the most giving people in the world, but we need to be giving to the needy instead of supporting the greedy.

Tuesday, September 20, 2005

Identity Theft/Check Fraud in Katrina

In a story released by Reuters, the Louisiana Attorney General's Office is reporting that identity theft is complicating getting benefits to victims. When they apply, they discover that someone has already applied (using their information) and received benefits in their name.

Besides identity theft, I would imagine that we will being seeing a lot of check fraud in the near term. The reason for this is that the government and relief agencies will be issuing checks for benefits. The U.S. Postal Service is recommending that displaced victims submit a "change of address" to a temporary address, where they can pick up their mail in order to avoid having it stolen.

Mail theft, especially to steal government checks, is nothing new. The criminals involved in this target times when they know a lot of checks are in the mail. Every year, there is a huge surge of this activity during tax season due of the amount of refund checks being mailed.

In the case of stolen checks, the criminals will have to assume the identity of the person entitled to the check. Many Katrina victims were stranded without their identification and agencies, such as the Social Security Administration have set up remote offices to address this problem. With the combination of temporary offices set up to issue identification and masses of displaced people, it creates an environment that identity thieves/check fraudsters will probably try to take advantage of.

In the ensuing confusion, there have already been reports of people "double and triple" dipping for Katrina benefits. One common method of doing this is to cash in the original benefit payment (normally a check) and then claim it was never received.

This activity is starting to occur all over the country with people showing up, claiming to be displaced victims and applying for benefits. There are reports of people being arrested for this, as well as filing false claims, nationwide.

I wrote about some of this in an earlier post, Katrina Fraud Far and Wide .

There are many other methods the crooks use to pass bad checks. Here is a document from the Treasury Department that is pretty extensive on Check Fraud:

http://www.occ.treas.gov/chckfrd/chckfrd.pdf#search=

For the story by Reuters, click on the title of this post.

Wednesday, September 07, 2005

Advance Fee Scams with Katrina

It was a matter of time, but the Advance Fee a.k.a. (419) scams have started using the Katrina disaster. 419 is the penal code in Nigeria for the advance fee scam. This scam involves tricking someone to pay an advance fee for untold riches they will receive at a later date.

In urban legend, the scam is Nigerian based; however it is now being done all over the world. These scams have not only been traced to Nigeria and Western Africa, but also to Europe, Canada, Australia and even within the United States. Historically, it would be a letter, or e-mail sent from a foreign prince etc., who had a lot of money that he was willing to share with you for passing it through your account. Besides tricking someone into sending money, if they got enough of your account information, they would wipe out the balance.

More recently, the scam has mutated into getting someone to think they have won a lottery, or that someone wants to buy something they placed on a auction. I have even seen a variation where they are approached by a (alleged) beautiful foreign model on a dating site, who needs their help to negotiate some financial instruments. In the end, the victim is duped into sending money and is left at a loss. This can be severe if they have negotiated a lot of money for them. In these more recent mutations, the fraudsters are sending counterfeit cashiers checks (cheques) and counterfeit money orders and duping their victim into to cashing them and wiring the money back. In a lot of instances, the items are intitally cashed and discovered to be counterfeit after the money has been wired (normally overseas).

For the person, who cashes these items, at a minumum they are financially liable. There are reports that people have had criminal charges brought against them as a result of passing the instruments.

Besides getting people to send them money in advance these criminals are very adept at stealing personal and financial information. This might include invading a computer if someone opens an attachment and using software to obtain what they need to do their misdeeds. The best thing to do is avoid these people like the plague.

Right after the Tsunami disaster and London bombings, the letters surfaced and today it is being reported that Katrina is being used in yet another variation. In an article from Gregg Keizer, it was reported that a letter is being circulated from an illegal Mexican national, who has discovered hidden treasure (boxes full of currency).

It amazes me that this variation still is out there despite all the publicity it has drawn.

Of more concern will be the phishing and pharming activity, which I wrote a previous post on:

http://fraudwar.blogspot.com/2005/09/fbi-reports-fraudulent-activity-on.html

In this post, I've listed recommendations from the FBI (who is noting a lot of sites being registered for Katrina) on how to avoid becoming a victim. In case you are interested on more detailed information on this scam and variations thereof, feel free to use the search box by keyword located at the top of the page.

Wednesday, May 02, 2007

Washington Post exposes another reason why Katrina victims are still suffering

The hurricane disasters, and their commentary on social issues, continue to amaze me. To me, the rest of the world can learn a lot by studying the ongoing problems related to the disaster.

The amount of money wasted, or lost to fraud (over a billion and growing) is a sad commentary, when a lot of the victims are still living in the now (infamous) FEMA trailers.

Now a new allegation is being brought forth, which is that $854 million in aid promised by our allies, wasn't even accepted. I find this pretty interesting as people are suffering nearly two years, afterwards?

Even more shameful was that expert search and rescue personnel, were turned down, immediately after the hurricane, when they probably would have been extremely helpful:

And while television sets worldwide showed images of New Orleans residents begging to be rescued from rooftops as floodwaters rose, U.S. officials turned down countless offers of allied troops and search-and-rescue teams. The most common responses: "sent letter of thanks" and "will keep offer on hand," the new documents show.

This fact, given the problems in the initial response, amazes me.

Original Washington Post article, here.

I wonder how our allies, many of who have accepted similar aid from us in the past, felt when we turned their generous offers down?

More recently, the Post is reporting that Congress intends to look into this. The article regarding this can be read, here.

I'm not sure when the story on Katrina will be over. The bottom line is that there are still a lot of hurricane victims, who could use a helping hand. A good place to learn more about this is Margaret Saizan's site (Beyond Katrina), which can be seen, here.

Sunday, April 02, 2006

If We Can't Trust Giving to the Red Cross, Who Can We Trust?

Most major organizations face a growing problem, or the fact that many of their fraud losses come from within. You would think that the Red Cross would be immune to this, but apparently not.

It seems that although disasters bring out the best in people, it also brought out some of the worst behavior imaginable.

Hurricane Katrina illustrates this. It almost seems that more money was distributed to fraudsters than to the people, who were victims. No one was immune from the Government to the Red Cross.

I recently blogged about "Who Really Profited in the Hurricane Disasters" in reference to massive amounts of money that was lost due to fraud and waste in the government effort to provide relief.

Now the Red Cross is under fire and has turned the case over to the FBI. Here is a story from the AP, courtesy of Forbes:

"The FBI is looking into allegations of theft and other wrongdoing by American Red Cross volunteers who distributed relief supplies after Hurricane Katrina. A task force probe - which includes state, local and federal authorities - began after the Red Cross conducted its own investigation and turned over information to authorities, said Jim Bernazzani, the agent in charge of the FBI's New Orleans office."

Full story, here.

My sad prediction is that in future disasters, I would imagine the public is going to be less likely to help. Perhaps (in the end) only aggressive prosecution of the guilty will bring the people's confidence back. A little diligence within some of these organizations to prevent misdeeds from their own would help, also.

It would only be justice for those, who committed fraud when people's lives were at stake.

Here are some previous posts, I've done on the hurricane disasters:

Fraud Related to FEMA

FBI Reports Fraudulent Activity on Internet Related to Hurricane ...

Katrina Fraud Far and Wide