Federal and State governments have spent billions of dollars in response to natural disasters, including hurricanes, floods, tornados, earthquakes, and fires. In order to provide rapid relief to those harmed by these disasters, the government often spends millions of dollars in a matter of days on food, water, clothing, shelter, clean-up and reconstruction.
Frequently, the government spends these enormous sums of taxpayer money on disaster relief and recovery without the government knowing very much about those businesses and persons who are providing the products and services. Moreover, the government frequently does not have the resources in place to monitor whether the taxpayers are receiving the products and services that are being paid for.
The combination of rapid and massive government spending and minimal government oversight has proven to be a recipe for fraud. Some of the best known cases of disaster relief fraud occurred following Hurricanes Katrina, Rita and Wilma in 2005. As of July 2007, the Congressional Budget Office reported that the federal government had spent $94.8 billion for immediate and long term relief for the Gulf Region. This money went to multiple federal agencies, including: Federal Emergency Management Agency (“FEMA”); Department of Housing and Urban Development (“HUD”); Department of Defense (“DOD”); Army Corps of Engineers; Department of Transportation; Small Business Administration; and Department of Health and Human Services (“HHS”). These massive recovery funds are being used for a wide variety of purposes, including: immediate and long term housing assistance; immediate and long term public assistance; Community Disaster Loans; Community Development Block Grants; repairs to infrastructure (such as roads and bridges); and small business loans.
Along with the massive government spending in response to the 2005 Gulf Hurricanes have come reports of wide spread fraud. The fraud that has been exposed to date includes: hundreds of thousands of dollars in hotel rooms for phantom victims; renovations for a shelter that cost about $416,000 per evacuee; half a billion dollars spent on mobile homes that were never used; millions in rental assistance collected by prisoners; and double charging for the removal of debris.