Posted on September 20, 2005

Cheaters Get ‘Easy Money’ From FEMA

Sally Kestin, Megan O’Matz, John Maines and Jon Burstein, South Florida Sun-Sentinel (Fort Lauderdale), Sept. 18

The federal government’s handling of the Hurricane Katrina catastrophe is only the latest bungling in a national disaster-response system that for years has been fraught with waste and fraud.

A South Florida Sun-Sentinel investigation has found that the Federal Emergency Management Agency in five years poured at least $330 million into communities — most of them poor, inner-city neighborhoods — that were spared the devastating effects of fires, hurricanes, floods and tornadoes that had struck nearby.

Taxpayer money meant to help victims recover from catastrophes instead has gone to thousands of people who suffered little or no damage, including:

$5.2 million to Los Angeles-area residents for wildfires in 2003 that burned more than 25 miles away.

$168.5 million to Detroit residents for a 2000 rainstorm that the then-mayor doesn’t remember.

$21.6 million in clothing losses alone to Cleveland residents for a 2003 storm that brought less than an inch and a half of rain.

The Sun-Sentinel first exposed fraud and waste in federal disaster aid in Florida last year, when FEMA distributed $31 million in Hurricane Frances relief to Miami-Dade County residents who experienced no hurricane conditions. U.S. senators and federal auditors, reacting to those reports, feared similar problems had occurred in disasters throughout the country.

The newspaper examined 20 of the 313 disasters declared by FEMA from 1999 through 2004, selecting cities where the agency’s inspectors said they had encountered large-scale fraud. Of the $1.2 billion FEMA paid in those disasters, 27 percent went to areas where official reports showed only minor damage or none at all.


In impoverished neighborhoods from California to the Carolinas, from Florida to Michigan, the newspaper found the same patterns: residents who call FEMA assistance “free money,” “easy money” and “mobility money.” Scamming FEMA is widely known and openly discussed.

Because FEMA aid covers only uninsured losses, it tends to be most heavily concentrated in poorer communities, where it can be a huge windfall. Unlike other government programs such as food stamps, which give recipients debit cards that can be used only for approved items, FEMA has traditionally handed out checks for up to $25,600.

FEMA determines the amount based on losses reported by applicants and approved by inspectors. Recipients are told to repair or replace items lost, but FEMA rarely follows up to see how the money was spent.

In Cleveland’s recreation centers, barbershops and day-care centers, residents said people hauled old clothes and furniture into their basements and told FEMA the items were damaged by flooding from the 2003 storm. Though city officials documented only 73 homes with minor damage, the federal government gave 28,500 Cleveland-area residents $41.4 million, including $21.6 million to replace clothing.

“We didn’t have much flooding in the city,” said Tom Marsalis, deputy commissioner of Cleveland’s Division of Water Pollution Control. “Basically, that was a normal storm for us.”

Julie Cobb, 37, whose southeast Cleveland neighborhood received $6.6 million from FEMA, said, “Everybody was talking about it on the bus.”

“All you had to do was tell FEMA stuff was ruined, and they’d send you a check,” Cobb said. “If you had a little water in the basement, you could throw some stuff down there and get some money for it.”

In Cedric Finley’s northeast Cleveland neighborhood, “everybody was getting checks,” he recalled. “They bought cars. They bought TVs. They bought wine. They bought weed,” said Finley, a 32-year-old day laborer.


Baton Rouge residents told of neighbors ripping siding off their homes to fake storm damage and then repairing it after FEMA inspectors left. Chaney said he knew of people passing broken televisions from one applicant to another, each claiming the TV and telling the government it had been ruined by the storm.

Shawanda Williams called her $600 FEMA check for Lili “mobility money.”

“I went and got . . . another house” to rent, said the 22-year-old personal-care assistant.

In Los Angeles after the 2003 wildfires in surrounding areas, smoke was the key. Tell FEMA that smoke ruined your TV, got in your clothes, messed up the paint job on your car, residents said.

“All you’ve got to do is say something was damaged,” said Tasha Williams, a 26-year-old mother of three and tenant of Imperial Courts, a public-housing development in the Watts section of Los Angeles. “It’s free money.”