Katrina Cards Sparked Massive Fraud

Australian (Sydney), Feb. 15, 2006

WASHINGTON: The $US2000 debit cards issued after Hurricane Katrina to buy emergency supplies were used in some cases to pay for gambling, pornographic movies, tattoos and even a diamond engagement ring, according to two government reports that detail grotesque fraud and mismanagement in which hundreds of millions of dollars were squandered.

The fraud was on such a scale that emergency aid was paid to almost one million bogus applicants, hindering the Bush administration’s response to the disaster.

The two reports—released before a separate congressional investigation that will today condemn President George W.Bush and his top aides—come a week before Mardi Gras in New Orleans, where large swaths are still without electricity or running water, and as 40,000 people left homeless by the hurricane were set to be evicted from hotel rooms across the US.

The two audits of the $US2.3billion in emergency cash spent in the weeks after the hurricane found that 900,000 of the 2.5million applicants who received federal aid did so after fraudulent claims.

Because the Federal Emergency Management Agency’s oversight of cash payments was so flawed, the agency made “millions of dollars of payments” to applicants with bogus addresses, names, or Social Security numbers.

The audits, by the Government Accountability Office and the Department of Homeland Security’s inspector-general, found debit cards issued for emergency supplies were often used for purchases unrelated to disaster aid, including pornographic movies, gambling, a $US450 tattoo, a $US1300 .45-calibre handgun and a $US1000 diamond engagement ring.

The debit cards were also used to make bail payments and to pay parking fines.

In one case, 17 applicants used fake names and addresses to collect more than $US103,000 in aid. About 80 of more than 200 sample addresses claiming to have been homes damaged by Katrina were visited by auditors and found to be vacant lots or “bogus apartments”.

The reports also detail millions in overspending, including evacuees being housed in $US438-a-night hotel rooms in New York and in beachfront condominiums in Panama City, Florida, costing $US375 a night.

Almost 11,000 trailer homes bought by FEMA are sitting empty in Hope, Arkansas, sinking intomud.

The reports precede a damning indictment of the Bush administration’s failures before and after Katrina, to be published today by a congressional committee composed exclusively of Republicans.

Democrats had boycotted the committee, claiming it would result in a whitewash. But the 11 house Republicans have produced a 600-page report savaging the administration, as well as state and local government, for a litany of failures.

Of most political concern to the White House, the congressional report says the US Government has failed to learn the lessons of the September11 terror attacks.

The congressmen say earlier involvement by Mr Bush “could have speeded the response”.

They also say that 56 hours before Katrina hit, the National Weather Service cited an “extremely high probability” that New Orleans would be flooded.

Given those warnings, the report notes remarks made by Mr Bush after the disaster, in which he said: “I don’t think anybody anticipated the breach of the levees.”

The congressmen say: “Comments such as those . . . do not appear to be consistent with the advice and counsel one would expect to have been provided by a senior disaster professional.”

The report singles out Michael Chertoff, Mr Bush’s Secretary of Homeland Security, for most criticism. He triggered the Government’s emergency response “late, ineffectively or not at all”, it says, delaying a flow of federal troops and aid by three days.

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