$643 million in disaster-assistance fraud

By U.S. Senator Susan Collins

(R-Maine)

Our hearts go out to the people of Japan. All of us watched in horror as a tsunami wiped out entire communities following a devastating earthquake, killing thousands of people and leaving hundreds of thousands of others homeless.

In the midst of overwhelming shock and grief, the people of Japan are now facing a nuclear crisis that has displaced thousands more families and complicated humanitarian efforts. The people of Japan are understandably alarmed and frightened about what might happen next and wondering how they will ever recover.

In the wake of the disaster, my offices throughout Maine have received telephone calls and emails from worried relatives of Mainers who are living in Japan. Limited phone and Internet service made reaching their family members impossible. With the help of the U.S. State Department, my staff was able to help reconnect several families, calming their fears, and reassuring them that their loved ones had survived.

Whether it’s the current crisis in Japan, last year’s massive earthquake in Haiti, Hurricanes Katrina and Rita, which in 2005 devastated the lives of so many people along the Gulf Coast of the United States, or last summer’s Deepwater Horizon oil rig explosion that led to an economic and environmental disaster, we are constantly reminded of the need to prepare for the unpredictable.

We don’t know when or where the next disaster will hit. But we do know the U.S. Geological Survey estimates that there is a 94 percent chance that an earthquake of 7.0 magnitude or greater will occur in California within the next 30 years. We also know that there will be hurricanes, floods, tornadoes or even storms like the Ice Storm of 1998 that we experienced here in Maine. And we recognize that a terrorist attack using a weapon of mass destruction in a large city would strain our capabilities.

The Senate Homeland Security Committee, which has oversight of the Federal Emergency Management Agency (FEMA), recently held a hearing to look closely at how well equipped the United States is for any catastrophic disaster. I raised the following questions: What is our level of preparedness to protect important energy sources? What are we learning from the nuclear incidents in Japan and last year’s Gulf Coast oil spill? How well prepared are we for a major earthquake in the United States? Do we have the communication and medical systems necessary to respond to the explosion of a radioactive dirty bomb?

More than four years ago, Congress enacted the Post-Katrina Emergency Management Reform Act, which Senator Joe Lieberman and I authored. The legislation was designed to take the hard-learned lessons of Hurricane Katrina and bring about improvements in the nation’s overall emergency preparedness and response systems.

Our law has indeed improved FEMA’s disaster response capabilities. From major floods to wildfires, we have witnessed improvements throughout the country. Here in Maine, I saw this progress in FEMA’s responses to the Patriot’s Day storm of 2007, the spring 2008 floods in Aroostook County and other disasters since then. FEMA has become a more effective, better-led agency during the past four years. Nevertheless, questions remain about our ability to handle a mega-disaster.

I also have concerns about FEMA’s stewardship of federal funds.

One of those hard-learned lessons from the aftermath of Hurricane Katrina was that FEMA’s assistance programs are highly vulnerable to fraud and improper payments. Our committee, with the assistance of the Government Accountability Office and the Inspector General, documented more than one billion dollars in misspent funds. In some cases, these taxpayer dollars were literally gambled away. Funds were also spent on bail bonds and diamond engagement rings. FEMA also paid millions of dollars for housing assistance to hundreds of applicants who apparently were in state and federal prisons.

While victims should receive appropriate and timely relief, FEMA needs to ensure that criminals do not defraud the system.

Unfortunately, safeguarding taxpayer dollars remains an area in which FEMA has yet to achieve success. A December 2010 report by the Department of Homeland Security Inspector General (IG) revealed that FEMA had stopped attempting to recover improper disaster assistance payments made after Hurricanes Katrina and Rita and subsequent disasters. The Inspector General identified approximately 160,000 applicants that had received improper disaster assistance payments totaling more than $643 million.

Even more disturbing, FEMA’s efforts to recoup these improper payments ended in 2007 after a court found FEMA’s recovery procedures to be inadequate. More than three years later, a new process for recovering these payments had only been initiated after our committee scheduled the oversight hearing.

There are some bright spots. The IG found that FEMA had made substantial progress in improving emergency communications coordination with officials at the federal, state and local levels. Ensuring that first responders can communicate during a disaster is vital—indeed, when communications failed after 9/11 and during Hurricane Katrina, it cost lives.

The IG also highlights the effectiveness of the regional emergency communications working groups in each of the 10 FEMA regions. These groups, composed of federal, state, and local responders, were established in the Post-Katrina Emergency Management Reform Act.

This October will mark the fifth anniversary of the Post-Katrina Emergency Management Reform Act. By that time, I expect FEMA to have made significant progress in improving our nation’s preparedness for the next catastrophe, whenever and wherever it may strike, and to have the safeguards required to prevent fraud and improper payments.