	Potentially Improper and/or Fraudulent Housing Assistance Payments Related to Trailers and Apartments

We found that FEMA provided nearly $17 million in potentially improper  and/or fraudulent rental assistance payments to individuals already  housed in other accommodations that FEMA provided through other  disaster assistance programs. In this case, FEMA paid nearly  $46,000 in rental assistance to 10 residents of an apartment complex in  Plano, Texas, from September 2005 through June 2006. Our review of FEMA records indicated  that 7 of the 10 individuals certified to FEMA that they were in need of  rental assistance, even after they had been provided with free housing. Potentially Improper and/or Fraudulent IHP Assistance Payments to Individuals Claiming Damages from Both Hurricanes

FEMA made nearly $20 million in duplicate payments to thousands of  individuals who submitted claims for damages to the same primary  residences from both hurricanes Katrina and Rita. Potentially Improper and/or Fraudulent Payments to Nonqualified Aliens

FEMA made at least $3 million dollars of improper and potentially  fraudulent payments to nonqualified aliens who were not eligible for IHP  financial assistance. Consequently, FEMA paid at least $3 million to foreign  students from four selected universities. This amount could understate the total payments to  ineligible foreign students because we requested information on  international students from only four of the colleges and universities in the  areas affected by hurricanes Katrina and Rita. As of  November 2006, FEMA had detected through its own processes about $290  million in overpayments and had collected nearly $7 million of the about  $290 million identified as improper. In total, of the 246 items we investigated for this  testimony, 85 items (34 percent) are lost or stolen. A November 27 DHS  memo supports the results of this investigation, acknowledging that many  items purchased for hurricane relief efforts are still missing. Conclusions

Ineffective preventive controls for FEMA’s IHP have resulted in  substantial fraudulent and improper payments. The additional examples of  potentially fraudulent and improper payments in our testimony today  further show that our estimate of $1 billion in improper and/or fraudulent  payments through February is likely understated. We have provided 25 recommendations to DHS and FEMA to improve  management of IHP and the purchase card program. Appendix I: Scope and Methodology

To assess whether the Federal Emergency Management Agency (FEMA)  provided potentially improper and/or fraudulent rental payments to  individuals at the same time it was providing the registrant’s free lodging  in FEMA trailers and rent-free (i.e., FEMA-provided) apartments, we  interviewed FEMA officials, reviewed Title 8 of the United States Code,  and reviewed the Stafford Act (Pub. To determine whether FEMA made duplicate payments to individuals who  claimed damages for both hurricanes Katrina and Rita using the same  damaged addresses, we compared the social security numbers and  damaged addresses maintained in the FEMA databases for hurricanes  Katrina and Rita, and reviewed National Emergency Management  Information System (NEMIS) data on selected individuals. To conduct our investigation into the Department of Homeland Security  (DHS) purchase card program, we traveled to New Orleans and Baton  Rouge, Louisiana, and Fort Worth, Texas, in September 2006, to physically  inspect selected property.
Why GAO Did This Study

Hurricanes Katrina and Rita destroyed homes and displaced millions of individuals. While the Federal Emergency Management Agency (FEMA) continues to respond to this disaster, GAO's previous work identified significant control weaknesses--specifically in FEMA's Individuals and Households Program (IHP) and in the Department of Homeland Security's (DHS) purchase card program--resulting in significant fraud, waste, and abuse. Today's testimony will address whether FEMA provided improper and potentially fraudulent (1) rental assistance payments to registrants at the same time it was providing free housing via trailers and apartments; (2) duplicate assistance payments to individuals who claimed damages to the same property for both hurricanes Katrina and Rita; and (3) IHP payments to non-U.S. residents who did not qualify for IHP. This testimony will also discuss (1) the importance of fraud identification and prevention, and (2) the results of our investigation into property FEMA bought using DHS purchase cards. To address these objectives, GAO data mined and analyzed FEMA records and interviewed city officials, university officials, and foreign students. GAO also traveled to Louisiana and Texas to inspect selected property items and to investigate improper housing payments to individuals living in FEMA-provided housing.

What GAO Found

FEMA continued to lose tens of millions of dollars through potentially improper and/or fraudulent payments from both hurricanes Katrina and Rita. These payments include $17 million in rental assistance paid to individuals to whom FEMA had already provided free housing through trailers or apartments. In one case, FEMA provided free housing to 10 individuals in apartments in Plano, Texas, while at the same time it sent these individuals $46,000 to cover out-of-pocket housing expenses. In addition, several of these individuals certified to FEMA that they needed rental assistance. FEMA made nearly $20 million in duplicate payments to thousands of individuals who claimed the damages to the same property from both hurricanes Katrina and Rita. FEMA also made millions in potentially improper and/or fraudulent payments to nonqualified aliens who were not eligible for IHP. For example, FEMA paid at least $3 million to more than 500 ineligible foreign students at four universities in the affected areas. This amount likely understates the total payments to ineligible foreign students because it does not cover all colleges and universities in the area. FEMA also provided potentially improper and/or fraudulent IHP assistance to other ineligible non-U.S. residents, despite having documentation indicating their ineligibility. Finally, FEMA's difficulties in identifying and collecting improper payments further emphasized the importance of implementing an effective fraud, waste, and abuse prevention system. For example, GAO previously estimated improper and potentially fraudulent payments related to the IHP application process to be $1 billion through February 2006. As of November 2006, FEMA identified about $290 million in improper payments and collected about $7 million. GAO's previous work on the DHS purchase cards also showed significant problems with property accountability. Of 246 items we investigated that FEMA purchased for hurricane relief efforts using DHS's purchase cards, 85 items--or 34 percent--are still missing and presumed lost or stolen.