Growing Cases of Fraud Over Hurricane Katrina

When any natural disaster hits the shores of the United States, fraud appears. In the case of Hurricane Katrina, by far the most devastating national disaster in recent history, fraud has been rampant. As of right now according to the Associated Press there have already been over 600 people charged with fraud related to Katrina, and it is suspected that there are thousands who have engaged in Katrina fraud.

Katrina fraud takes many forms. Some involve people not effected by Katrina asking the government for personal assistance. Such is the example of a woman in Alabama who asked for compensation for hurricane damage. Not just once but 28 times, giving addresses to receive the compensation in four different states. She herself never suffered any damage from Hurricane Katrina.

Also is the case of two California men who started an internet auction claiming that funds would go to those effected by Hurricane Katrina. Katrina victims never saw a dime of the money earned by these two men.

The largest known fraud so-far came from three people, one a Florida contractor, who falsified records showing they assisted in clean-up from Hurricane Katrina in the state of Mississippi. They billed the government $716,677 for work they never did. They have since pleaded guilty to fraud.

In total, it has been estimated that roughly $1 billion of Katrina aid has been given fraudulently. According to the GAO (General Accounting Office) less than 1% of this total has been recovered. Considering that not quite $5.3 billion in relief was spent on disaster relief, the amount of fraud is truly staggering.

Part of the reason according to the GAO for the widespread nature of Katrina fraud is just how widespread its effects were. Katrina hit hard across the Gulf, mostly in New Orleans but Mississippi and Texas as well, and those effected by the storm have been scattered across all 50 of the United States, some even having left the country in the wake of Katrina.

The federal government has not been the only target of fraud. Over 2,000 complaints of contractor fraud have been made in the state of Louisiana. Some 50 arrests have been made for insurance fraud. The Red Cross has filed charges against 104 people for fraud, 86 have so far been convicted. They have recovered $2.6 million in fraudulent spending but there is much more work to do.

Making cleaning up of fraud even more difficult is the complexity and variance in schemes. Many are cases of outright fraud, while others are simply manners of over-billing, some involve identity theft, public corruption and much, much more. The problems are large and they run deep. While people are working to assist those effected by Katrina, money is being spent fraudulently and even more money must be spent in combatting fraud and returning fraudulent funds to where it belongs, making the process even more difficult.

It has been some 18 months since Hurricane Katrina raged through New Orleans and the Gulf Coast. In that time great amounts of work have been left undone. Entire apartment complexes remain un-renovated and un-lived in. Debris still litters the streets of New Orleans. People who have lived in New Orleans their entire lives remain dispersed across the four corners of the nation. And while the people most desperately effected remain unaided, more and more people are making money off of Katrina fraud.