Katrina brought burst of fraud, federal prosecutor tells group|[4/19/06]
Published 12:00 am Wednesday, April 19, 2006
Katrina touched off a wave of criminality, the chief federal prosecutor for south Mississippi said here Tuesday.
Assistant U.S. Attorney John Dowdy said two weeks after the Aug. 29 hurricane that he began to realize the extent of false relief claims that might be filed.
“For law enforcement and for us in particular it was going to be unlike anything I had ever seen since I joined the U.S. Attorney’s Office in 1988,” Dowdy said as guest speaker for the Vicksburg Kiwanis Club.
Dowdy is one of 16 prosecutors in the office of the U.S. Attorney for the Southern District of Mississippi, Dunn Lampton. The district encompasses 44 of the state’s 82 counties and includes many of the state’s largest cities or metro areas, including Jackson, Vicksburg, Meridian, Hattiesburg and the Gulf Coast.
Since Oct. 1, the office has reviewed 550 cases of alleged fraud related to hurricane relief and more than 330 of those have resulted in open investigations, Dowdy said.
Of that number, indictments have been returned in 19 cases against 22 people, Dowdy said. Some have pleaded guilty but none have been sentenced.
The number of investigations does not include non-hurricane-related cases. By contrast, during the fiscal year that ended in September 2005, the number of investigations of all kinds the office opened was 309.
The first cases related to claims for $2,000 emergency cash being distributed by the Federal Emergency Management Agency. Among them was the claim of a Vicksburg man who was indicted for using a Long Beach address despite the fact that he lived and worked here when the storm hit.
“He grabbed an address from down there that belonged to his ex-wife and made a claim,” Dowdy said. “And the only way we found out about that particular case was when the ex-wife went to claim, to get money from FEMA, they denied her claim because somebody else had already made application for her particular residence.”
Trial is pending in that case and the maximum penalty is five years in prison and a $250,000 fine.
Dowdy said he foresees the number of fraud investigations opened by the office “probably tripling or quadrupling before it’s over.”
One reason is that, although millions of dollars have already been distributed, at least $3 billion to $4 billion more is expected in Community Development Block Grant funds for home-reconstruction for the uninsured alone. A certain percentage of such money – Dowdy said counterparts of his in Florida estimated 3 to 5, or up to 8 percent – has ended up being fraudulently obtained, he said.
“When you’re talking about $3 billion to $4 billion there is a lot of room for a lot of fraud,” Dowdy said.
Another type of hurricane-related fraud can be perpetrated by out-of-state contractors against people whose homes have been destroyed, Dowdy said. In one case such a contractor demanded and received advance payment of about $35,000 and then skipped town.
Helping to prosecute the fraud cases are unprecedented numbers of federal agents, including eight from the Department of Homeland Security’s inspector general’s office, five Department of Labor agents to investigate cases of potential false claims for emergency unemployment benefits and an addition to the state’s FBI-agent count of five temporary agents, a number that could rise to 10 due to Katrina claims, Dowdy said.
“What we’re talking about is we’re looking at cases that we’re going to be dealing with for the next five to eight years,” Dowdy said.
There will be many, he pledged. “We are operating under a zero-tolerance policy,” Dowdy said. “We have never operated like that before.” Threshold amounts have always been in place for monetary losses, he added.