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GAO report: Hurricane fraud soaked taxpayers

Story Highlights

• GAO says $20 million paid to "double-dipping" Katrina-Rita victims
• Government gave $3 million to students who weren't U.S. citizens
• People living in rent-free housing still received money to pay rent
• FEMA also sent nearly $17 million in rental aid to people in FEMA trailers
From Jeanne Meserve and Mike M. Ahlers
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WASHINGTON (CNN) -- Call it a case of double-dipping victims.

Federal investigators say the Federal Emergency Management Agency gave nearly $20 million in duplicate payments to over 7,000 people who claimed damages to the same property from both Katrina and Rita -- hurricanes that struck the Gulf Coast only 26 days apart.

FEMA also paid at least $3 million to more than 500 students at four Gulf Coast universities who were not eligible because they were not U.S. citizens.

And, investigators say, the Department of Homeland Security "overstated" the number of missing gear it had recovered in a message to Congress last summer. Many of the items -- laptop computers and printers -- are still missing, investigators say.

These disclosures and others are included in testimony prepared by the Government Accountability Office for a Senate hearing Wednesday on fraud and abuse in the wake of Hurricane Katrina.

"To be sure, the majority of the billions in assistance ... was necessary and warranted," said Sen. Susan Collins, chairman of the Senate Homeland Security Committee. "But FEMA has yet to strike a proper balance between expedited assistance and good stewardship of taxpayer funds."

"Current practices invite and enable fraud, harming the very people the program is designed to help," she said.

The GAO report looks at waste and abuses in two big-money FEMA programs -- the housing assistance program, which gives aide directly to storm victims, and the purchase card program involving credit cards issued to government employees.

According to the GAO, FEMA gave victims of the two hurricanes about $7 billion in housing assistance, intended for emergency housing and repair of damaged homes. Of that, the GAO estimated $1 billion were improper payments.

FEMA itself acknowledged that $290 million were overpayments, but it has recovered only about $7 million, the GAO report says.

In one case, FEMA sent $46,000 to 10 people in Plano, Texas, to cover out-of-pocket housing expenses while at the same time paying for their apartments. Seven of the 10 people "self-certified" to FEMA that they needed rental assistance despite the fact they were living in rent-free housing.

The GAO says FEMA also sent nearly $17 million in potentially improper rental assistance to people living in FEMA trailers.

And nearly $20 million went to individuals who registered for assistance for both hurricanes Katrina and Rita. For example, one individual received two housing replacement payments of $10,500 each, despite the fact he had only one property to replace.

"FEMA officials explained that victims of both disasters are entitled to only one set of (housing) payments for the same damaged property," the GAO said. But FEMA officials said they turned off the system that would signal an overlap in order to speed up the disaster assistance, the GAO said.

Collins said that in addition to the $7 million recovered by the agency, FEMA claims to have repayment plans in place to collect another $8 million.

The GAO previously faulted FEMA for failure to keep track of items purchased with government credit cards for the storm relief effort.

In July, investigators reported that FEMA could not account for 143 items, including laptop computers, computer printers, GPS systems and two flat-bottom boats.

On the morning of the testimony, DHS sent Congress an e-mail indicating that 87 of the items had been found.

But the GAO will testify Wednesday that eight of the 87 items remain missing. Moreover, the GAO said it investigated 103 new items and discovered that 37 were missing.


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