A decade after Hurricane Katrina hit the Gulf Coast with historic ferocity, the federal government still doesn’t know how many taxpayer dollars were lost to waste and fraud in the aftermath of the storm.
Botched contracts, rampant fraud and mismanaged projects squandered millions of dollars meant to help the victims of Katrina. Politicians and business owners who skimmed off the top of the government’s relief effort were later jailed, with some remaining behind bars to this day.
Hurricane Katrina “produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history,” the New York Times wrote of the disaster in 2006, just months after the storm.
When former New Orleans Mayor Ray Nagin was sentenced last summer to 10 years in prison for corruption and bribery — some of which occurred during the hurricane response — he became the 17th local politician sentenced since the storm, according to the New Orleans Advocate.
A Disaster Fraud Task Force initially established to crack down on Katrina-related fraud had charged 1,439 people by 2011 for crimes committed in the wake of Hurricanes Katrina, Rita and Wilma.
While some set up elaborate schemes to take advantage of the money pouring into the region in late 2005, others simply gamed the poorly-planned systems put in place by entities such as the Federal Emergency Management Agency.
“The federal government … received widespread criticism for a slow and ineffective response to Hurricane Katrina,” began a 2006 inspector general report about FEMA’s handling of the disaster. “Much of the criticism is warranted.”
On Sept. 8, 2005, FEMA began handing out active debit cards, each loaded with $2,000, to supposed victims of the storm at stadiums in Dallas and Houston and an air force base in San Antonio.
Despite an initial plan to ensure applicants were eligible to receive the assistance before distributing the debit cards, the director of FEMA decided to hand out active cards instead.
“This meant FEMA was providing funds without any assurance of need and with no way to verify that people who received the cards were actually eligible for the assistance,” the report said.
That method of distributing funds had never been used before, nor had it ever even been tested.
FEMA passed out more than $22 million in just two days between the three Texas locations, without checking the identities of any of the people who lined up to claim the free debit cards.
Businesses were also able to profit off emergency government contracts that required less scrutiny than typical awards.
The government handed out most of its reconstruction contracts without seeking competitive bids, a practice that cost taxpayers hundreds of millions of dollars.
The Army Corps of Engineers doled out four contracts worth $2 billion to clean up the many tons of debris that littered the coast after Katrina.
“The debris contractors grabbed the money and then committed every abuse imaginable,” said Rep. Henry Waxman, D-Calif., in a May 2006 hearing. “Some sought double payments for the same load.”
Members of Congress claimed some companies had submitted duplicate bills for debris removal to the government in order to pocket the extra funds.
As late as 2014, the Department of Homeland Security’s inspector general, which oversees FEMA, was still recommending the disaster agency attempt to recover portions of grants and other relief funding it had doled out improperly or that had since been mismanaged.
