Audit scolds FEMA over payments

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Miami-Dade County residents collected Hurricane Frances aid for belongings they didn't own, temporary housing they never requested and cars worth far less than the government paid, according to a federal audit that questions millions in storm payouts.

The review found waste and poor controls in every level of the Federal Emergency Management Agency's assistance program and challenges the designation of Miami-Dade as a disaster area when the county "did not incur any hurricane force winds, tornados or other adverse weather conditions that would cause widespread damage."

As a result of the declaration, "millions of individuals and households became eligible to apply for [money], straining FEMA's limited inspection resources to verify damages and making the program more susceptible to potential fraud, waste and abuse," the report states.

Though the study was confined to Miami-Dade County, it concludes that the agency's problematic practices "cast doubt about the appropriateness" of awards elsewhere in the state, "particularly those counties that had only marginal damage."

Conducted by the Inspector General's Office of the Department of Homeland Security, the audit shows that in Miami-Dade FEMA distributed:

$8.2 million in rental assistance to 4,308 applicants in the county who "did not indicate a need for shelter" when they registered for help. In 60 cases reviewed by auditors, inspectors deemed homes unsafe without explanation, and applicants never moved out.

$720,403 to 228 people for belongings based on their word alone.

$192,592 for generators, air purifiers, wet/dry vacuum cleaners, chainsaws and other items without proof that they were needed to deal with the hurricane. Three applicants got generators for their homes, plus rental assistance from FEMA to live somewhere else.

$15,743 for three funerals without sufficient documentation that the deaths were due to the hurricane.

$46,464 to 64 residents for temporary housing even though they had homeowners insurance. FEMA funds cannot be used when costs are covered by insurance.

$17,424 in rental assistance to 24 people who reported that their homes were not damaged.

$97,500 for 15 automobiles with a "blue book" value of $56,140. In general, the report states that FEMA approved claims for damaged vehicles without properly verifying that the losses were caused by the storm.

The 60-page report, obtained by the South Florida Sun-Sentinel Friday, confirms a number of the findings in an ongoing investigation by the newspaper into FEMA's disaster aid program. The newspaper first reported in October that FEMA was awarding millions of dollars to Miami-Dade residents even though the Labor Day weekend storm made landfall more than 100 miles to the north and local officials knew of no serious damage.

The paper found that FEMA paid for thousands of televisions, appliances and rooms full of furniture in Miami-Dade and that the agency covered the expenses of 315 funerals statewide, even though Florida's medical examiners attributed only 123 deaths to the four hurricanes.

Michael D. Brown, FEMA's director, said Friday that although some fraud and abuse is evident in all disasters he was pleased with the audit's findings of "nothing widespread."

"The residents of Florida, and people across the nation, can feel assured that they will always be our first priority in responding to devastating disasters," he said in a written statement to the newspaper.

The audit is scheduled for official release Wednesday, when the U.S. Senate Committee on Homeland Security and Governmental Affairs will hold a hearing into whether the FEMA program was mismanaged.

"We want to get answers," said U.S. Rep. Mark Foley, R-Palm Beach Gardens.

Calling the inspector general's report a "cursory review," Foley said: "I don't think they were digging deep enough. They were scratching the surface on the questions we have."

The scope of the audit was limited to whether FEMA had enough evidence to declare Miami-Dade a disaster area and whether the agency had the proper controls in place to ensure that money only went to eligible applicants and for verified expenses. "Our review ... disclosed shortcomings in both areas," the report states.

The review examined $936,979 or 3 percent of the almost $31 million awarded to people in Miami-Dade as of early March.

It did not consider allegations of fraud, leaving that task to the Inspector General's Office of Investigations and to the U.S. Attorney's Office. In early March, a grand jury indicted 14 aid recipients in Miami-Dade County on fraud charges. Six have pleaded guilty.

The report contains 16 recommendations for change, largely focusing on the need for clearer guidelines and criteria in designating disaster areas, validating and documenting damage, and classifying "disaster-related deaths." The auditors urged FEMA to recover $36,300 paid to Miami-Dade residents who did not report a need for rental assistance or damage to their homes.

FEMA agreed with some of the findings and promised to make some corrections, but also argued that the criticisms were unfair because the agency was dealing last fall with "eight named storms resulting in multiple major disaster declarations in virtually every state along the Eastern Seaboard and Gulf of Mexico."

To expect an "error-free execution and a seamless trail of decision support documentation is both unrealistic and inappropriate," the agency wrote in its official response to the audit.

Although the audit did not focus on other areas of Florida or the country, the review found that FEMA's lack of controls extended to other disasters nationwide.

FEMA admitted that inspection errors resulted in $24.4 million in "ineligible or excessive payments" throughout the United States and its territories from August 2004 to February 2005. The agency is trying to recoup the money.

Two private companies, with five-year contracts worth $150 million each, provide inspectors who enter homes to verify hurricane damage. The companies hired 1,600 new inspectors to respond to the four Florida hurricanes and gave them only eight to 12 hours of training, the audit states. The work of the inspectors was not closely monitored, according to the report.

Examiners discovered potential conflicts of interest in particular in the hiring of 22 Miami-Dade residents to serve as inspectors in the county. Five verified claims within 20 blocks of their home. Another did inspections "just one block from his home," the audit states.

Dan McLaughlin, spokesman for U.S. Sen. Bill Nelson, a Florida Democrat, said the audit findings "clearly indicate lax oversight by a government agency in the way it spends taxpayer dollars."

Megan O'Matz can be reached at momatz@sun-sentinel.com or 954- 356-4518. Sally Kestin can be reached at skestin@sun-sentinel.com or 954-356-4510.

Copyright © 2014, Los Angeles Times
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