The Fight Against Crime: Notes From the Front : In Disasters, Fraud Rears Its Ugly Head

Disasters, it seems, can bring out not only the best in people, but also the worst. Or at least a streak of larceny.

In Miami, in 1992, people made up stories about how Hurricane Andrew blew away nonexistent homes. The next year in Des Moines, Iowa, the Mississippi River was accused of washing away hundreds of imaginary acres of ripe, golden wheat.

And in the San Fernando Valley in 1994, several people falsely claimed to have lived at 9565 Reseda Blvd.--site of the Northridge Meadows Apartments complex that collapsed so dramatically and fatally in the January, 1994, quake.

In what has become commonplace in areas declared disaster zones by the federal government, hundreds, perhaps thousands, of citizens file false claims to get aid they do not deserve.

So while the Federal Emergency Management Agency--which administers most disaster aid--tries to help those who have lost their homes to a hurricane or their farmland to floods, the agency also tries to detect those who are looking for a free ride.

That’s where Paul J. Lillis comes in.

Lillis, the assistant inspector general of FEMA, is the cop whose job is to catch the cheaters.

And, what bugs him most, he said, is that about half a dozen people filed disaster claims with FEMA, claiming to have lived in Northridge Meadows--where 16 people died--on Jan. 17.

“That was one of the most disgusting things I ever saw,” said Lillis, who has been a federal law enforcement officer for 25 years.

“Claiming to live in a place where a lot of innocent people died. . . . that’s sad.”

Of course, he’s seen it before, though. Or some attempted fraud very similar to it.

“Think of a variation,” he said, “and we’ve probably seen it.”

When people get desperate, they start to lie.

“That’s not uncommon in a disaster area,” he said. “What they mean is that they used to live there (before the disaster). Or a friend lived there. Or that they stayed there overnight a few times.”

Sometimes, it was enough that they had driven by the doomed complex. Or that they had seen on TV how its three stories had pancaked into two.

Since 1991, Lillis has been investigating suspicious claims. From his office in Washington, D.C., the 50-year-old has had a somewhat skewed perspective of hurricanes in Hawaii, fires in Colorado, floods in Georgia and riots in California.

He oversees a team of 15 full-time special agents and 10 part-time investigators who are federal law enforcement officers.

They have the power to arrest, detain, search and to seize. They carry badges and guns, and during busts, wear jackets with “U.S. Agent” emblazoned on the back.

Many are former IRS, FBI, Secret Service and Naval intelligence officers, Lillis said. The agency takes its work seriously.

“Our function,” said Lillis, “is to go out and protect the taxpayers’ money.”

A few weeks ago, perhaps to send that point home, FEMA sent out a news release around tax collection time titled “Cheaters Beware,” which warned Los Angeles residents that 15 months after the quake, the agency is still on the lookout for liars.

“Fraud will not be tolerated,” a FEMA official is quoted in the release. “We seek out offenders and refer potential cases for prosecution.”

For those who get away with cheating, the prize could be as much as thousands of dollars in federal housing grants. For those who get caught, the punishment is up to five years in prison and a $250,000 fine for each count.

Since last January, 34 people have been arrested and successfully prosecuted for quake fraud. Most exaggerated damage at their homes, or falsified addresses to make it appear that they had lived in quake-damaged homes.

The truly desperate, though, go a step further, Lillis said.

Some have actually taken hammers to their own homes.

“Yeah, we’ve had people damage their own homes,” he said. “But happily, I can talk about these cases because these are the ones that have been caught. We really don’t have any idea how many get away with it.”

To report suspected earthquake fraud, the FEMA hot line is (800) 323-8603.