49 Charged in Katrina Fund Scam

The number of people in the Bakersfield area charged with wire fraud in a scheme that siphoned off Red Cross funds intended for victims of Hurricane Katrina has risen to 49, and more indictments are expected, federal officials said Wednesday.

At least 19 were contract workers at a Red Cross national call center in Bakersfield, said Mary Wegner, a spokeswoman for U.S. Atty. McGregor Scott in Sacramento. The rest were friends and relatives who picked up relief checks to which they were not entitled, she said.

More than $200,000 had been misappropriated, Wegner said, “and we expect that figure to grow.”

The center was the largest of three set up to field calls from Katrina victims. The others were in Niagara Falls, N. Y., and Falls Church, Va. The centers, which closed earlier this month, were staffed largely by temporary workers who were employed by Spherion, a service company based in Ft. Lauderdale, Fla. None of the suspects worked directly for the Red Cross.

Once callers were determined eligible for relief, they were given personal identification numbers to claim money from Western Union outlets nationwide, FBI Agent Ryan D. McDougal said in one of the criminal complaints.

McDougal said a single victim was entitled to $360 and a family of five or more could receive up to $1,565. The money was intended to help cover day-to-day expenses.

Lawrence Brown, first assistant U.S. attorney in Sacramento, said the employees at the Bakersfield center created sham victim accounts, issuing identification numbers to family members and friends.

But Brown said the Red Cross became suspicious.

“They noted that there seemed to be an inordinate amount of disbursement in the Bakersfield area,” he said in October. “They called in the FBI.”

The investigation had begun in September, and McDougal said he arrested one of the suspects, Trent Jermaine Preslie, 33, on Sept. 28 at a Western Union outlet in Bakersfield. By Oct. 4, four workers at the Bakersfield call center and five of their friends and relatives, including Preslie, had been indicted. In the weeks that followed, those numbers continued to grow.

Officials with Spherion said the firm hadn’t had time to run background checks on the temporary workers who had been hired to staff the processing centers.

The wire fraud charges carry a maximum penalty of 20 years in prison and fines of up to $250,000, federal officials said.

On Sept. 15, two San Fernando Valley residents allegedly posing as Red Cross workers were arrested in what officials said was the first federal case involving a Katrina charity scam.

Prosecutors said Tino Lee, 44, of Burbank and Gina Liz Nicholas, 22, of Glendale were picked up as they sat at a table outside a Best Buy store in Burbank. Atop the table was a collection box and a sign that read, “American Red Cross -- Hurricane Disaster,” court documents showed.

Burbank police said they questioned the suspects after noticing that their laminated Red Cross badges were poorly made.

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Associated Press contributed to this report.