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Testimony: 

Before the Committee on Homeland Security and Governmental Affairs, 
U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EST: 

Wednesday, December 6, 2006: 

Hurricanes Katrina And Rita Disaster Relief: 

Continued Findings of Fraud, Waste, and Abuse: 

Statement of Greg Kutz, 
Managing Director:
Forensic Audits and Special Investigations: 

John J. Ryan, 
Assistant Director:
Forensic Audits and Special Investigations: 

GAO-07-252T: 

GAO Highlights: 

Highlights of GAO-07-252T, a testimony to the Committee on Homeland 
Security and Governmental Affairs, U.S. Senate 

Why GAO Did This Study: 

Hurricanes Katrina and Rita destroyed homes and displaced millions of 
individuals. While the Federal Emergency Management Agency (FEMA) 
continues to respond to this disaster, GAO’s previous work identified 
significant control weaknesses—specifically in FEMA’s Individuals and 
Households Program (IHP) and in the Department of Homeland Security’s 
(DHS) purchase card program—resulting in significant fraud, waste, and 
abuse. 

Today’s testimony will address whether FEMA provided improper and 
potentially fraudulent (1) rental assistance payments to registrants at 
the same time it was providing free housing via trailers and 
apartments; (2) duplicate assistance payments to individuals who 
claimed damages to the same property for both hurricanes Katrina and 
Rita; and (3) IHP payments to non-U.S. residents who did not qualify 
for IHP. This testimony will also discuss (1) the importance of fraud 
identification and prevention, and (2) the results of our investigation 
into property FEMA bought using DHS purchase cards. 

To address these objectives, GAO data mined and analyzed FEMA records 
and interviewed city officials, university officials, and foreign 
students. GAO also traveled to Louisiana and Texas to inspect selected 
property items and to investigate improper housing payments to 
individuals living in FEMA-provided housing. 

What GAO Found: 

FEMA continued to lose tens of millions of dollars through potentially 
improper and/or fraudulent payments from both hurricanes Katrina and 
Rita. These payments include $17 million in rental assistance paid to 
individuals to whom FEMA had already provided free housing through 
trailers or apartments. In one case, FEMA provided free housing to 10 
individuals in apartments in Plano, Texas, while at the same time it 
sent these individuals $46,000 to cover out-of-pocket housing expenses. 
In addition, several of these individuals certified to FEMA that they 
needed rental assistance. 

FEMA made nearly $20 million in duplicate payments to thousands of 
individuals who claimed damages to the same property from both 
hurricanes Katrina and Rita. FEMA also made millions in potentially 
improper and/or fraudulent payments to nonqualified aliens who were not 
eligible for IHP. For example, FEMA paid at least $3 million to more 
than 500 ineligible foreign students at four universities in the 
affected areas. This amount likely understates the total payments to 
ineligible foreign students because it does not cover all colleges and 
universities in the area. FEMA also provided potentially improper 
and/or fraudulent IHP assistance to other ineligible non-U.S. 
residents, despite having documentation indicating their ineligibility. 

Finally, FEMA’s difficulties in identifying and collecting improper 
payments further emphasized the importance of implementing an effective 
fraud, waste, and abuse prevention system. For example, GAO previously 
estimated improper and potentially fraudulent payments related to the 
IHP application process to be $1 billion through February 2006. As of 
November 2006, FEMA identified about $290 million in improper payments 
and collected about $7 million 

Figure: GAO Improper Payment Estimate and FEMA Reported Overpayments 
and Collections: 

[See PDF for Image] 

Source: GAO analysis and FEMA data. 

[End of Figure] 

GAO’s previous work on the DHS purchase cards also showed significant 
problems with property accountability. Of 246 items we investigated 
that FEMA purchased for hurricane relief efforts using DHS’s purchase 
cards, 85 items—or 34 percent—are still missing and presumed lost or 
stolen. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-252T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gregory Kutz at (202) 512-
7455 or kutzg@gao.gov 

[End of Section] 

Chairman and Members of the Committee: 

Thank you for the opportunity to discuss our forensic audit and related 
investigations into the Federal Emergency Management Agency's (FEMA) 
response to hurricanes Katrina and Rita. In several prior hearings, we 
testified that significant control weaknesses in FEMA's Individuals and 
Households Program (IHP) and in the Department of Homeland Security's 
(DHS) purchase card program have left the government vulnerable to 
significant fraud, waste, and abuse. In February 2006,[Footnote 1] we 
testified before this Committee that specific control weaknesses in the 
IHP program resulted in improper expedited assistance payments and 
nonexistent controls left the government vulnerable to substantial 
fraud and abuse related to IHP. Several months later, in June 
2006,[Footnote 2] we testified on additional work performed whereby we 
projected that the weak or nonexistent controls resulted in an 
estimated $1 billion dollars in potentially fraudulent and improper IHP 
payments.[Footnote 3] Most recently, in July 2006,[Footnote 4] we 
testified before this Committee that control weaknesses in DHS's 
purchase card program had resulted in fraud, waste, and abuse, 
including activity by FEMA related to hurricanes Katrina and Rita. Our 
purchase card work also showed that poor controls over property 
acquired primarily for hurricanes Katrina and Rita operations, 
including laptops, printers, global positioning system (GPS) units, and 
flat-bottom boats, resulted in lost, missing, or stolen assets. We have 
issued companion reports[Footnote 5] following each of these 
testimonies that included numerous recommendations on how to address 
the weaknesses identified by our audit and investigative work. 

As we previously reported, the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (Stafford Act)[Footnote 6] provides the basis 
for IHP. IHP is a major component of the federal disaster response 
efforts designed to provide financial assistance to individuals and 
households that, as a direct result of a major disaster, have necessary 
expenses and serious needs that cannot be met through other means. The 
Stafford Act allowed registrants to receive financial assistance up to 
a cap of $26,200 for disasters occurring in 2005. In early October 
2006, FEMA reported to Congress that it had delivered approximately $7 
billion in IHP aid for hurricanes Katrina and Rita. This IHP amount 
included expedited assistance, temporary housing assistance, repair and 
replacement of real and personal property, and other miscellaneous 
categories. 

Today's testimony reflects new findings related to additional work we 
have performed since June 2006. The testimony will address whether FEMA 
provided potentially improper and/or fraudulent (1) rental assistance 
payments to registrants at the same time it was providing free housing 
via trailers and apartments; (2) duplicate assistance payments to 
individuals who claimed damages to the same property for both 
hurricanes Katrina and Rita; and (3) IHP payments to nonqualified 
aliens who did not qualify for IHP. This testimony will also discuss 
(1) the importance of fraud prevention, and (2) the results of our 
investigation into property bought by FEMA using DHS purchase cards, 
which was subsequently lost or stolen. For purposes of this testimony, 
potentially improper and/or fraudulent payments refers to payments made 
by FEMA based on potentially improper and/or fraudulent registration 
data submitted by IHP registrants. 

To address these objectives, we compared information included in FEMA 
databases; performed data mining on FEMA databases; and interviewed 
officials in selected cities and universities, and foreign students. We 
also traveled to Louisiana and Texas to physically inspect selected 
items FEMA purchased for hurricane relief efforts. For details on our 
scope and methodology, see appendix I. We conducted our audit and 
investigations from June 2006 through November 2006. We conducted our 
audit work in accordance with generally accepted government auditing 
standards and conducted our investigative work in accordance with the 
standards prescribed by the President's Council on Integrity and 
Efficiency. 

Summary: 

Our audit and investigative work on controls over FEMA disaster relief 
payments associated with hurricanes Katrina and Rita identified 
additional potentially improper and/or fraudulent payments, including 
the following: 

* Nearly $17 million in potentially improper and/or fraudulent rental 
assistance payments to individuals while they were living in trailers 
also paid for by FEMA. For example, after FEMA provided a trailer to a 
household--in January 2006--FEMA provided rental assistance payments to 
the same household in late January, February, and April of 2006 
totaling approximately $5,500. 

* FEMA provided potentially improper and/or fraudulent rental 
assistance payments to individuals living in FEMA-paid apartments. For 
example, FEMA made nearly $46,000 in rental assistance payments to at 
least 10 individuals living in apartments at the same time that the 
apartments were being paid for by FEMA through the city of Plano, 
Texas. Seven of 10 in this group self-certified to FEMA that they 
needed rental assistance, despite the fact that they were living in 
rent-free housing. Because of limitations in FEMA data, we were not 
able to identify the full extent of potentially improper rental 
assistance payments made to individuals in FEMA-paid apartments. 

* Nearly $20 million in potentially improper and/or fraudulent payments 
went to individuals who registered for both hurricanes Katrina and Rita 
assistance using the same property. With few exceptions, FEMA officials 
explained that victims of both disasters are entitled to only one set 
of IHP payments for the same damaged property. However, FEMA officials 
told us that they turned off the system edits that should have 
identified these types of duplicate payments to increase the speed with 
which FEMA could distribute disaster assistance. Consequently, FEMA 
paid over 7,000 individuals IHP assistance twice for the same property-
-once for Hurricane Katrina and once for Hurricane Rita. These 
individuals received double payments for expedited assistance, rental 
assistance, and/or housing replacement. For example, FEMA records 
showed that one registrant received two housing replacement payments of 
$10,500 each, despite the fact that he had only one property to 
replace. 

* Millions of dollars of improper and potentially fraudulent payments 
went to nonqualified aliens, including foreign students and temporary 
workers. For example, FEMA improperly paid at least $3 million in IHP 
assistance to more than 500 ineligible foreign students at four 
universities. Further, FEMA provided IHP payments that included 
expedited assistance and personal property totaling more than $156,000 
to 25 individuals who claimed to be foreign workers on temporary visas. 
FEMA made these payments despite having copies of the work visas for 
several individuals, which should have alerted FEMA that the temporary 
workers were not eligible for financial assistance. Because we did not 
obtain information from all universities in the Gulf region and because 
of unavailability of detailed data on other nonqualified legal aliens, 
we were not able to determine the magnitude of potentially improper 
and/or fraudulent payments in this area. 

* The small amount of money that FEMA has been able to collect from 
improper payments further demonstrates the need to have adequate 
preventive controls. We previously reported that inadequate preventive 
controls related to the IHP application process resulted in an 
estimated $1 billion of potentially improper and/or fraudulent payments 
through February 2006. In contrast, as of November 2006, FEMA had 
detected through its own processes about $290 million in overpayments. 
This overpayment amount, which FEMA refers to as recoupments, 
represents the improper payments that FEMA had detected and had issued 
letters requesting repayments. However, through November FEMA had only 
collected nearly $7 million of the about $290 million identified for 
recoupment. Collection of only $7 million of an estimated $1 billion of 
fraudulent and improper payments clearly supports the basic point we 
have previously made[Footnote 7] that fraud prevention is far more 
efficient and effective than detection and collection. 

* Regarding the DHS purchase card program, we found overall problems 
with property items bought for hurricanes Katrina and Rita relief 
efforts using government purchase cards. For example, FEMA is still 
unable to locate 48 of the143 missing items (e.g., laptop and printers) 
identified in our July 2006 testimony. Moreover, 37 items were missing 
from an additional 103 items that we investigated. Thus, over a year 
after being purchased, FEMA could not locate 85 of the 246 items (34 
percent) that we investigated, and are presumed lost or stolen. 

* Our investigation also revealed that although FEMA was in possession 
of 18 of the 20 flat-bottom boats it had purchased for hurricane relief 
efforts, FEMA had not received the title to any of these boats. 
Further, FEMA could not provide any information about the location of 
the remaining two boats, although local law enforcement officials 
informed us that they found one of the boats in a shed at the house of 
its previous owner. 

Potentially Improper and/or Fraudulent Housing Assistance Payments 
Related to Trailers and Apartments: 

We found that FEMA provided nearly $17 million in potentially improper 
and/or fraudulent rental assistance payments to individuals already 
housed in other accommodations that FEMA provided through other 
disaster assistance programs. The Stafford Act prohibits FEMA from 
providing rental assistance payments under IHP to an applicant if 
temporary housing has been provided by any other source.[Footnote 8] 
Despite this prohibition, FEMA did not have an effective process in 
place to compare IHP registrant data with data on individuals already 
housed in FEMA-purchased trailers and FEMA-provided apartments. FEMA 
also failed to adequately advise victims that they were prohibited from 
receiving rental assistance for the same period they occupied rent-free 
housing. Consequently, FEMA improperly paid nearly $17 million to over 
8,600 registrants after they had already moved into FEMA trailers. 
While the quality of FEMA data did not allow us to make similar 
calculations for the amount and number of individuals receiving rental 
assistance payments after they had been housed in FEMA-provided 
apartments, the amount could be substantial. 

In the aftermath of hurricanes Katrina and Rita, FEMA used various 
programs to house displaced victims, including financial assistance for 
rent and rent-free housing. Rent-free housing included trailers that 
FEMA purchased and apartments that FEMA either paid for directly or 
reimbursed state and local governments for after they paid landlords on 
behalf of the disaster victims. According to a FEMA official, to 
expedite apartment rental assistance, FEMA provided payments to over 
100 different state and local governments for the provision of rent- 
free apartments. 

By comparing information in two of FEMA's databases--the FEMA Response 
and Recovery Applicant Tracking System (FRRATS) and the National 
Emergency Management Information System (NEMIS)--we calculated that 
FEMA improperly made rental assistance payments--intended to cover out- 
of-pocket rental expenses--totaling nearly $17 million to over 8,600 
individuals after they had moved into FEMA-provided trailers.[Footnote 
9] Some received multiple rental assistance payments even after they 
moved into free FEMA-provided housing. In some instances, the payments 
were made based on potentially fraudulent claims because recipients 
typically have to certify to FEMA that they continued to need IHP 
rental assistance. 

Limitations in FEMA apartment data did not allow us to determine the 
magnitude of potentially duplicate rental assistance payment to 
individuals housed in rent-free apartments. In contrast to trailer 
data, which FEMA maintains in the FRRATS database, we could not 
validate accuracy or completeness of apartment data. According to FEMA 
officials, the accuracy of apartment data was questionable because it 
came from the over 100 state and local authorities who assisted in 
delivering housing aid for FEMA. The completeness of data was also at 
issue because FEMA did not ask states to collect registration data from 
individuals in rent-free apartments until well after the aid was 
provided, and therefore individuals who may have left the rent-free 
apartments were not included in the data. Table 1 provides illustrative 
examples of duplicate rental assistance payments to registrants in FEMA 
trailers and rent-free apartments. 

Table 1: Examples of Duplicate and Potentially Improper and/or 
Fraudulent Housing Assistance Payments Related to FEMA Trailers and 
Apartments: 

Case: 1; 
Amount of duplicate and improper payment: $46,000; 
Type/ location of FEMA-provided unit: Apartment/ Plano, TX; 
Details: 
* 10 residents of an apartment complex applied and received rental 
assistance; 
* At the same time, FEMA provided rent-free housing at the apartment in 
Plano, Texas; 
* FEMA records indicated that seven registrants certified to FEMA that 
they needed rental assistance, despite the fact that they lived in rent-
free apartments. 

Case: 2; 
Amount of duplicate and improper payment: 3,600; 
Type/ location of FEMA-provided unit: Apartment/ Austin, TX; 
Details: 
* Registrant received free housing in September 2005 when the 
registrant moved into an apartment the city of Austin paid for on 
behalf of FEMA; 
* FEMA made rental assistance payments in September 2005, February 
2006, and May 2006 totaling more than $3,600 at the same time that it 
paid $705 per month for the apartment. 

Case: 3; 
Amount of duplicate and improper payment: 1,700; 
Type/ location of FEMA-provided unit: Apartment/ Houston, TX; 
Details: 
* Registrant received assistance in February and a smaller payment in 
May 2006 covering rent from February through May 2006; 
* Registrant received a rent-free apartment for the months of February, 
April, and May 2006. We were unable to confirm whether the registrant 
received rent-free housing in March 2006 due to incomplete data. 

Case: 4; 
Amount of duplicate and improper payment: 5,400; 
Type/ location of FEMA-provided unit: Trailer/ Slidell, LA; 
Details: 
* Registrant received trailer in mid-March 2006; 
* Registrant received two rental assistance payments totaling more than 
$5,400 in April and May 2006 for the time the registrant lived in the 
trailer. 

Case: 5; 
Amount of duplicate and improper payment: 5,500; 
Type/ location of FEMA-provided unit: Trailer/ Lacombe, LA; 
Details: 
* Five members of the same household registered and received IHP 
assistance using the same damaged address; 
* FEMA delivered a trailer to the damaged property in January 2006, but 
continued to provide rental assistance to four members of the same 
family in January, February, and April 2006; 
* One interviewee informed us that the rental receipt that a family 
member provided to FEMA was fictitious; 
* In addition to the $5,500 in improper duplicative payments for 
trailer and rental assistance, the family also received over $6,000 in 
potentially improper and/or fraudulent payments by submitting multiple 
registrations. 

Source: GAO analysis of FEMA's IHP trailer, data and apartment data 
from selected cities. 

[End of table] 

* Case 1 relates to a series of potentially improper and/or fraudulent 
IHP rental assistance payments totaling $46,000 made to 10 registrants 
already housed in rent-free housing. In this case, FEMA paid nearly 
$46,000 in rental assistance to 10 residents of an apartment complex in 
Plano, Texas, from September 2005 through June 2006. However, at about 
the same time period (October 2005 through March 2006), the city of 
Plano made payments totaling more than $74,000 directly to the 
apartment, for which it received reimbursements from FEMA. Of the total 
amount paid, $46,000 was duplicative and therefore potentially improper 
and/or fraudulent. Our review of FEMA records indicated that 7 of the 
10 individuals certified to FEMA that they were in need of rental 
assistance, even after they had been provided with free housing. 
Further, FEMA records showed that 7 provided rental receipts and/or 
leases that clearly indicated that the rent was paid by the city of 
Plano. 

* Case 5 relates to a family of five, all of whom registered for IHP 
using the same damaged address. Four registrations were duplicative and 
therefore payments on those registrations are potentially improper and/ 
or fraudulent. Further, despite the fact that FEMA had installed a 
trailer on the damaged property in January 2006, FEMA continued to send 
rental assistance payments in late January, February, and April 2006 
totaling approximately $5,500. Further, a family member informed us 
that the family had moved back into the damaged home prior to the 
trailer being delivered. Consequently, when the trailer was delivered, 
it simply increased the living space for the household, and it was used 
by a family member who lived in the house prior to the hurricane. 
Further, evidence we gathered during the course of the investigation 
indicated that a rental receipt provided to FEMA to justify continued 
need for rental assistance was fictitious, and that the family member 
who submitted the receipt had never paid rent to the supposed landlord. 
In addition to the $5,500 in improper duplicative rental assistance 
payments, we found that the family members also received at least 
$6,000 in other potentially improper and/or fraudulent IHP payments 
arising from the duplicate registrations. 

In the course of apartment-related audit and investigative work, we 
also identified 14 individuals who improperly received more than 
$75,000 in disaster assistance using one apartment building as their 
hurricane-damaged address, even though the building had minimal damage 
and residents were not forced to evacuate. We provide further details 
in appendix II. 

Potentially Improper and/or Fraudulent IHP Assistance Payments to 
Individuals Claiming Damages from Both Hurricanes: 

FEMA made nearly $20 million in duplicate payments to thousands of 
individuals who submitted claims for damages to the same primary 
residences from both hurricanes Katrina and Rita. With few exceptions, 
FEMA officials explained that victims of both disasters should not 
receive duplicate benefits for the same necessities and/or damages to 
the same property. However, in order to process disaster claims more 
quickly, FEMA disabled a system edit check in NEMIS that could have 
alerted FEMA officials when the same individual applied for both 
disasters using the same identifying information. This system change 
resulted in nearly $20 million in duplicate payments being made based 
on duplicate registrations for hurricanes Katrina and Rita. 

In October 2005, FEMA officials informed us that the small amount of 
time between the impact of hurricanes Katrina and Rita had necessitated 
the issuance of new policy to prevent duplicate claims for the same 
damaged property for both hurricanes. FEMA officials said that, with 
few exceptions, the new policy specified that registrants were entitled 
to one payment for the same damage and/or need. FEMA explained to us 
that this was necessary because most individuals did not have an 
opportunity to replace and/or repair damages they incurred from 
Hurricane Katrina before Hurricane Rita struck, and because their 
displacement was likely caused by both hurricanes. At the time, FEMA 
officials informed us that they had available a system edit check in 
NEMIS intended to alert FEMA system administrators when the same 
individual applies for assistance for both disasters, so that FEMA 
personnel could perform a manual review prior to payments being made. 

Despite having a control available, we identified through our review of 
FEMA's NEMIS that FEMA made payments to about 7,600 individuals who 
used the same social security number (SSN) and hurricane-damaged 
addresses for their Hurricane Katrina registration that they used for 
their Hurricane Rita registration. Subsequently, FEMA officials 
informed us that these duplicate payments occurred because FEMA 
disabled the system edit check feature. FEMA stated that they 
deactivated the system edit check in order to process disaster claims 
more quickly, because the manual review process that they had intended 
for these duplicate registrations would have held up many eligible 
payments. Because of this, FEMA paid nearly $20 million in duplicate 
payments to individuals who submitted duplicate registrations using the 
same SSNs and damaged addresses. The nearly $20 million includes 
duplicate payments for all areas of IHP assistance, including expedited 
assistance, rental assistance, housing replacement payments, or a 
combination of these. In five of the six cases where we performed 
investigative work, the same individual received duplicate payments to 
replace the same damaged property. The individuals also failed to 
provide FEMA with evidence that they had replaced the items or 
conducted repair work after Hurricane Katrina, only to have those items 
or that work destroyed again by Hurricane Rita. In all cases, FEMA 
performed its first physical inspection of the damaged property after 
the passing of both hurricanes. 

In addition to other IHP payment types, all six individuals we 
investigated also received IHP personal property payments to compensate 
them for lost or destroyed household items, twice--once for Hurricane 
Katrina and again for Hurricane Rita. In one case, an individual 
received multiple payments for more than $27,000--over the $26,200 cap-
-for personal property replacement alone. In total, this individual 
received more than $51,800 in IHP assistance, of which at least $25,000 
is potentially improper and/or fraudulent. According to FEMA records, 
another registrant received two housing replacement payments of $10,500 
each, despite the fact that the individual had only one property to 
replace. 

Potentially Improper and/or Fraudulent Payments to Nonqualified Aliens: 

FEMA made at least $3 million dollars of improper and potentially 
fraudulent payments to nonqualified aliens who were not eligible for 
IHP financial assistance. U.S. law specifically prohibits nonqualified 
aliens, such as foreign students and workers on temporary visas, from 
receiving financial assistance in case of disaster.[Footnote 10] 
However, FEMA did not have implementing controls in place, such as an 
agreement in place with other government agencies, such as the Social 
Security Administration (SSA), to identify nonqualified aliens and 
prevent them from receiving such assistance. Consequently, FEMA paid at 
least $3 million to foreign students from four selected universities. 
FEMA also made payments to other nonqualified aliens, such as workers 
on temporary visas. However, because of a lack of data on other 
nonqualified aliens, we were unable determine the magnitude of any such 
improper payments. FEMA made such payments even in cases in which FEMA 
received information indicating that the alien applying for assistance 
was not qualified to receive financial disaster assistance. 

IHP Payments to Ineligible International Students: 

The destruction caused by hurricanes Katrina and Rita affected 
thousands of college students in the fall of 2005. As with other U.S. 
citizens and qualified aliens, college students who were able to 
demonstrate losses were eligible to receive IHP payments to assist them 
in recovering from the disaster. However, U.S. law[Footnote 11] and 
FEMA policy specifically prohibits students in the United States on 
student visas from receiving IHP assistance. By comparing data provided 
by four universities in Louisiana and Texas against registrant 
information in NEMIS, we determined that FEMA improperly provided at 
least $3 million in financial assistance, in the form of IHP payments, 
to more than 500 students in the United States on student visas. This 
amount could understate the total payments to ineligible foreign 
students because we requested information on international students 
from only four of the colleges and universities in the areas affected 
by hurricanes Katrina and Rita. 

Our interviews of school officials and several of the ineligible 
students stated that they received misleading information from FEMA 
personnel. Specifically, officials at several universities informed us 
that FEMA personnel actively encouraged all students--including 
international students--to register for IHP assistance. Despite being 
ineligible for financial disaster assistance, many international 
students with whom we spoke stated that FEMA officials told them they 
were eligible to receive IHP payments and should apply for aid. 

We found that FEMA made these payments despite evidence provided to 
FEMA by students--specifically their student visas--that indicated that 
they were not eligible for cash assistance. Further, consistent with a 
finding we reported on previously, FEMA could have identified these 
students if it had validated their identities with SSA prior to issuing 
IHP payments. In fact, more than 400 of the students reported as 
foreign by the four universities were also identified by SSA as non- 
U.S. citizens. Table 2 displays some examples of ineligible students 
and payments they received. 

Table 2: Improper Payments Made to Ineligible International Students: 

Case: 1; 
Location: Louisiana; 
Number of payments/ amount: 6/$25,500; 
Type of payments: Expedited assistance, rental assistance, 
transportation assistance, and personal property replacement. 

Case: 2; 
Location: Louisiana; 
Number of payments/ amount: 6/$22,500; 
Type of payments: Expedited assistance, rental assistance, housing 
repair, and personal property replacement. 

Case: 3; 
Location: Louisiana; 
Number of payments/ amount: 3/$17,700; 
Type of payments: Rental assistance and personal property replacement. 

Case: 4; 
Location: Louisiana; 
Number of payments/ amount: 4/$16,400; 
Type of payments: Expedited assistance, rental assistance, and housing 
repair. 

Case: 5; 
Location: Louisiana; 
Number of payments/ amount: 3/$17,000; 
Type of payments: Rental assistance and personal property replacement. 

Case: 6; 
Location: Louisiana; 
Number of payments/ amount: 4/$10,900; 
Type of payments: Expedited assistance, rental assistance, and 
transportation replacement. 

Case: 7; 
Location: Texas; 
Number of payments/ amount: 3/$7,700; 
Type of payments: Expedited assistance, rental assistance, and personal 
property replacement. 

Case: 8; 
Location: Louisiana; 
Number of payments/ amount: 3/$6,500; 
Type of payments: Expedited assistance, rental assistance, and personal 
property replacement. 

Source: GAO analysis of university data and FEMA IHP data. 

[End of table] 

* Case 4 concerns a student in New Orleans who received more than 
$16,000 in FEMA payments, including payments for expedited assistance, 
rental assistance, and personal property replacement. According to 
NEMIS data, the student's damaged property was in the hardest-hit area 
of the city, and therefore the student's qualification for IHP was 
performed through geospatial mapping, while his identity was also 
validated through a third-party contractor. The student told us that he 
repeatedly informed FEMA personnel that he was an international student 
on an F1 visa, and was told each time that he qualified for assistance. 
In addition to receiving rental payments from FEMA, the student also 
received a trailer in April 2006. The student stated that he received a 
letter from FEMA in August 2006 asking for the money back. Further, he 
is concerned because a FEMA representative informed him that he was not 
immune to legal action for receiving payments he was ineligible for, 
despite the fact that he had informed FEMA of his status all along. 

* Case 6 involves an international student in New Orleans who received 
nearly $11,000 in FEMA payments. The student had a student visa from 
Brazil, and stated on his IHP registration that he owned a home in the 
New Orleans area. The registrant informed us that he applied via phone, 
and that he took care to inform the FEMA personnel that he was an 
international student. According to this student, in this and 
subsequent conversations with FEMA employees (one of whom was a 
supervisor at a relief center he visited), he was repeatedly told that 
he qualified for assistance despite his international student status. 
Our review of FEMA records confirmed the student's assertion that he 
provided FEMA with a copy of his visa. In fact, a copy of his visa was 
scanned into NEMIS and had a note next to it stating "Proof of 
Qualified Alien," despite the fact that the visa clearly showed he was 
an international student and therefore ineligible. 

* In case 8, a student in New Orleans at the time of Hurricane Katrina 
received three payments totaling $6,500 covering expedited assistance, 
rental assistance, and personal property replacement even though he 
repeatedly told FEMA representatives that he was an international 
student. The student registered for aid via FEMA's Web site using a 
valid SSN. The student told us that the SSN was given to him because he 
was allowed to work in the United States. He stated that during the 
registration process, he did not find any information that made him 
aware that he was not eligible for assistance. After registering 
online, he stated that he also contacted FEMA call center employees and 
made them aware that he was not a U.S. citizen and was in the country 
on a student visa, and said he was told by call center employees that 
he was eligible. The student informed us that during an inspection 
process, the inspector certified that he was a qualified alien even 
after he showed the inspector his visa. He subsequently received more 
than $2,000 for property replacement based on the inspection. However, 
because the student's visa was not scanned into FEMA's system, we could 
not corroborate his statement that he repeatedly informed FEMA of his 
status. 

Payments to Other Nonqualified Aliens: 

We also found that weaknesses in FEMA's controls resulted in improper 
and/or potentially fraudulent IHP payments being made to other 
nonqualified aliens, such as workers in the United States on temporary 
work visas. Because of the unavailability of detailed data on other 
nonqualified aliens, we were unable to calculate the magnitude of this 
problem. However, our investigative work uncovered 25 cases where FEMA 
provided improper payments to nonqualified temporary workers. 
Specifically, we found that FEMA provided 50 disaster assistance 
payments totaling nearly $156,000 to 25 individuals who worked at a 
crab processing facility, despite the fact that FEMA records clearly 
showed that 11 individuals were in the United States on temporary work 
visas, and were therefore ineligible for IHP assistance.[Footnote 12] 
These payments included expedited assistance payments of $2,000 and 
payments of over $10,000 for replacement of property. Some registrants 
received as much as $15,000 in IHP payments. In one instance, the 
registrant's file at FEMA contained a copy of a FEMA flier specifically 
indicating that aliens in the United States on work visas were not 
eligible for IHP. Next to the flier was a copy of the registrant's 
temporary work visa. Despite clearly having evidence that he was 
ineligible for IHP payments, FEMA paid this registrant more than 
$15,000 in IHP assistance. 

Although we were not able to validate that all 25 registrants possessed 
work visas, we were informed by the registrants' employer that all 25 
employees brought their work visa documents with them to FEMA when they 
filed the disaster claims. However, data from SSA indicated that only 
14 of the 25 employees used valid SSNs on their FEMA 
application.[Footnote 13] The remaining 11 individuals provided SSNs to 
FEMA that were never issued or belonged to other individuals in order 
to get IHP assistance. Payments made to the 11 workers who submitted 
fictitious information to FEMA are therefore potentially fraudulent. 

Ineffective Detective Controls Point to Need for Better Preventive 
Controls: 

We previously reported that inadequate preventive controls related to 
the IHP application process resulted in an estimated $1 billion of 
potentially improper and/or fraudulent payments through February 2006. 
As of November 2006, FEMA had detected through its own processes about 
$290 million in overpayments and had collected nearly $7 million of the 
about $290 million identified as improper. Collection of only $7 
million of an estimated $1 billion of potentially improper and/or 
fraudulent payments clearly supports the basic point we have previously 
made, that fraud prevention is far more effective and less costly than 
detection and monitoring. 

FEMA's Detection Controls Are Not Effective at Identifying All 
Potentially Improper and/or Fraudulent Payments: 

In June 2006, we testified that an estimated $1 billion was potentially 
improper and/or fraudulent. We derived this estimate from statistical 
sampling work we conducted on registrations submitted to FEMA as of mid-
February 2006. We also reported that this estimate potentially 
understates the total potentially improper and/or fraudulent payments 
because the scope of our statistical sampling work did not include 
verifying for insurance or actual property damage, among others things. 

As of November 2006, FEMA reported that it had identified about $290 
million in overpayments to nearly 60,000 registrants. This overpayment, 
which FEMA refers to as recoupments, represents the improper payments 
that FEMA reported it had detected and for which it had issued 
collection letters. According to FEMA officials, the payments 
identified as improper were based on cases referred to the fraud 
hotlines and registrations that met specific criteria of being more 
likely improper. 

Although FEMA had identified about $290 million in overpayments, to 
date FEMA had collected nearly $7 million. We did not validate the 
potential collection amount. However, the amount that FEMA had 
collected on overpayments related to hurricanes Katrina and Rita 
supports our prior statements that detective controls, while an 
important element of a fraud prevention program, are more costly and 
not as effective as preventive controls. As FEMA's historical 
experience demonstrated, once a payment had been disbursed because of 
weak preventive controls, it is difficult to identify individuals who 
received the improper payments, contact those individuals, and collect 
on those payments. As discussed previously, when system edit checks 
that should occur during the processing of disaster registration are 
circumvented, significant improper payments occur that require 
extensive data mining and follow-up actions to identify and recover 
improper payments. 

In addition to the difficulties in collecting overpayments, there are 
limitations to the ability of detective controls in identifying all 
instances of overpayments. For example, our conversations with several 
foreign students indicate that although some have received recoupment 
letters, others have not. 

FEMA Had Not Issued Recoupment Notice to GAO Registrations: 

The limitations of detective controls are demonstrated through GAO's 
own experience with the FEMA registration, payment, and recoupment 
processes. As we testified previously, GAO submitted a number of 
registrations using false identities and fictitious addresses to test 
the effectiveness of FEMA's internal controls. We also testified that 
we received payments on registrations we submitted. However, to date, 
we had not received recoupment notices from FEMA indicating that it had 
identified the undercover registrations that GAO submitted. After our 
last testimony in June of 2006, we received another payment of more 
than $3,200 for rental assistance on a property that did not exist. In 
total, we received six payments on five registrations using falsified 
information, without receiving any recoupment notices from FEMA. 

FEMA Cannot Adequately Track Its Property: 

We found weak accountability over FEMA property bought for hurricanes 
Katrina and Rita relief efforts using government purchase cards. Our 
investigation revealed that DHS overstated the number of items FEMA had 
actually located on the day of our July16, 2006, testimony and that 
additional items are missing. In total, of the 246 laptops, printers, 
flat-bottom boats, and GPS units that we investigated for this 
testimony, 85 items are missing and presumed lost or stolen. Moreover, 
during the course of our investigation, we found that FEMA did not have 
titles to any of the 20 flat-bottom boats it purchased for hurricanes 
Katrina and Rita. The fact that FEMA could not locate two of the flat- 
bottom boats raises additional concerns about DHS's accountable 
property controls. 

Missing Items FEMA Purchased for Hurricane Relief: 

As part of our July 19, 2006, testimony, we reported that poor controls 
over property acquired with DHS purchase cards may have resulted in 
lost or misappropriated assets. Specifically, we reported that FEMA 
could not account for 143 items purchased in September and October 2005 
for Hurricane Katrina and Hurricane Rita relief efforts. On the morning 
of the testimony, DHS sent your office an e-mail indicating that 87 of 
the 143 items had been found.[Footnote 14] At the hearing, DHS's Chief 
Financial Officer reiterated that most of the missing property had been 
found, but acknowledged that the items had not yet been physically 
verified. 

Our investigation revealed that DHS's July 19 e-mail overstated the 
number of items FEMA had located. By October 2006, a year after the 
property was purchased, we could only account for 79 of the 87 items 
that FEMA claimed it had found.[Footnote 15] In addition, of the 143 
items that we reported as missing in our July testimony, 48 are still 
missing and presumed lost or stolen. Moreover, 37 of items were missing 
from an additional 103 new items we investigated. In total, of the 246 
items we investigated for this testimony, 85 items (34 percent) are 
lost or stolen.[Footnote 16] A November 27 DHS memo supports the 
results of this investigation, acknowledging that many items purchased 
for hurricane relief efforts are still missing. Figure 1 details the 
results of our investigative work as of October 16, 2006.[Footnote 17] 

Figure 1: Status of Property as of October 16, 2006: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Title and Location of Flat-Bottom Boats: 

In our July 2006 testimony, we also reported on several issues 
surrounding the purchase of 20 flat-bottom boats needed for hurricane 
relief efforts. Specifically, we found that FEMA paid $208,000--about 
twice the retail price--to a broker, who in turn obtained the boats (17 
new and 3 used) from several different retailers. Further, although the 
broker billed FEMA and was paid for all 20 of the boats, he failed to 
pay one retailer that provided 11 of the boats. The retailer 
subsequently reported the boats as stolen and did not provide FEMA with 
title to the boats. Consequently, in our testimony, we concluded that 
FEMA paid for, but did not receive title to, at least 11 of the boats. 

However, upon further investigation, we found that FEMA also did not 
have title to the remaining 9 boats. Thus, FEMA did not have title to 
any of the boats. Specifically, our searches for boat titles found that 
no transfer of title and/or registration had taken place on any of the 
17 new boats, that is, the serial numbers were "not on file." Of the 
remaining 3 used boats, title searches revealed that all 3 remain 
registered to their previous owners. 

Furthermore, FEMA could not provide us with any information about the 
two boats that are still not in its possession as of October 2006. 
However, using the serial numbers and manufacturer information on the 
make and model, local law enforcement located one of the boats in a 
shed at the house of its previous owner. According to the previous 
owner, he sold the boat to FEMA and delivered it to the New Orleans 
Convention Center in September 2005. In March 2006, he received a call 
from the New Orleans Convention Center requesting that he retrieve his 
abandoned boat. When he went to retrieve the boat, he found that the 
tires on the boat's trailer were flat, the boat's battery had been 
removed, and the anchor rope had been cut. This boat is one of the 
three still registered under its previous owner's name and no 
application for transfer of title has been recorded. 

Conclusions: 

Ineffective preventive controls for FEMA's IHP have resulted in 
substantial fraudulent and improper payments. The additional examples 
of potentially fraudulent and improper payments in our testimony today 
further show that our estimate of $1 billion in improper and/or 
fraudulent payments through February is likely understated. With 
respect to property bought with government purchase cards, items not 
found 1 year after they were purchased, and over 8 months after we 
selected them for investigation, shows that ineffective FEMA property 
accountability controls resulted in lost or stolen computers, printers, 
and GPS units. 

We have provided 25 recommendations to DHS and FEMA to improve 
management of IHP and the purchase card program. FEMA and DHS had fully 
concurred with 19 recommendations, and substantially or partially 
concurred with the remaining 6 recommendations. DHS and FEMA also 
reported that they have taken actions, or plan to take actions, to 
implement many of our recommendations; however, we have not determined 
if these actions adequately address our recommendations. If properly 
implemented, our prior recommendations should help to address control 
weaknesses identified in this testimony. As with prior work, we will 
refer cases we deem to be potentially fraudulent to the Katrina Fraud 
Task Force for further investigation. 

Madam Chairman and Members of the Committee, this concludes my 
statement. Special Agent Ryan and I would be pleased to answer any 
questions that you or other Members of the Committee may have at this 
time. 

Contacts and Acknowledgments: 

For further information about this testimony, please contact Gregory D. 
Kutz at (202) 512-7455 or kutzg@gao.gov. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this testimony. The individuals who made major contributions to 
this testimony were Kord Basnight, Gary Bianchi, Matthew Brown, Norman 
Burrell, Jennifer Costello, Thomas Dawson, Dennis Fauber, Christopher 
Forys, Alberto Garza, Adam Hatton, Christine Hodakievic, Ryan Holden, 
Jason Kelly, John Ledford, Barbara Lewis, Jonathan Meyer, Andrew 
McIntosh, Kristen Plungas, John Ryan, Viny Talwar, Tuyet-Quan Thai, and 
Matthew Valenta. 

[End of section] 

Appendix I: Scope and Methodology: 

To assess whether the Federal Emergency Management Agency (FEMA) 
provided potentially improper and/or fraudulent rental payments to 
individuals at the same time it was providing the registrant's free 
lodging in FEMA trailers and rent-free (i.e., FEMA-provided) 
apartments, we interviewed FEMA officials, reviewed Title 8 of the 
United States Code, and reviewed the Stafford Act (Pub. L. 93-288) and 
its implementing regulations. We obtained the FEMA Individuals and 
Households Program (IHP) databases as of June 2006 and data on 
individuals residing in FEMA trailers and rent-free apartments. We 
performed data reliability assessment for these databases. In addition, 
we validated that the FEMA IHP database was complete and reliable by 
comparing the total payment against reports FEMA provided to the 
Appropriations Committee on hurricanes Katrina and Rita disbursements. 
We then compared FEMA paid housing data to IHP registration data to 
determine whether FEMA provided duplicate benefits to the same 
registrants. We also conducted field visits to Texas and Louisiana to 
view the property and interview individuals who received IHP payments 
after they had moved into free housing. While we were able to determine 
the number of individuals staying in FEMA trailers who received 
duplicate housing assistance, the data related to individuals staying 
in FEMA-provided apartments were not sufficiently reliable for us to 
perform the same analysis. 

To determine whether FEMA made duplicate payments to individuals who 
claimed damages for both hurricanes Katrina and Rita using the same 
damaged addresses, we compared the social security numbers and damaged 
addresses maintained in the FEMA databases for hurricanes Katrina and 
Rita, and reviewed National Emergency Management Information System 
(NEMIS) data on selected individuals. 

To determine whether FEMA made potentially improper payments to 
ineligible foreign students, we contacted officials at four Louisiana 
and Texas universities and obtained the names and identifying numbers 
of enrolled foreign students. We compared the listing of students 
provided by the universities to FEMA payment data. We also interviewed 
foreign students at those four schools receiving IHP assistance in 
order to determine what guidance FEMA provided them on eligibility. We 
also conducted investigative work to determine whether FEMA made 
improper and potentially fraudulent payments to nonqualified aliens, 
such as those in the United States on work visas. Because we did not 
receive data on all foreign students and nonqualified aliens in the 
United States, we were not able to determine the magnitude of 
potentially improper and fraudulent payments to these individuals. 
Further, because of data availability issues, our work was not designed 
to identify illegal aliens receiving improper payments. We also 
received FEMA data on its recoupment program, but did not validate data 
on identified overpayments and collections provided to us by FEMA 
officials. 

To conduct our investigation into the Department of Homeland Security 
(DHS) purchase card program, we traveled to New Orleans and Baton 
Rouge, Louisiana, and Fort Worth, Texas, in September 2006, to 
physically inspect selected property. If we could not physically 
inspect the property during our visit, we requested that DHS, FEMA, or 
the New Orleans Police Department send us a clear photograph of the 
property and its serial number as proof of possession. We ultimately 
requested that photographic evidence be sent to us no later than 
October 16, 2006, nearly a year after most of the property was 
acquired. 

To obtain information on the case study detailed in appendix II, we 
reviewed data from the U.S. Department of the Treasury's Financial 
Management Service, FEMA's NEMIS database, the Texas Department of 
Motor Vehicles, the Social Security Administration, and the U.S. Postal 
Service, and we conducted field investigations. 

We conducted our audit and investigations from June 2006 through 
November 2006. We conducted our audit work in accordance with generally 
accepted government auditing standards and conducted our investigative 
work in accordance with the standards prescribed by the President's 
Council on Integrity and Efficiency. 

[End of section] 

Appendix II: Potentially Improper and/or Fraudulent Rental Assistance 
Payments Case Study: 

When Hurricane Katrina came ashore in late August 2005, 15 of the 16 
total units in a single Gulfport, Mississippi, apartment building were 
occupied by tenants. The landlord of this building told us that damage 
to the apartment building was minimal. Although one apartment had a 
broken window and some personal property damage, the only real effect 
of the hurricane was water damage from rain and water seepage from 
missing roof tiles. The landlord also said that anyone who left after 
Hurricane Katrina did so voluntarily, and that they were not required 
(e.g., forced) to leave as a result of damage by the storm. 

During a visit to the apartment building, we spoke to the landlord 
about an individual we identified as receiving potentially improper 
rental assistance payments. Subsequently, we conducted additional data 
mining on the apartment address to determine whether other tenants 
applied for and received FEMA disaster assistance. We found that 8 
tenants of this apartment building received FEMA disaster assistance. 
The remaining 7 tenants did not file any disaster assistances claims, 
as a result of being displaced because of uninhabitable or inaccessible 
living quarters as a result of Hurricane Katrina. In addition, we were 
able to confirm with the building landlord that 6 additional 
individuals who did not live at the apartment building at the time of 
hurricane Katrina also made disaster assistance claims. Table 3 lists 
14 individuals who improperly received disaster assistance using the 
apartment building as their hurricane-damaged address. 

Table 3: Apartment Building Tenants Receiving Disaster Assistance: 

Individual: 1; 
Date applied: 9-6-2005; 
Notes: Lived at apartment during storm; 
IHP assistance: $4,358. 

Individual: 2; 
Date applied: 9-6-2005; 
Notes: Never lived at address; 
IHP assistance: 3,810. 

Individual: 3; 
Date applied: 9-7-2005; 
Notes: Lived at apartment during storm; 
IHP assistance: 26,200. 

Individual: 4; 
Date applied: 9-9-2005; 
Notes: Lived at apartment during storm; 
IHP assistance: 772. 

Individual: 5; 
Date applied: 9-9-2005; 
Notes: Lived at apartment during storm;
IHP assistance: 1,725. 

Individual: 6; 
Date applied: 9-10-2005;
Notes: Lived at apartment during storm; 
IHP assistance: 7,160. 

Individual: 7; 
Date applied: 9-12-2005; 
Notes: Moved out before storm; 
IHP assistance: 4,358. 

Individual: 8; 
Date applied: 9-12-2005;
 Notes: Lived at apartment during storm; 
IHP assistance: 4,358. 

Individual: 9; 
Date applied: 9-14-2005; 
Notes: Lived at apartment during storm; 
IHP assistance: 2,000. 

Individual: 10; 
Date applied: 9-16-2005; 
Notes: Never lived at address; 
IHP assistance: 2,000. 

Individual: 11; 
Date applied: 9-19-2005; 
Notes: Evicted before storm; 
IHP assistance: 8,716. 

Individual: 12; 
Date applied: 9-21-2005; 
Notes: Never lived at address; 
IHP assistance: 2,000. 

Individual: 13; 
Date applied: 9-24-2005;
 Notes: Moved out before storm; 
IHP assistance: 4,358. 

Individual: 14; 
Date applied: 9-24-2005; 
Notes: Lived at apartment during storm; 
IHP assistance: 4,358. 

Individual: Total; 
Date applied: [Empty];
Notes: [Empty]; 
IHP assistance: $76,173. 

Source: GAO analysis of FEMA data. 

[End of table] 

FOOTNOTES 

[1] GAO, Expedited Assistance for Victims of Hurricanes Katrina and 
Rita: FEMA's Control Weaknesses Exposed the Government to Significant 
Fraud and Abuse, GAO-06-403T (Washington, D.C.: Feb. 13, 2006). 

[2] GAO, Hurricanes Katrina and Rita Disaster Relief: Improper and 
Potentially Fraudulent Individual Assistance Payments Estimated to Be 
Between $600 Million and $1.4 Billion, GAO-06-844T (Washington, D.C.: 
June 14, 2006). 

[3] To reach this estimate we followed a probability procedure based on 
random selections. Therefore, our sample is only one of a large number 
of samples that we might have drawn. Since each sample could have 
provided different estimates, we expressed our confidence in the 
precision of our particular sample's results as a 95 percent confidence 
interval. The 95 percent confidence interval surrounding the estimate 
of $1 billion ranges from $600 million to $1.4 billion. 

[4] GAO, Purchase Cards: Control Weaknesses Leave DHS Highly Vulnerable 
to Fraudulent, Improper, and Abusive Activity, GAO-06-957T (Washington, 
D.C.: July 19, 2006). This work was performed jointly with the DHS 
Office of Inspector General. 

[5] GAO, Expedited Assistance for Victims of Hurricanes Katrina and 
Rita: FEMA's Control Weaknesses Exposed the Government to Significant 
Fraud and Abuse, GAO-06-655 (Washington, D.C.: June 16, 2006); GAO, 
Hurricanes Katrina and Rita: Unprecedented Challenges Exposed the 
Individuals and Households Program to Fraud and Abuse; Actions Needed 
to Reduce Such Problems in Future, GAO-06-1013 (Washington, D.C.: Sept. 
27, 2006); and GAO and DHS Inspector General, Purchase Cards: Control 
Weaknesses Leave DHS Highly Vulnerable to Fraudulent, Improper, and 
Abusive Activity, GAO-06-1117 (Washington, D.C.: Sept. 28, 2006). 

[6] 42 U.S.C. §5121-§5206. 

[7] GAO, Individual Disaster Assistance Programs: Framework for Fraud 
Prevention, Detection, and Prosecution, GAO-06-954T (Washington, D.C.: 
July 12, 2006). 

[8] 42 U.S.C. §5155, C.F.R. §206.101. 

[9] FEMA officials stated that they did not believe that the initial 
rental assistance payment, provided to cover the first few months of 
rental housing, should be considered a duplication of benefits if it 
was provided to trailer residents. FEMA officials argued that this 
amount is designed to assist disaster victims in moving from temporary 
emergency housing into a normal apartment or home lease situation. The 
United States District Court for the Eastern District of Louisiana 
expressed approval when FEMA permitted claimants to reapply for three 
months of IHP rental assistance even though they had already received 
IHP rental assistance for that period where the claimants certified 
that the first IHP rental assistance was used for essential needs other 
than lodging and/or that they had not been notified the money could 
only be used for lodging. McWaters v. FEMA, Civ. Action. No. 05-5488 
(Order and Reasons dated 12/12/05 and 6/16/06). The court also 
permitted short term lodging program participants to remain in their 
rent free lodging two weeks after receiving their rental assistance or 
the disapproval of their claim. Id. 

[10] 8 U.S.C. §1611 allows the U.S. government to provide nonfinancial, 
in kind emergency disaster relief, including short term shelter to 
temporary legal aliens (nonqualified aliens) after a disaster, but 
prohibits them from receiving financial assistance. 

[11] 8 U.S.C. §1611. 

[12] According to the owner of the crab processing facility, the 
remaining 14 individuals were also in the United States as temporary 
workers, a fact that we were unable to validate. We have referred the 
25 individuals to the Katrina Fraud Task Force for further 
investigation. 

[13] Foreign workers who are admitted legally into the United States 
are issued SSNs. 

[14] In our testimony, we reported as missing 107 laptop computers, 22 
printers, 12 flat-bottom boats, and 2 GPS units. DHS's e-mail claimed 
that FEMA found 74 of the 107 missing laptops, all 12 missing flat- 
bottom boats, and 1 of the 2 missing GPS units. The e-mail also stated 
that FEMA was in the process of locating the missing printers. 

[15] Specifically, we found 69 printers and 10 boats. 

[16] We were able to locate eight printers because we discovered that 
the bar codes FEMA reported as being assigned to the serial numbers on 
the printers had actually been affixed to different items. 
Consequently, when FEMA staff tried to locate these printers using 
their own bar code information, they could not find them--even though 
the printers actually were in FEMA's possession. 

[17] After October 16, FEMA sent us additional photographs of laptops, 
printers, and GPS units. However, because we received this information 
after our October 16 deadline, we did not include it as part of our 
final property count for the purposes of this testimony. 

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