Katrina fraud estimated at two billion...

RAW STORYPublished: Monday June 26, 2006

According to the New York Times, Hurrican Katrina has "produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history, costing taxpayers up to $2 billion," RAW STORY has learned.

The Times pored through government audits, criminal prosecutions and congressional investigations to find stories of claims for non-existent victims, payments for rental assistance made to prison inmates, and bureaucratic boondoggles involving inflated renovation costs and unused mobile homes.

The degree of fraud is creating amazement even in Washington, DC. Senator Susan Collins is quoted as saying, "The blatant fraud, the audacity of the schemes, the scale of the waste -- it is just breathtaking,"

FEMA officials say they typically expect 1-3% of disaster relief funds to be improperly disbursed. However, in the cases of Hurricanes Katrina and Rita, nearly 11% of the expenses to date are estimated to have been fraudulent -- and as much as 21% of the money given directly to individuals.

The most disturbing cases are those which involve government officials accused of orchestrating elaborate scams involving bribes and extortion in connection with debris removal, provisions for relief workers, and unemployment benefits. Even a program set up by the American Red Cross resulted in an extraordinary level of waste and abuse.

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