When natural disasters strike, relief funding fraud often follows. One such instance is when Hurricane Katrina began on August 23d, 2005. It caused billions of dollars in water damage to the city and claimed nearly 2,000 lives.
The Center Square reports that around $160 billion in damages occurred in New Orleans; however, continued financial damage occurred after the storm as individuals sought to profit from the disaster via fraudulent activity.
Citizens and public officials involved
After Katrina ended and individuals realized that the federal government would offer relief funds for those affected, fraudulent activity began in earnest. Both public officials and individual residents applied for funding under the guise of several reasons, including:
- Money to assist New Orleans residents
- Funding for building materials
- Disaster relief housing/shelter improvements and construction
However, investigations since then reveal that some individuals knowingly filled out applications in a fraudulent manner. Business owners in both Louisiana and as far away as Texas claimed funds for victims who never existed and incarcerated individuals, who claimed relief funds as they sat in jail cells across the Gulf Coast.
FBI investigations reveal staggering fraud losses
Several years after the hurricane hit, the Federal Bureau of Investigation took an in-depth look at more than 900 people involved in fraudulent activity connected to relief funding. The charges included identity theft so individuals could gain funding by using the names of the deceased, public corruption by Louisiana officials and kickbacks gained by procurement fraud. The FBI eventually brought charges against those involved.
The resulting fraud cost Louisiana taxpayers approximately $2 billion, but some officials believe that these actions caused additional losses that slipped through the cracks as well.
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