Hurricane Relief Money Went to Strippers, Booze and Tatoos

From the Smoking Gun comes this story about how FEMA distributed ATM cards were “abused”. Here is a list of items that were bought,

  1. .45 calibre pistol–$1,300
  2. Gentlemen’s club–$1,200
  3. Diamond engagement ring–$1,100
  4. Gambling–$1,000
  5. Bail Bond–$1,000
  6. Traffic tickets–$700
  7. Tatoo–$450
  8. Massage Parlor–$400
  9. Alcoholic beverages–$200
  10. Condoms–$150

Now I know that most people are going to be upset or even “outraged” that people would buy things like this. However, if you are a “Reagan Republican” or often make arguments that “people know best how to spend their money on themselves” then I think you are being rather hypocritical. Heck, and after all that looting and what not in New Orleans, I think buying a .45 calibre pistol isn’t that unreasonable. The bottom line is that these people are spending the money as they think best. That I or somebody else thinks it is inappropriate is somewhat of a hard call to make since we don’t know the circumstances in which these people found themselves. For example, while a family living in their car with little food to eat might spend the money on securing shelter and food, a guy who is staying at Chez Mom & Dad might find that spending the money on strippers, booze, or a trip to the local massage parlor results in a larger welfare benefit.

Now, if you are upset that it is money the federal government is handing, in other words, part of that money is your money, then perhaps it is time to reconsider these kinds of government programs. This doesn’t bother me in the slightest. After all there even if these people are being “stupid or unwise” in spending the money in this way, I’m not terribly keen on trying to legislate behavior. After all, look at your own personal life and consider if some of your expenditures are ill-advised. Was it really a bright idea to put the $3,000 58 inch flat screen television on your credit card? After all, by the time you pay it off the actual price of that television might be approaching $6,000 or $7,000.1 You could have bought a much more modest television for a tenth the cost and invested the rest for your retirement, your child’s education, or something that isn’t so selfish.

What I think is actually far more disturbing is the problem with fraud.

For example, using falsified identities, bogus addresses, and fabricated disaster stories, we applied for disaster assistance over the telephone and obtained $2,000 expedited assistance payments.

[snip]

In one specific case example, 17 individuals, some of whom shared the same last name and current addresses, used 34 different SSNs that did not belong to them and addresses that were bogus or not their residences to receive more than $103,000 in FEMA payments.

[snip]

Consequently, FEMA issued $2,000 debit cards to over 60 registrants who provided SSNs that were never issued or belonged to deceased individuals. We also found that FEMA made multiple expedited assistance payments to over 5,000 of the 11,000 debit card recipients. That is, FEMA provided the registrant both a $2,000 debit card and a $2,000 check or electronic fund transfer.

[snip]

Our audits and investigations of 20 case studies demonstrate that the weak or nonexistent controls over the registration and payment processes have opened the door to improper payments and individuals seeking to obtain IHP payments through fraudulent means. Specifically, a majority of our case study registrations—165 of 248—contained SSNs that were never issued or belonged to deceased or other individuals. About 20 of the 248 registrations we reviewed were submitted via the Internet. Further, of the over 200 alleged damaged addresses that we tried to visit, about 80 did not exist. Some were vacant lots, others turned out to be bogus apartment buildings and units.

I imagine that the fraud aspect of the story will get lost in all the rhetoric about how the money was spent.
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1Yeah, I know some people might put the television on the credit card to get some ancillary benefit then pay off the balance with the next statement. That isn’t what I’m talking about, so please don’t bring up this example.

FILED UNDER: Natural Disasters, US Politics, , , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. M. Murcek says:

    Of course, the people who will rush to say that a Bush administration bureaucracy got – gasp! – defrauded of hardworking taxpayers’ money, are the same ones who – DOUBLE GASP!!! – when anyone suggests we should implement ANY measures to prevent identity fraud at polling places.

    Count me as less than impressed with their expressions of concern for how fraud damages the republic…




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  2. John Burgess says:

    Buying a gun certainly makes sense, but $1,400? Seems like a little chrome-plating going on…




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  3. Christopher says:

    Maybe they should spend money on the strippers so they can buy some clothes! I guess a guy has to have entertainment.

    Seriously, why are we sending so much money to that region? They live in a bathtub! We are supposed to feel sorry for them when it floods, and I am supposed to send them money from Vancouver, WA even though they made their choice to live there? ABANDON NEW ORLEANS!

    Note to Bush: you are not running for re-election!




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  4. Jack Ehrlich says:

    Steve, your first premise is incorrect. They, did not meet the criteria Reagan put forth. It was not their money they were spending. They were spending our money. I spend my money differently than I would spend your money. That subtle difference prevents the hypocracy you wrote about. People tend to spend free money (to them its free) differently than money they had to earn.




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  5. Herb says:

    I am mad as hell that Chertoff has gotten off scott free with this entire mess.

    He is the DIRECTOR of Homeland Securty and FEMA. Brown was the scapegoat in the whole Katrina mess and Chertoff was totally responsible for the entire operation. I have always thought the buck stops at the higest level, but this is not the case with Homeland Securty and FEMA.

    The entire bureaucracy of Homeland Securty should be scrapped and a new and responsible Department, withour the usual bureaucrats in charge and working there, should be formed.

    But, you think this waste is bad, wait until the Prescription Drug Plan is totally uncovered, that will blow everyones mind with the waste, fraud and payoffs.




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  6. Steve Verdon says:

    Jack,

    I submit that once you give it to them, it is their money, not yours anymore. I agree, that people will treat a windfall differently than they would earned inocme, but that is really more of an argument against this kind of policy than anything else. But exactly how are you going to regulate these kinds of things? I thought Reagan Republicans opposed the nanny-state, not endorsed it.

    I say, if we are going to help, give them the money, and let them do with it as they please. If they mess up and spend it all on booze, guns, and strippers then they have nobody to blame, but themselves.




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  7. anjin-san says:

    Another aspect of the Katrina fiasco comes to light.

    It would be nice to have a discussion of facts that have come out showing the Bush White House WAS WARNED & DID KNOW the extent of the disaster. They just blew it.

    Seems like all I am seeing here now is posts about scary muslims…




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  8. Jamie says:

    I’m surprised only $200 was spent on alcohol. Isn’t new orleans famous for drinking enough liquor to float the Atlantic Fleet?




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  9. Christopher says:

    the white house “WAS WARNED & DID KNOW”? what about New Orleans and the people there? THEY knew better than ANYbody! Lets forget about New Orleans. Blacks don’t even want to move back. we r just lining the pockets of slazy politicians.




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  10. Mark Jaquith says:

    It’s not that they don’t know how to spend the money. Obviously they do. It’s just that the purchases tend to suggest that the people who got the money didn’t really need it. So not only is taxpayer money being given away, it’s being given to people who are so well-off that $2,000 just goes into their stripper fund. That’s enough to piss off capitalists and socialists. It’s “steal from the rich to buy strippers for the middle class” and that doesn’t fit into anyone’s view of how things should work.




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  11. jimbo says:

    This stuff is mildly interesting. Criticising Katrina relief is a good way to play “gotcha” with the Bush administration, which certainly deserves all the criticism it gets. The bigger picture is about people’s attitudes towards government. The media love these stories because the info is right there for them and the average journalist is at least as lazy as the typical welfare bum. Plus these stories sell well amongst lower middle and working class people who otherwise are not interested in what the media have to say. (take it from someone who knows, no one, nobody hates welfare recipients more than welfare workers who make just a few dollars more than the amount needed to qualify for welfare) The left believes that whoever “needs” help should get it generously from government with no questions asked; but they also have a bash Bush mentality of throwing everything at the wall to see what sticks. The right thinks people should be self-reliant and government is incompetent. The result is that future relief of this sort will be tied up with red tape designed by incompetent bureaucrats. The crooks who know how to game the rules will prosper, and those who really need help will not get it.




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  12. Paul says:

    Oh Jack….

    >Steve, your first premise is incorrect. They, did not meet the criteria Reagan put forth. It was not their money they were spending. They were spending our money.

    Do you think people in New Orleans don’t pay taxes? It is their money just like a tax cut would be returning their money. So much for you understanding Reagan.

    This money went to almost a million people and this is the only questionable expenditures they could find?

    Find me another place the Feds waste so little money.




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  13. Steve Verdon says:

    Mark,

    I think your right that the people who spent the money on strippers, guns, booze, etc. didn’t need it. Chances are those expenditures were by people who were abusing the system. Either getting multiple cards, getting cards under false pretenses, etc. Again, the true story isn’t what people bought necessarily, but that they were engaging in fraudulent behavior.




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  14. Eneils Bailey says:

    Condoms–$150

    Gee, as a tax-paying citizen, I feel like I have been screwed more than that.




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  15. Herb says:

    Eneils Bailey:

    Great Comment

    That’s two day in a row that you made me roll on the floor laughing. Keep it up. You sure do bring some great new insights to OTB




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  16. G A PHILLIPS says:

    Anjin-san, I remember watching the news for five days before the strum hit, and I think it was like 24 hours a day that they reported the storm was a cat.5 and it would destroy New Orleans, and I think it was like every 5 sec. that said reporters told people to leave that area for 24 hours a day, for five days before the storm hit, and I also seem to remember all the interviews with all the Idiots who said they were not going anywhere. so I now see that your right, its all Bush’s fault.




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