U.S. Government Defrauded of Over $1 Billion in Hurricane Aid

The General Accounting Office is reporting that the Federal Government was defrauded of well over $1 billion of money intended to assist the victims of Hurricanes Katrina and Rita.

Fraud involving payments supposed to help victims of Hurricanes Katrina and Rita likely exceeds earlier estimates of $1 billion and only a tiny fraction of the money has been recovered, according to a U.S. government report released on Wednesday.

A February estimate that improper payments could be $1 billion “is likely understated,” the Government Accountability Office, the investigative arm of Congress, said in the report to the Senate Homeland Security and Government Affairs Committee.


The GAO cited incidents in which FEMA gave $17 million in housing assistance to individuals who had already obtained free housing in the form of trailers or apartments and $20 million that went to people who improperly claimed for help for both storms that ravaged the U.S. Gulf Coast area.

“FEMA has yet to strike a proper balance between expedited assistance and good stewardship of taxpayer funds,” said Sen. Susan Collins, chairwoman of the committee and a Maine Republican.

One might quibble with the “fraud” language. I suspect a large portion of the housing assitance mentioned in the article was distributed more as a result of confusion than fraud. Still, considering that many Katrina victims are still suffering, the government losing over $1 billion to scam artists is pretty deplorable.

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Alex Knapp
About Alex Knapp
Alex Knapp is Associate Editor at Forbes for science and games. He was a longtime blogger elsewhere before joining the OTB team in June 2005 and contributed some 700 posts through January 2013. Follow him on Twitter @TheAlexKnapp.


  1. cirby says:

    With over $100 billion spent in total, having over a billion in fraud means that the “fraud and waste ratio” is about 100:1. That’s pretty good for government work.

  2. Arcs says:

    If you live anywhere in a GO-Zone county/parrish, I guarantee you that at least one of your two or three closest neighbors bought a FEMA-reimbursed chainsaw and/or generator after the hurricane.

  3. madmatt says:

    And the republicans want to cancel oversight/ inspector generals program why? Couldn’t be that they are for rampant corruption and theft of taxpayer funds…so what is it?

  4. Steven Plunk says:

    In the aftermath of the hurricane everyone complained that aid was slow in coming. In response the government sped up the process and now you see the results, waste and fraud.

    Public policy decisions should not be such emotional affairs. Preparations should be made, processes of distribution decided upon, and plans followed. Congressional leaders, state leaders, and opponents of the administration all called for quicker payouts and less red tape. We now see how that all worked out.

    It’s not all scam artists either. Regular folks just wanted to get what was being given away free. Some probably took what they didn’t need.