70% of Billion Dollar Katrina Aid Program Gone Missing

HUD’s inspector general says that nearly $700 million in aid given to Louisiana homeowners to raise their homes in order to save them from future flooding is nowhere to be found. Chances of recovering the cash are “slim,” says the AG.


ABC News:

“We have $700 million that we can’t account for and that certainly did not go to elevating homes and preventing future damage from storms,” Montoya said in an interview in his office in Washington.

“This is money we can’t afford to lose. This is money that we don’t get back and this is money that we can’t put toward other disaster victims.”

The cases of government waste and fraud have steadily piled up since Hurricane Katrina ravaged the Gulf Coast in 2005. Federal prosecutors are pursuing criminal charges in New Orleans, including one instance last week in which a New Orleans woman pleaded guilty to making false statements after taking government grants and failing to fix her home.

The Louisiana Road Home program, which allocated $1 billion to elevate and repair homes to protect them from flooding and storms, was part of the $29 billion Hurricane Katrina relief effort approved at the time by Congress. The government investigation found that 70 percent of the money has not been accounted for. More than 24,000 homeowners who each accepted grants of $30,000 were unable to show they used the money to fix their houses.

“There is fault all the way around. Clearly the homeowner accepting up to $30,000 to elevate their home is at fault for not using the money that it was intended for,” HUD’s Montoya said.

He added, “Clearly the state’s at fault for not doing a better job of due diligence if you will for ensuring that these homes were being elevated.”


Let me get this straight:

1. The Feds give homeowners $30,000 to elevate their homes. Just. Gave. It. To. Them.

2. The Feds expected the state of Louisiana to perform “due diligence” (snort) to make sure the homeowners spent the money the way it was intended.

3. Homeowners absconded with 70% of tax money earmarked for a program designed by a chimpanzee, implemented by marmosets, and overseen by zombies.

Glad we got that down.

Twenty-four thousand homeowners have a billion dollars thrown at them and we expect…what? This is America. The land of opportunity. If some government bureaucrat drops out of the sky and tosses $30,000 in your lap, what would you do?

The state of Louisiana acknowledges that hundreds of millions of dollars from the program have not been accounted for, but officials told ABC News they are working to recover the money and pushing homeowners to restore their houses in hopes of minimizing damage from the next round of floods and storms. Since the federal investigation began last year, the state says that it has already tracked down 5,000 more people who have fixed their homes.

“We are working aggressively with HUD to get the remaining 19,000 homeowners in compliance,” said Pat Forbes, who oversees disaster recovery in the administration of Gov. Bobby Jindal of Louisiana.


How many of those 24,000 homeowners still have the money? And if they don’t have the money, how are they going to get “in compliance?” Is Louisiana really going to prosecute thousands of people for theft? One would hope so, but the fraud is on such a scale that it is likely they will give homeowners years to do as they promised rather than clog the court system.

My guess is several thousand of those homeowners took the money and ran. Good luck finding them.

This bodes well for all those grants given for hurricane Sandy relief, doesn’t it? Senator Tom Coburn is thinking the same thing:

Coburn said HUD should have a plan in place to ensure that people who receive grants use the money for its intended purpose. He said one area of particular concern is the $16 billion community development block grant program in the Hurricane Sandy aid package, which was signed into law earlier this year by President Obama after intense debate in Congress.

Senior officials at the Housing Department told ABC News that tighter controls are already in place for the Sandy rebuilding effort that were not operative during Hurricane Katrina.

“In the years since Hurricane Katrina, HUD has already implemented a number of the recommendations made by the Inspector General, including additional controls to ensure recovery funds are used properly,” said Jerry Brown, a spokesman for the Housing Department.


It isn’t acceptable, but you can reasonably expect 1% or 2% of spending to fall down the black hole of waste and fraud. But 70%? Some programs like Medicare have higher instances of fraud — 10% by some estimates.

But to lose $700 million is criminal negligence. And the reason it happens is because we don’t put those responsible in jail themselves. Fraud is a crime. But so should being so incompetent, lazy, and ignorant that hundreds of millions of dollars in taxpayer money are lost.



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