Alan K. Henderson's Weblog


Old comments migrated to Disqus, currently working outtechnical issues

Wednesday, June 14, 2006

Everything's Bigger In Texas - Including Disaster Relief Fraud?

Local man allegedly does bad:

Like thousands of Americans, Kenneth McClain got personally involved after Hurricane Katrina devastated the Gulf Coast. But not in volunteering or rebuilding.
Instead, federal prosecutors say, he became part of a continuing aftershock of the costliest natural disaster in the nation's history: fraud.

The 33-year-old Texan, safely living hundreds of miles from Katrina's wreckage, is charged in an elaborate conspiracy that allegedly scammed more than $10,000 in relief checks from the Federal Emergency Management Agency (FEMA).

McClain is among roughly 150 criminal defendants charged by federal prosecutors since Katrina struck on Aug. 29, a USA TODAY review of court and Justice Department records shows. A Government Accountability Office (GAO) review set for release today concluded that FEMA's disaster aid program is riddled with fraud, a finding that suggests prosecutors could eventually file thousands of additional cases.

The article links the GAO report on the overall fraud investigation (3MB PDF file). The Washington Herald reports that the cost of Katrina-related fraud approaches $1.4 billion.

But don't think for a minute that that accounts for all the waste associated with government Katrina relief. Let me remind you of all the legitimate disaster fund that were spent on frivolous stuff:

In Los Angeles, recipients bought furniture and jewelry, residents said. Women spent FEMA money on their hair and nails.

In Baton Rouge, residents said they knew of people gambling their disaster assistance at casinos on the Mississippi River.

In Cedric Finley's northeast Cleveland neighborhood, "Everybody was getting checks," he recalled.

"They bought cars. They bought TVs. They bought wine. They bought weed," said Finley, a 32-year-old day laborer.

(I am not certain if all these examples stem from Katrina assistance alone or from multiple FEMA disaster relief missions.)

There are two lessons here. First, charity must go directly to the source and in the form of whatever goods and services are needed. Those who need food get food, not cash. Those who need post-disaster home repairs get building materials and repairs, not cash. Those who need rent assistance get a check payable to their landlord sent directly to their landlord.

The second lesson is that the government is far too vulnerable to fraud and misuse for welfare assistance to ever be efficient. Every welfare program gets scammed, because bureaucrats are too distant from the end use of the welfare funds to tell whether they're being used effectively or if they're needed at all. No private-sector charity drive will ever get conned into funding a sex change operation like FEMA has.

Site Meter