WASHINGTON (CNN) — Problems with the distribution of federal disaster assistance after hurricanes Katrina and Rita caused potential fraud and waste topping $1 billion, an audit by the Government Accountability Office found.

Debit cards given to people displaced by the storms were improperly used to buy diamond jewelry, a vacation in the Dominican Republic, fireworks, a $200 bottle of champagne at a Hooters in San Antonio and $300 worth of “Girls Gone Wild” videos, the audit found.

According to the GAO, $1,000 from a FEMA debit card went to a Houston divorce lawyer, $600 was spent in a strip club and $400 was spent on “adult erotica products,” all of which auditors concluded were “not necessary to satisfy legitimate disaster needs.”

The GAO concluded that at least $1 billion in disaster relief payments by the Federal Emergency Management Agency were improper and potentially fraudulent because the recipients provided incomplete or incorrect information when they registered for assistance.

[…]
The GAO also found that FEMA lost track of 750 debit cards, worth a total of $1.5 million.

After inquiries from the GAO, FEMA recovered about half of that money, which had not been distributed by JPMorgan Chase, the bank hired to run the program. But the agency still cannot account for 381 cards, worth about $760,000 total, which JPMorgan Chase says it distributed, according to the GAO.

[…]

GAO investigators estimated that 16 percent of FEMA’s disaster relief payments were made to people who submitted invalid registrations, to the tune of about $1 billion. However, because the figures were calculated using a statistical sample, the agency said the amount could range from $600 million to as much as $1.4 billion.

[…]

Among the problems found with the registrations, according to the GAO study:

• People signed up for assistance using Social Security numbers that didn’t exist or belonged to other people.
• Aid applications contained bogus addresses for damaged property, or gave addresses for damaged property where the applicants did not live when the hurricanes struck. In one case, FEMA paid nearly $2,360 to a man whose allegedly damaged property was in a cemetery.
• Payments were made to people who listed post office boxes as their damaged residences.
• People submitted duplicate registrations, which FEMA did not detect.
• More than 1,000 registrations used the names and Social Security numbers of prison inmates. According to the GAO, in one instance, FEMA paid $20,000 to a Louisiana prisoner who listed a post office box as his damaged property.
• As part of its audit, the GAO used an undercover registrant who submitted a vacant lot as a damaged address.

FEMA paid the registrant $6,000 and even made payments after being notified by one its own inspectors, as well as an inspector for the Small Business Administration, that the damaged property could not be found, the GAO investigators found.

The GAO concluded that the potentially fraudulent payments occurred because FEMA did not validate the identity of registrants and the locations and ownership of purportedly damaged property before it began making payments.

While conceding that FEMA acted out of the need to provide assistance quickly, GAO investigators concluded the agency’s own policies required additional verification before continuing payments.

The GAO study also found FEMA improperly provided rental assistance to people who were staying in hotels paid for by FEMA because the agency did not require hotels to collect Social Security numbers and FEMA registration information.

Without that information, FEMA could not verify if people were staying in hotels when they applied for rental assistance.

And because that information doesn’t exist, GAO auditors said they could not determine how many people might have double-dipped — or how much it cost the government. […]

http://www.cnn.com/2006/US/06/14/fema.audit/index.html

My emphasis.

Stepping back, you can se how this can be used as an argument for REALID. With it, people will be inextricably tied to their street addresses, social security numbers and ‘identities’ by their thumbprint. If you want to collect your money, you have to be in the system. If you want to buy something, you have to be in the system. And the system is the ultimate arbiter.

Now in a potential cashless society, where the government mandates that you must be in the system in order to be ‘economically active’ it is abundantly clear how REALID / UKNIRID will be able to track everything that you do. They will use the same methods that used to know about the specific purchases made in this relief programme; just ask. There will be no need for statisical samples in order to see how many people are doing what; it will be a simple (comparatively) SQL query.

Anyone trying to roll out these systems will be smacking their lips at this story, which acts as both a test case for rolling out electronic money to millions of people, but also as a demonstration of why the biometric net must be put in place, “to prevent fraud”.

‘Mother nature’ has kindly provided the pretext for the rolling out of this FEMA programme, and note how it is being tested on the poorest of the poor, who are 1000 times more likely to be able to get a hold of the SSN’s of prisoners and be well versed in the subtle arts of ‘gettin one over the man’.

This article does not mention how much JP Morgan charged the government to run this system. No doubt they made sure that they would not be penalized for any fraud committed by ‘their’ users, otherwise you can guarantee that the system would have been air tight.

This entry was posted on Wednesday, June 14th, 2006 at 9:43 am and is filed under NIR.