Monday, May 20, 2024

An estimated $2 billion in fraud from 2005 Hurricane Katrina bailouts

by BIZ Magazine

Hurricane Ida battered Louisiana on Sunday, killing at least one person and knocking out power for more than 1 million customers.

That happened to be the 16th anniversary of Hurricane Katrina hitting New Orleans, killing more than 1,800 people during its existence. In addition, the hurricane was estimated to have caused more than $160 billion in damage.

Quickly, the fraud began.

The FBI announced in October 2008 that the Hurricane Katrina Fraud Task Force brought federal charges against 907 people across the country for committing a “wide range of crimes including emergency-benefit fraud, identity theft, procurement fraud and public corruption.”

Less than a year after the hurricane, the New York Times called the waste and fraud “breathtaking,” estimating that “one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles” cost taxpayers up to $2 billion.

The fraud was rampant. The Times gave examples: a hotel owner in Sugar Land, Tex., charged with submitting $232,000 in bills for phantom victims and about 1,100 inmates across the Gulf Coast collecting more than $10 million in rental and disaster-relief assistance.

The bureaucratic bungling was also bad, including officials ordering almost half a billion dollars’ worth of mobile homes that were never used, and spending about $416,000 per evacuee on renovations for a shelter at a former Alabama Army base.

An investigation by the Washington Examiner 10 years after Katrina found that it was impossible to know just how much money had been lost to waste and fraud.

The government’s response to both Katrina and COVID-19 shows us that emergencies and disasters attract bad actors and they cost taxpayers billions of dollars.

Adam Andrzejewski, Waste of the Day. The #WasteOfTheDay is presented by the forensic auditors at

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