Management Reports Issued (continued) - Office of Inspector ...

April 1, 2012 – September 30, 2012
Semiannual Report to the Congress
FEMA Public Assistance Grant Funds Awarded
to the City of Vacaville, California
We audited PA grant funds awarded to the City
of Vacaville, California (City), for FEMA Disaster
Number 1628-DR-CA. Of the $1.5 million we
reviewed, City offcials generally expended and
accounted for PA funds according to Federal grant
regulations and FEMA guidelines for the three
projects we audited. The City did not, however,
spend any money on the two projects we subjected
to a limited review. In summary, our work
identified $137,530 of unused funds and $6,000 in
ineligible project costs.
We recommended that the FEMA Region IX
Administrator (1) deobligate $137,530 (Federal
share $103,148) from Projects 622 and 2585
and put those Federal funds to better use, and
(2) disallow $6,000 (Federal share $4,500) in
ineligible Project 1827 costs.
(DS-12-13, August 2012, EMO)
http://www.oig.dhs.gov/assets/GrantReports/
OIG_DS-12-13_Aug12.pdf
INVESTIGATIONS
Fraudulent Claim Leads to FEMA
Disaster Arrest
With the Small Business Administration (SBA)
OIG, we investigated and arrested a former county
offcial who submitted false benefit applications
and received approximately $134,000 in funds
following Hurricane Ike. He was charged with
violation of fraud related to a major disaster and is
facing a maximum of 360 months confinement and
a $250,000 fine.
FEMA Employee Sentenced for Bid Rigging
Following our investigation, a former FEMA
Supervisor and his business colleague were arrested
and pleaded guilty to fraud charges. The former
employee and his business partner were found to
have engaged in bid rigging in order to steer FEMA
trailer deactivation contracts over to their company.
According to records, FEMA paid the company
more than $31 million between May 2006 and
January 2010. The former FEMA employee no
longer works for the company and was sentenced to
probation.
Preacher Sentenced for Misuse of FEMA
Disaster Loan
We conducted a joint investigation with the SBA,
which revealed that a well-known preacher and
community activist misused funds received from
a $963,900 disaster loan from FEMA and the
SBA after Hurricane Katrina. The funds were
approved to rebuild an inner-city church but were
instead used by the preacher to purchase personal
vehicles, jewelry, designer clothing, and real estate.
In addition, the preacher made several thousands
of dollars in automated teller machine withdrawals
and check card purchases. He was sentenced to
120 months in prison and was also ordered to pay
restitution of $963,900 and a special assessment fee
of $200.
Kickback Scheme Ends in Arrest for Husband
and Wife
We conducted a joint investigation with the
Internal Revenue Service, Offce of Investigations,
which proved that a husband and wife, owners of
a company, obtained more than $1 million from
subcontracts from another company owned by a
relative. The contracts were awarded in exchange
for more than $200,000 in cash kickbacks to
the relative. In furtherance of the scheme, the
husband and wife engaged in a series of structured
withdrawals from their corporate bank account
in amounts just under the amount necessary to
trigger reports of cash transactions. In this way,
they withdrew $205,000 in cash in 6 months, then
laundered the money by depositing it into several
bank accounts. After being found guilty at trial,
the husband and wife each received 63 months of
incarceration, and the relative received 30 months.
Jointly, the three were ordered to pay a total of
$736,769 in restitution to the U.S. Government.
Disaster Benefit Applicant Found Guilty
With the Department of Housing and Urban
Development OIG, we investigated a disaster
benefit applicant who was found to have included
false identifying information and a false immigration
status on an application for benefits. The
applicant was sentenced to 8 months incarceration,
3 years of supervised release, and restitution in the
amount of $28,992.
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