FEMA did not take sufficient actions to prevent fraud, waste, and abuse of transportation assistance funds for vehicles considered damaged or destroyed by Hurricanes Harvey, Irma, and Maria in FY 2017. These weakness occurred because FEMA does not require that agencies collect and retain documentation used to establish applicant eligibility; consider pre-disaster vehicle market value when determining award amounts; provide guidance to state, territorial and tribal governments on how to set transportation assistance thresholds; and conduct post-payment reviews to ensure funds are spent appropriately. We made three recommendations that, when implemented, will help FEMA ensure it is spending Federal funds for transportation assistance properly. FEMA concurred with one recommendation and non-concurred with two recommendations.
- Executive SummaryReport NumberOIG-19-66Issue DateDocument FileDHS AgencyOversight AreaFiscal Year2019
- Executive Summary
In two of the four areas – training and collaboration – Washington’s Emergency Management Division (EMD) and FEMA complied with applicable policies, procedures, and regulations. In the third functional area – project execution, monitoring and oversight – we did not identify any significant deficiencies. We found, however, EMD lacked position-specific guidance for all personnel with programmatic responsibilities. In the last functional area – project and grant closeout – neither EMD nor its subrecipients submitted timely project closeout requests. In addition, FEMA did not enforce compliance with its own guidance for processing closeouts. We recommended FEMA ensure EMD complies with its State Administrative Plan by issuing and regularly updating desk manuals. In addition, we recommended FEMA coordinate with EMD to initiate closeout on behalf of subrecipients for all open, large projects whose period of performance end dates exceed the 90-day regulatory requirement, and submit closeout requests to FEMA for projects exceeding the 180-day requirement. We made five recommendations to strengthen EMD’s internal controls to improve its oversight of FEMA’s Public Assistance grant program. FEMA concurred with all five of our recommendations.Report NumberOIG-19-64Issue DateDocument FileFiscal Year2019
- Executive Summary
Richland County did not always properly account for and expend Federal funds according to Federal regulations and FEMA guidelines. FEMA did not hold North Dakota accountable for fulfilling its grant management responsibilities, and North Dakota did not adequately manage the FEMA grant by monitoring the County to ensure it complied with applicable regulations and guidelines. The County failed to follow all Federal procurement regulations when awarding about $1.9 million in disaster-related contracts. We recommended that FEMA disallow $1,146,921 in ineligible contract costs and direct North Dakota to work with the County to verify that the County complies with all Federal grant requirements and establishes effective accounting systems. FEMA concurred with our three recommendations for improving County compliance in managing future Federal grants.Report NumberOIG-19-63Issue DateDocument FileFiscal Year2019
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In July, a Third Man Pleaded Guilty to Participating in the Scheme
Greenbelt, Maryland – A federal grand jury returned an indictment charging John Irogho, age 38, of Upper Marlboro, Maryland, for conspiracy to commit wire fraud, and charging Irogho and Odinaka Ekeocha, age 33, of Laurel, Maryland, for conspiracy to commit money laundering, in connection with a scheme to fraudulently obtain federal benefits. The indictment was returned on July 31, 2019, and unsealed today upon the arrests of the defendants.
The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Mark I. Tasky of the Department of Homeland Security (DHS) – Office of Inspector General; Special Agent in Charge Michael McGill of the Social Security Administration (SSA) Office of Inspector General; Special Agent in Charge Matthew S. Miller of the U.S. Secret Service – Washington Field Office; and J. Russell George, Treasury Inspector General for Tax Administration (TIGTA).
“While many come forward in the wake of disasters to help selflessly, some use disasters to enrich themselves through theft and fraud,” said U.S. Attorney Robert K. Hur. “The U.S. Attorney’s Office will pursue criminals who steal funds intended to help actual disaster victims.”
“This indictment should serve as notice that the Treasury Inspector General for Tax Administration is committed to investigating illicit manipulations of IRS online systems, and bringing those involved to face justice,” said J. Russell George, Treasury Inspector General for Tax Administration.
Michael McGill, Special Agent in Charge of the Social Security Administration Office of the Inspector General, Philadelphia Field Division said, “I want to thank our law enforcement partners for their efforts to bring these individuals to justice. We will continue to protect the integrity of the Social Security system, and pursue those who violate the public trust by committing fraud against Social Security and those who depend on it across the country.”
During the time period covered by this indictment, the Federal Emergency Management Agency (FEMA) was responsible for providing emergency benefits and compensation for damage to victims who were affected by declared national emergency disasters, such as hurricanes and wildfires. Among other benefits, an individual in an area affected by a national disaster was immediately eligible for “Critical Needs Assistance” (CNA) to purchase life-saving or life sustaining materials. The assistance was paid to the victim in a manner of his/her choosing, including being deposited onto pre-paid debit cards.
According to the two-count indictment, from 2016 through 2018 Irogho and several co-conspirators purchased hundreds of Green Dot debit cards, which co-conspirators then registered with Green Dot using the stolen personal information of identity theft victims from around the country. In 2017, amidst Hurricanes Harvey, Irma, and Maria, and the California wildfires, co-conspirators allegedly applied online with FEMA for CNA using the stolen personal information of additional victims of identity theft. According to the indictment, FEMA paid at least $8 million in amounts of $500 per claim to the Green Dot debit cards purchased by Irogho and his co-conspirators.
In addition to filing false disaster-assistance claims with FEMA, the indictment alleges that co-conspirators also filed false claims online for Social Security benefits, for IRS tax refunds, and for Department of Labor unemployment and disability benefits using the stolen identities of multiple additional individuals, including name, address, Social Security Number (“SSN”), and other personal identifiers.
The indictment alleges that FEMA, and the other federal agencies to whom fraudulent applications for benefits were submitted, deposited the falsely claimed benefits directly onto the Green Dot debit cards. Funds were deposited onto the Green Dot debit cards in the names of multiple stolen identities, and in stolen identities that were different from the identities that had been used to register the cards. After the funds were placed onto the Green Dot debit cards, certain co-conspirators then informed other conspirators, including Irogho, that funds were available on the cards, and provided information to facilitate “cashing out” the funds from the cards. The indictment also alleges that Irogho enlisted Ekeocha and other conspirators to cash out stolen funds from the Green Dot and other pre-paid debit cards, which Irogho, Ekeocha, and other co-conspirators did in exchange for a commission. Irogho, Ekeocha, and their co-conspirators cashed out the cards soon after funds were added by depositing the money into bank accounts, and/or through ATM withdrawals or purchases of money orders.
According to the indictment, Irogho and other co-conspirators took steps to conceal their identities and the conspiracy and scheme to defraud, by enlisting other individuals (including Ekeocha) to make the purchases and withdrawals, utilizing multiple store and bank locations and methods of withdrawal, using multiple bank accounts (including in the names of corporate entities), converting funds into cash rather than placing them into bank accounts, and making money orders payable to other individuals and/or corporate entities which they or their co-conspirators controlled.
The conspirators allegedly used an encrypted messaging application, e-mail and other means to communicate, and used the stolen federal funds to pay rental and housing expenses, to purchase used vehicles, and for other purposes.
If convicted, Irogho faces a maximum sentence of 30 years in federal prison for conspiracy to commit wire fraud. Irogho and Ekeocha each face a maximum sentence of 20 years in federal prison for conspiracy to commit money laundering. At their detention hearings today in U.S. District Court in Greenbelt U.S. Magistrate Judge Thomas M. DiGirolamo ordered that Irogho be detained pending a detention hearing scheduled for Monday, August 5, 2019 at 3:00 p.m. Judge DiGirolamo ordered that Ekeocha be released under the supervision of U.S. Pretrial Services.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
In a related case, Tare Stanley Okirika, age 30, of Laurel, Maryland, pleaded guilty to wire fraud conspiracy on July 19, 2019, admitting that as part of the conspiracy to fraudulently obtain government benefits, he worked with other co-conspirators to cash out Green Dot and other prepaid debit cards. Okirika admitted that he used the stolen federal funds from the scheme to pay his rent and for other purposes. U.S. District Judge George J. Hazel has scheduled sentencing for Okirika on October 22, 2019, at 10:00 a.m.
Members of the public who suspect fraud involving disaster relief efforts, or believe they have been the victim of fraud from a person or organization soliciting relief funds on behalf of disaster victims, should contact the National Disaster Fraud Hotline toll free at (866) 720-5721. The telephone line is staffed by a live operator 24 hours a day, 7 days a week. You can also fax information to the Center at (225) 334-4707, or email it to email@example.com. Learn more about the Department of Justice’s National Center for Disaster Fraud at http://www.justice.gov/disaster-fraud.
United States Attorney Robert K. Hur commended the DHS OIG, the SSA OIG, the USSS, and TIGTA for their work in this investigation. Mr. Hur thanked Assistant U.S. Attorneys Elizabeth G. Wright, and Kelly O. Hayes, who are prosecuting these cases.Topic
- Executive Summary
FEMA has instituted several effective mechanisms to demonstrate the importance of fraud prevention in its disaster assistance programs, but it needs to do more. In line with our 2011 audit report recommendations, FEMA now uses standard system queries and additional business rules to flag potentially fraudulent disaster assistance applications. However, FEMA must take additional, proactive steps to create and sustain a culture of fraud prevention and awareness. This includes adequately staffing the Fraud and Internal Investigations Division, implementing an effective process to monitor and discourage staff noncompliance with required fraud training requirements, and establishing a clear and consistent process for reporting suspected fraud. We made five recommendations for FEMA to demonstrate its commitment to fraud prevention in carrying out its disaster assistance programs. FEMA concurred with all of our recommendations and has begun implementing corrective actions.Report NumberOIG-19-55Issue DateDocument FileFiscal Year2019
- Executive Summary
Federal Emergency Management Agency (FEMA) did not properly oversee the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana or State) to ensure it complied with Federal regulations and FEMA guidelines. Louisiana and the Office of Community Development (OCD), in turn, did not always properly account for and expend Federal grant funds. Specifically, Louisiana did not provide adequate documentation to support costs, as required by Federal regulations, and FEMA is not requiring the State to provide mandatory documentation to close out the $706.6 million Hazard Mitigation Grant Program (HMGP) grant. Louisiana also has not provided FEMA with required documentation showing that homeowners paid $79.7 million in promissory notes for state-funded mitigation work on their homes. Finally, Louisiana drew down funds exceeding project obligations by $50.4 million due to a lack of FEMA controls. These issues arose primarily because FEMA did not ensure Louisiana exercised proper oversight of the HMGP grant and the State did not comply with Federal regulations. As a result, Federal funds are at risk of fraud, waste, and abuse. We provided five recommendations to FEMA to postpone project closeout until Louisiana provides adequate documentation that supports $706.6 million in costs and that FEMA ensures compliance with Federal regulations and FEMA guidelines. FEMA’s responses were sufficient to close all but one recommendation, which we consider open and unresolved.Report NumberOIG-19-54Issue DateDocument FileKeywordsFiscal Year2019