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FEMA cuts back on cash for disaster victims

Published June 17, 2006

WASHINGTON - FEMA is cutting back on the amount of cash it will give to future disaster victims in a nod to the rampant fraud that followed last year's hurricanes.

Instead of using debit cards worth $2,000, FEMA director R. David Paulison said Friday, victims will only be able to withdraw about $500 for food, clothing, shelter and transportation costs.

At least 7,000 people signed up for the Federal Emergency Management Agency debit cards last year after hurricanes Katrina and Rita ransacked the Gulf Coast. Recipients got a card and a personal identification number that could be used at ordinary cash machines to withdraw money.

Congressional auditors said this week that they found up to $1.4-billion in aid to individual hurricane victims was used for bogus expenditures like football tickets. This included questions about whether an estimated 750 debit cards - worth $1.5-million - went to Katrina's victims.

"We went out and gave people $2,000, and obviously a lot of those people did not live in Louisiana, did not live in the devastated areas, weren't who they said they were," Paulison said.

He said FEMA has a new identity verification system in place for this year's storm season that will help ensure the cards are issued to victims and not people trying to cash in on a disaster.

"That's going to really get a major handle on the fraud issue - as far as how much money do we give out, and who we give it to," Paulison said.

A report issued this week by the Government Accountability Office found that the debit cards last year paid for a Caribbean vacation, season tickets to New Orleans Saints football games, adult erotica products and alcoholic beverages, including bottles of Dom Perignon champagne.

FEMA hastily scrapped the debit cards program two days after it began distributing them to victims at the Astrodome and other shelters in Texas, where many moved after the storm. At the time, FEMA officials said they believed they could get cash to victims faster through direct bank account deposits.

Paulison, who was not at FEMA during the debit card debacle, said the program "was something that FEMA had very, very rarely ever done."

"And when we did it, it was on a much, much smaller scale," he said.

[Last modified June 17, 2006, 06:32:25]

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