Riders on the Storm: Whistleblowers Can Help Stop Rising Tide of Disaster Relief Fraud

by | Sep 18, 2020 | Blog | 0 comments

The 2020 Atlantic hurricane season, which began in June and continues until November, is on track to break meteorological records. While the average hurricane season features 12 named storms, 2020 has already seen 20 of them as of September. A recent tweet by the National Oceanic and Atmospheric Administration indicated the presence of 5 named storms spinning in the Atlantic Ocean at once, the first time such a phenomenon was observed since September 1971. The New York Times reported on September 15, 2020 that if, as expected, the current season exhausts the 21-name list, meteorologists will begin naming storms based on the 24-letter Greek alphabet. According to the National Hurricane Center, this has only ever happened once, in 2005.

In addition to wreaking human and economic devastation, active hurricane seasons provide fuel for fraud. A September 16, 2020 FBI press release warned the public to remain on alert for “fraudsters who may capitalize on natural disasters.” This class of bad actors includes people and entities that solicit funds for sham disaster relief charities or market nonexistent opportunities for temporary housing to storm victims. The federal government maintains at least two bodies to investigate and prosecute these forms of fraud: the National Center for Disaster Fraud, within the Department of Justice (“DOJ”), and the Federal Emergency Management Agency’s (“FEMA”) Fraud Investigations and Inspections Division.

Unsurprisingly, natural disasters also provide an opportunity for people to defraud the government. On June 3, 2020, the DOJ announced its intervention in a whistleblower lawsuit accusing several defendants of filing false disaster relief claims to FEMA in the wake of Hurricane Katrina. The lawsuit alleges that architecture firm AECOM received more than $300 million by serving as a technical assistance contractor for FEMA relief efforts between 2005 and 2019 and knowingly submitting false and inflated claims on behalf of various relief applicants. One such applicant, Xavier University of Louisiana has agreed to pay $12 million and cooperate in the DOJ’s investigation of other defendants. This case is only the most recent instance of government prosecution of false disaster claims. Undoubtedly, more will follow.

Under the federal False Claims Act, whistleblowers that reveal schemes to defraud the government may receive a significant percentage of the government’s ultimate recovery as a reward. If you have information concerning disaster fraud and would like to discuss further, please contact Charles Kopel (ckopel@lowey.com) for a confidential consultation.