Report: FEMA Spent Millions Fraudulently

The Federal Emergency Management Agency misspent millions of dollars it received from selling used travel trailers, government investigators have found.

Instead of buying more trailers - as allowed under the law - FEMA used more than $13 million toward fully loaded sport utility vehicles, travel expenses and purchase card accounts, according to a draft report by the Homeland Security Department's inspector general obtained by The Associated Press. The report is to be released Friday.

During its three-month review last summer, the inspector general found that FEMA used some of the proceeds from trailer sales for tree-removal services, agency decals and banners and global positioning systems. FEMA spokesman James McIntyre said the agency discovered these problems on its own and has taken steps to fix them.

After Hurricane Katrina, FEMA purchased 200,000 travel trailers and mobile homes. When displaced hurricane victims leave these housing units, FEMA may sell the units to the general public. The law states that FEMA must use proceeds from these sales to buy more trailers or return the money to the U.S. Treasury.

"Once again, FEMA has proven to be a poor steward of taxpayer money. In order to regain the public's trust, FEMA must ensure that this type of wasteful spending never occurs again," said Rep. Bennie Thompson, D-Miss., the chairman of the House committee that oversees the Homeland Security Department.

In its comments on the report, FEMA said it spent all the money received from the sales to help disaster victims, but the agency agrees with investigators that there needs to be better oversight and control in the future.

"The funds received from the sale of used travel trailers and mobile homes were used specifically for what they were originally obligated for - that is, the proceeds were used for disaster relief and emergency assistance," according to the agency's comments to the draft report. In its comments, FEMA said it will establish a system to track the sale proceeds so that the proper amount of money is returned to the U.S. Treasury.

Since the 2005 hurricanes, Congress and the government have investigated FEMA's spending practices and determined the agency was defrauded, purchased trailers that pose potential health risks and misspent taxpayer dollars. In 2006, a congressional investigation found that purchase cards were used improperly and the Homeland Security Department - FEMA's parent agency - wasted hundreds of thousands of dollars on items like iPods, beer-making equipment and designer jackets.