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.

Supreme Court declines to hear flood insurance plea

The U.S. Supreme Court won't hear a federal lawsuit brought by Hurricane Katrina victims against private insurance companies, but a similar case at the state level will go to Louisiana's highest court next week.

The federal high court rejected appeals by Xavier University and 68 other individuals and businesses who claimed their hazard insurance policies should have covered flooding caused by the failure of man-made levees.

Last August, the 5th U.S. Circuit Court of Appeals overturned a district court ruling that said the policies' flood exceptions were vague. The appeals court panel, comprised of three Texas judges, said that the waters that covered 80 percent of the city after Hurricane Katrina constituted a "flood," even though the policies didn't specifically include man-made failures in its definition of the word.

In the federal case, federal judges were interpreting Louisiana insurance law. But another hurricane victim, Joseph Sher of Uptown New Orleans, made nearly the same argument in state court to challenge his insurer's decision not to cover his flood damages. So far, the district and appeals courts have ruled in his favor. The state Supreme Court has scheduled oral arguments for next Tuesday.

Attorneys on both sides of the Sher case have said the ruling could determine the future of millions of dollars worth of insurance claims from the 2005 hurricanes.
To read the story on the federal 5th Circuit's ruling in the Xavier case last August, click here.

FEMA not providing promised mobile homes

RAMONA, Calif. (AP) — Patty Reedy is still waiting for someone at the Federal Emergency Management Agency to send her the mobile home she was promised before Christmas.

In December, agency inspectors said she wouldn't get a government house because it would be too difficult to haul the 60-foot, three-bedroom prefabricated home up a winding road to her remote mountaintop property.

Reedy isn't alone. FEMA brought dozens of mobile homes to Southern California after the fires, only to find their own guidelines prevented them from putting them on many properties in rough terrain. San Diego County officials say dozens of applicants were denied homes because trucks couldn't reach their properties, didn't have connections into the electrical grid, or were on hillsides deemed at mudslide risk.

They don't have any familiarity with these areas so they can't conceive of the needs being different," said Deena Raver, a contractor who was hired by San Diego County to help fire victims. "You're talking about one area with sewage and water and other places that are very rural."

The mobile home delay is another blemish on a beleaguered agency.

When the fires broke out in five Southern California counties, forcing half a million people to flee, many thought FEMA — still bruised from its performance after Hurricane Katrina — had a golden opportunity to repair its image.

But the fires blackened about 800 square miles and destroyed nearly 2,200 homes, a fraction of the 90,000 square miles and roughly 500,000 homes ravaged by the hurricane, and left roads, power lines and sewage systems largely intact.

"FEMA wasn't really tested here," said Paul Light, a professor of public service at New York University. "It really wasn't a dry run for sustained response and recovery."

FEMA spokesman James McIntyre said the agency applied lessons it learned in Katrina to streamline its operations in Southern California — like the need to respond quickly. Two days before President Bush declared a federal disaster, FEMA crews were moving into fire-stricken zones and setting up at San Diego's Qualcomm Stadium.

Within a week, the agency had begun disbursing grants up to $28,800, short-circuiting detailed accounting requirements that slowed relief after the 2003 fires. So far, FEMA has paid more than $13.1 million to 1,973 people, mostly in San Diego County.

But the agency has only distributed 33 mobile homes in the county, including 14 on American Indian reservation land.

In 2003, the agency sent short, adaptable "travel trailers" to house people living in the mountains, but they are being avoided now amid concerns about toxic chemicals; this week the agency said it would move hurricane victims out of more than 35,000 trailers because tests indicate some of the temporary homes contain high levels of formaldehyde.

Instead, FEMA only dispatched three-bedroom modular homes to Southern California — luxurious compared to the 15-foot travel trailers, but, at 60 feet, too long to fit on many properties or be moved up steep roads full of switchbacks. They also require too much electricity to run off generators or solar panels and have to be hooked into the power grid. They have to be on flat land, away from any hills that might be at risk for mudslides.

Grace Yim, a FEMA branch manager in Pasadena, said she didn't know how many eligible fire victims were denied homes.

"We met a lot of challenges with the kind of unit that was available to us — there are canyon areas, mountainous areas so we had a lot of sites that came back infeasible, and then there's just nothing we can do," Yim said.

People who were unable to put the large trailers on their properties were referred to other agencies, mainly Housing and Urban Development, for subsidized apartments, Yim said.

But living far away from isolated lots can slow reconstruction for people who are cash-strapped to begin with, said Bonnie Frede, director of a nonprofit-funded fire recovery center in the mountain town of Ramona, about 35 miles northeast of San Diego.

"These people want to be on their land," Frede said.

Reedy, a lithe 51-year-old, said she already put more than 7,000 miles on her pickup truck driving up and down the mountain, costing her $2,000 in gas out of her $28,800 grant. She had hoped to get the mobile home on her land and eventually use the grant money to buy it.

She said she will keep trying to get the promised FEMA home on her property.

"I ran into my first FEMA inspector at the grocery store, and he said, 'You pay your taxes, so don't let them tell you no,'" she said. "As long as I know what I'm working towards, I can start to plan, but right now it's just sitting in the bank while I waste gas."

Scientists Closely Examine FEMA Trailers

NEW ORLEANS (AP) -- While the Federal Emergency Management Agency rushes to move thousands of Gulf Coast storm victims out of government-issued trailers, scientists are tearing the units apart to learn why many have exposed occupants to dangerous levels of formaldehyde fumes.

The Centers for Disease Control and Prevention is studying materials used by several companies that provided FEMA with tens of thousands of travel trailers after hurricanes Katrina and Rita in 2005.

Test results reported this week by the CDC showed formaldehyde levels in hundreds of FEMA trailers and mobile homes were, on average, about five times higher than what people are exposed to in most modern homes. Formaldehyde, a preservative commonly used in construction materials, can cause breathing problems and also is believed to cause cancer.

CDC director Dr. Julie Gerberding said scientists need time to determine how -- and why -- formaldehyde levels varied among different models of FEMA trailers. Scientists from the CDC and the University of California's Lawrence Berkeley National Laboratory also are looking at ways to reduce formaldehyde emissions in the trailers.

The study was limited to materials in unoccupied government trailers. Gerberding said other studies indicate formaldehyde levels in manufactured homes are steadily decreasing ''in a fairly significant manner.''

''Mainly because the manufacturers don't want this problem,'' she said, ''so they're learning how to use new materials and changing their processing.''

Kevin Broom, spokesman for the Recreation Vehicle Industry Association, said Friday the industry would adjust its manufacturing techniques if the government adopts stricter formaldehyde standards than those already set by the U.S. Department of Housing and Urban Development.

''We in the RV industry are committed to following the science and making sure our products are safe,'' Broom said in a statement.

FEMA said its New Orleans office received nearly 70 phone calls from concerned residents after Thursday's announcement.

Sherry Gremillion, 45, a waitress still living in a St. Bernard Parish trailer park, said she can't afford an apartment large enough to accommodate her family or close enough to her job. FEMA expects to close the trailer park by March 15.

''I fell asleep crying last night,'' she said Friday. ''I don't think I'm going to make it.''
Hundreds of Gulf Coast trailer dwellers are suing manufacturers in federal court, accusing the companies of furnishing FEMA with shoddily constructed units that jeopardized their health. By law, FEMA can't be named as a defendant in the consolidated litigation until next month at the earliest, according to plaintiffs lawyers.

Critics claim FEMA should have reacted sooner to concerns that formaldehyde is to blame for a host of ailments reported by trailer occupants.

''They knew full well something was wrong. They were just hoping nothing would happen,'' said attorney Daniel Becnel Jr., who says he represents about 5,000 trailer occupants.
Another plaintiffs lawyer said trailer makers are the ''real culprits.''

''Obviously FEMA made lots of mistakes, but FEMA didn't manufacture these trailers,'' said Tony Buzbee, a lawyer for hundreds of current and former trailer occupants.
A lawyer for the companies sued in U.S. District Court in New Orleans didn't return a telephone call for comment Friday.

FEMA administrator R. David Paulison said Thursday the agency hoped to move all of the roughly 35,000 families out of trailers by summer, when hot weather increases formaldehyde emissions.

Louisiana has 25,162 occupied FEMA trailers and mobile homes, while Mississippi has 10,362, according to FEMA. The number of occupied FEMA trailers and mobile homes peaked at 144,000 following the hurricanes.
Paulison called the relocations a ''stopgap measure.''

''We're not booting people out. What we're doing to putting them into hotels and motels until we can find an apartment for them,'' he said. ''It's just transition, to get them out of the travel trailer and into someplace where it's safer.''

Many residents still in FEMA trailer parks are elderly or have disabilities, meaning they are on fixed incomes and can't easily find affordable housing, said Tracie Washington, president of the Louisiana Justice Institute, a nonprofit advocacy group for the poor.

''These are people that rented $200, $300 apartments before Hurricane Katrina, and those aren't available anymore,'' Washington said. ''They're afraid that if they're moved into hotels they'll wind up homeless in a few months.''

FEMA Slammed for Using Toxic Trailers

FEMA, already a dirty word along the Gulf Coast, has taken another hit to its reputation.

The Federal Emergency Management Agency came under new withering criticism Thursday after tests found dangerous levels of formaldehyde fumes in many of the trailers the agency used to house hurricane victims in Louisiana and Mississippi.

''This is such gross incompetence. I really have not in my 10 years seen anything like this on the domestic front,'' said U.S. Sen. Mary Landrieu, D-La.

FEMA Administrator R. David Paulison said Thursday the agency would rush to find temporary housing for roughly 35,000 families now in its trailers. ''We're moving as fast as we can,'' he said.

The agency was forced to act after the Centers for Disease Control and Prevention reported that formaldehyde fumes from hundreds of trailers and mobile homes were, on average, about five times what people are exposed to in most modern homes.

Formaldehyde, a preservative commonly used in construction materials, can lead to breathing problems and is also believed to cause cancer.

Critics, already angered at FEMA for its performance after Hurricanes Katrina and Rita struck in 2005, faulted the agency for not responding sooner to concerns from storm victims that its trailers could be jeopardizing the health of occupants.

''It is simply inexcusable for FEMA to have a one to two year delay in addressing the serious health issues of these men and women along the Gulf Coast who have already suffered from the devastation of the 2005 hurricanes,'' said Louisiana Gov. Bobby Jindal, a Republican.

''When the health of our people and our children and our families is at stake we cannot afford to wait, we cannot decide that we have to do more studies and conduct further analysis,'' he said.

Paulison said he hoped to have everyone out of trailers and into hotels, motels, apartments and other temporary housing by the summer, when the heat and stuffy air could worsen the problem inside the trailers.

Louisiana has 25,162 occupied FEMA trailers and mobile homes, while Mississippi has 10,362, according to FEMA. Other states also have hundreds of trailers. At one point, FEMA had placed victims of the 2005 hurricanes in more than 144,000 trailers and mobile homes.

In an interview with The Associated Press after Thursday's briefing, Paulison acknowledged he could have done a better job of expressing sympathy for storm victims.

''I didn't want to get sappy out there in front of the cameras,'' he said, ''but the truth is that we really do care and we really are working hard to take care of the people's needs and get them out of these travel trailers and mobile homes.''

CDC Director Dr. Julie Gerberding said the center's tests could not draw a direct link between formaldehyde levels and the wide range of ailments reported by trailer occupants. But the CDC urged people to move out as quickly as possible.

Lynette Hooks, a trailer resident, was outraged at FEMA. Since she began living in her trailer outside her damaged New Orleans home in October 2006, she said she has suffered headaches and sinus problems, in addition to the asthma she had before.

''Am I angry at FEMA? Of course I am. They should have started moving people out of these trailers once they first started finding problems,'' said Hooks, 48.

The CDC findings could also have disturbing implications for the safety of other trailers and mobile homes across the country, Homeland Security Secretary Michael Chertoff said Thursday on Capitol Hill. But the CDC study did not look beyond the FEMA housing.

Paulison vowed that the agency would never again use the flimsy, cramped travel trailers to shelter victims of disasters. Mobile homes are generally roomier than trailers and considered less susceptible to buildups of fumes.

FEMA will press ahead with plans to supply leftover, never-used mobile homes from the twin disasters to victims of last week's tornadoes in the South, Paulison said. But the mobile homes will be opened up, aired out and tested first, he said.