NEW YORK, New York | July 18, 2013 – Lessons from Hurricane Katrina suggest that the large influx of federal aid associated with the Hurricane Sandy relief will present the potential for fraud and waste, as well as an opportunity for whistleblowers to help remedy these abuses and potentially earn 15-30% of the government’s recovery. If Hurricane Katrina is any guide, whistleblowers should bre on the lookout for fraud in connection with the large influx of federal disaster relief aid following Hurricane Sandy.

Hurricane Katrina is considered the most costly natural disaster in U.S. history – estimated to have caused up to $125 billion in damage. The federal government picked up the majority of this tab in the form of immediate disaster recovery and long-term rebuilding projects.

Unfortunately, this massive payout of federal funding was accompanied by widespread fraud and abuse, the scope of which a New York Times article described as “breathtaking.”

Seven months ago, Hurricane Sandy caused widespread devastation to the Tri-State area. Federal funding of approximately $52 billion has been approved by Congress to aid in the recovery and rebuilding of the region2. But with this influx of disaster relief money comes the potential for widespread government fraud.

Fortunately, whistleblowers can assist the government in recovering relief funding paid out as a result of fraud by filing a whistleblower, or qui tam, a lawsuit under the False Claims Act. Under the law, the whistleblower can earn an award equaling 15-30% of the government’s recovery for stepping forward.

In a recent case related to Hurricane Katrina, a federal jury found an insurance company had violated the False Claims Act by falsely classifying wind damage as flood damage to shift liability from its policy to a federal relief fund. Other False Claims Act cases from Katrina involved schemes to inflate the funding received through federal contracts during the rebuilding process. Examples of potential fraud could also include:

  • Receiving federal funding for goods or services that were not provided;
  • Inflating the prices of goods or services paid for from federal funding;
  • Misclassifying expenses or falsifying records to justify federal aid;
  • Receiving federal funds for an expense that was paid for by another source;
  • Collusion or price-fixing schemes in connection with bidding on federal contracts;
  • Using federal funds for personal or other non-qualifying uses; or
  • Receiving or providing kickbacks or other benefits in awarding government funding.

Whistleblower lawsuits filed under the False Claims Act involve unique legal procedures and, according to federal law, must be filed with the help of an attorney. If you have knowledge of fraud involving federal, state, or local funds, including disaster relief aid fraud related to Hurricane Sandy relief, contact the whistleblower attorneys at Levy Konigsberg LLP at (800) 315-3806, or toll free at 1-800-988-8005, for a free and confidential consultation.


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