FEMA asking hurricane victims to return money

WASHINGTON – Thousands of victims of hurricanes Katrina and Rita are being asked to return money they received from the Federal Emergency Management Agency.

FEMA last week began mailing the first of about 50,000 letters to aid recipients who an agency audit has determined were ineligible for the assistance they received.

“This correspondence serves to notify you of a debt owed to the federal government,” the letters say.

Some of the letters will go to storm victims who subsequently received compensation from insurance agencies, making them ineligible for FEMA’s help.

Other letters will be sent to people who filed for losses on secondary residences, unaware that FEMA does not pay for damages to those homes.

And an undisclosed number of letters will be mailed to people who received money they weren’t entitled to because of FEMA processing errors.

Letters also will go out to people suspected of fraud.

The letters advise recipients they must return a specific amount of money within 30 days to avoid interest and penalties. Recipients are told they can contact FEMA to appeal the decision or set up a repayment plan.

Kevin Whelan, spokesman for the Association of Community Organizations for Reform Now, or ACORN, said the organization will help Katrina victims who want to appeal the determinations.

“We would never defend fraud in the system,” Whelan said. “On the other hand, instructions from FEMA were terribly confusing and people were desperate for help. It’s pretty hard for them to come back now and say ‘you owe us money.’ “

Donna Dannels, acting deputy director of FEMA’s recovery division, told reporters last week the agency conducts an audit following every disaster. This likely will be the largest of those audits because of the scope of Katrina’s destructiveness.

As of Monday, FEMA has paid out $6.7 billion in individual assistance to victims of hurricanes Katrina and Rita. More than 1.7 million households have asked the agency for this type of help. Historically, FEMA audits find that about 2 percent to 3 percent of disaster assistance is incorrectly distributed.

FEMA spokesman Michael Widomski said he expects the latest FEMA audit to find the same percentage of ineligible payments. He said they are an unavoidable consequence of responding to a disaster.

“We always err on the side of helping people who are in need,” he said.

FEMA is stinging from recent reports that say the agency misspent millions of dollars. Last week the Government Accountability Office released a report that said the agency spent millions on hotel rooms, ice, beds and services that were never used.