Sunday - September 18, 2005

Katrina Corruption Watch #3

Here is the quote of the week from Louisiana’s Office of Homeland Security and Emergency Preparedness, referring to $60 million that was mis-spent and/or unaccounted for long before Katrina struck ....

Mark Smith, a spokesman for the Louisiana emergency office, said the agency had responded to calls for reform, and that “we now have the policy and personnel in place to ensure that past problems aren’t repeated.”

He said earlier problems were largely administrative mistakes, not due to corruption.

For instance, a Nov. 30, 2004, report by Tonda L. Hadley, a director in the Denton field office, examined $40.5 million sent to the Louisiana agency, mostly for the Hazard Mitigation program. The report found that the state’s emergency office did not have receipts to account for 97% of the $15.4 million it had awarded to subcontractors on 19 major projects. The report also said the Louisiana agency had misspent $617,787 between May 2000 and September 2003.

Questionable expenditures identified by the inspector general included $2,400 for sod installation, several thousand dollars for a trip to Germany by the deputy director, $1,071 for curtains, and $595 for an L.L. Bean parka and briefcase. The inspector general also challenged unspecified spending for camera equipment, professional dues and a 2002 Ford Crown Victoria.

The day before the report was issued, the U.S. Attorney’s Office for the Western District of Louisiana obtained an indictment against Michael L. Brown, deputy director of the Louisiana office of emergency preparedness. (Brown is no relation to former FEMA director Michael D. Brown who resigned this week.) Louisiana’s deputy director oversaw the state’s Hazard Mitigation program.

Brown was charged with conspiring to obstruct the inspector general’s investigation and for making a false statement to a federal investigator. Michael C. Appe, another senior state agency official, also was charged with obstructing the audit. Months earlier, Appe had been appointed as head of a “surge team” to review projects funded with FEMA money. The team’s mission was to help spot abuses. Both Appe and Brown hold the rank of colonel for their roles in overseeing elements of the state National Guard.

Appe was arrested in Baton Rouge last November, as was Daniel J. Falanga, the state agency’s flood-mitigation officer. Falanga was accused of committing perjury before a grand jury investigating misuse of FEMA funds. All three men have pleaded not guilty to the charges and deny wrongdoing, according to their lawyers. Trial dates remain uncertain because the hurricane disrupted court schedules. According to the indictment, Brown and Appe conspired in 2000 to use $175,000 in FEMA funds to cover a shortfall in a related agency’s budget. Later, when the inspector general began investigating the agency’s use of FEMA money, the two men conspired to create a fake, backdated memo to cover up the earlier diversion of funds, the indictment says.

State agency spokesman Smith said Brown had traveled to Germany, but to attend a conference. He declined to answer questions about alleged improper spending, citing the pending trial. Smith said at the time, state officials believed the trip to Germany was a proper expenditure. Brown’s lawyer, Elton Richey, said his client tried to spend federal disaster funds wisely despite job turnover and confusion between state agency officials and FEMA overseers. He said FEMA kept changing the rules. Marty Stroud, a lawyer who represents Appe and Falanga, said, “There are no charges that anyone in this case enriched himself at the expense of a federal program.”

Hadley, of the inspector general’s office, issued a second report on Feb. 25, 2005, which tracked state spending of FEMA money to pay for “extraordinary costs,” a special category used for the administration of disaster assistance programs. It said the agency had improperly spent $247,166 for items such as a car, computers, membership dues and travel to seminars. In addition to alleged misspending reported in the two audits, FEMA has asked for the return of $10.7 million allocated to a program for buying property in high-risk flood areas. Most of that money was passed on to local communities to determine which property owners would benefit.

FEMA alleged the Louisiana agency had not properly monitored expenditures, and failed to ensure that properties receiving the funds were eligible. About $2.8 million of the refund sought by FEMA went to consultant fees. Most of that money went to Aegis Innovative Systems, a Baton Rouge firm hired by many parishes to administer the flood buyout program. Aegis owners include Mark Howard, a former official at the Louisiana agency. State Sen. Reggie Dupre said it appeared that parishes employing Aegis were especially successful in winning money from the state emergency preparedness agency. “It smells like a horrible brother-in-law deal to me, “ he said in a phone interview. An Aegis attorney did not respond to a request for comment.

Posted by The Skipper     on 09/18/2005 at 03:18 AM   
Filed Under: • Crime •  
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Not that very many people ever read this far down, but this blog was the creation of Allan Kelly and his friend Vilmar. Vilmar moved on to his own blog some time ago, and Allan ran this place alone until his sudden and unexpected death partway through 2006. We all miss him. A lot. Even though he is gone this site will always still be more than a little bit his. We who are left to carry on the BMEWS tradition owe him a great debt of gratitude, and we hope to be able to pay that back by following his last advice to us all:

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It's been a long strange trip without you Skipper, but thanks for pointing us in the right direction and giving us a swift kick in the behind to get us going. Keep lookin' down on us, will ya? Thanks.

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