Thursday, 2 May 2024

City Admits Defrauding FEMA After Hurricane Sandy; Agrees to Pay $5.3 Million

It’s an age-old tale: Time and again, federal relief money that is supposed to help people rebuild after a natural disaster is instead subject to fraud.

Unscrupulous contractors swoop in. Insurance scams pop up. Cunning individuals use relief money to repair beachside vacation homes instead of using it on their primary residences.

Now you can add another offender to the list: New York City. On Wednesday, the city reached a tentative settlement to pay back the government more than $5.3 million as a result of having submitted fraudulent claims to the Federal Emergency Management Agency after Hurricane Sandy.

In the proposed settlement, the city admitted that it had filed false certifications to the federal government in order to receive relief funds for vehicles that the Department of Transportation had claimed were damaged during the 2012 hurricane, but had actually been out of use before Sandy.

The city also conceded that the deputy commissioner from the Department of Transportation who signed off on the certification “lacked personal knowledge about the vehicles” and did not direct his employees to inspect the vehicles before signing the paperwork.

“When people lie to FEMA about the cause of property damage in order to reap a windfall, it compromises FEMA’s ability to provide financial assistance to legitimate disaster victims in desperate need,” Geoffrey S. Berman, the United States attorney in Manhattan, said in a statement.

The federal government filed a civil fraud lawsuit on Wednesday but also submitted the proposed settlement to United States District Court for review and approval.

Scott Gastel, a spokesman for the Department of Transportation, said the city cooperated with federal prosecutors when it was notified about the fraudulent reimbursement claims in 2016.

“As a result of the joint review, NYC DOT has already instituted stronger procedures to reduce the risk of this ever happening again, including a new grants compliance officer and a centralized, comprehensive tracking system for the agency’s thousands of fleet vehicles,” Mr. Gastel said.

Originally, the city in 2014 had sought more than $12.7 million from the federal government to replace 132 city-owned vehicles, but many of those vehicles were already inoperable before the storm, according to the complaint filed by the United States Attorney’s Office in Manhattan against the city on Wednesday night.

For example, the city sought more than $3 million to replace seven paving trucks that, according to the department’s own internal records, had been designated for salvage years before the hurricane. Some of the paving machines had been sitting in a dump under a highway since 2009 and were being scrapped for parts by vandals, the complaint says.

The city also sought to replace a trailer and a trash pump with federal funds even though the equipment had been deemed inoperable in 2010, the lawsuit says. The list of damaged vehicles was compiled during the Bloomberg administration, but submitted to the federal government in 2014 under Mayor Bill de Blasio.

The complaint says that transportation officials either knew the certifications were false or “made the certifications with reckless disregard or willful blindness as to their truth or falsity.” In fact, city officials never conducted in-person inspections of the vehicles, the complaint contends.

Even when an employee at the Department of Transportation sent an email in June 2014 to a deputy commissioner informing that commissioner that fraudulent claims had been made, the warning went unheeded, the lawsuit says.

The department decided to take action only when it became aware that the United States Attorney’s Office was conducting an investigation, according to the complaint.

Follow Luis Ferré-Sadurní on Twitter: @luisferre

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