The Fraud Examiner

What to Expect When You’re Expecting Disaster Fraud
 

Jennifer Liebman                       
Research Editor, Association of Certified Fraud Examiners                                 



Fraud schemes in the wake of a disaster are as certain to happen as the heavy rains and top-speed winds from a hurricane. Past storms such as Hurricanes Katrina, Rita and Sandy showed that disasters not only create optimal conditions for schemers to exploit, but also that the swirl of confusion and destruction that follow can make discerning fraudulent acts from honest victims in need extremely difficult. However, these past storms also showed the importance of being prepared and ready to confront disaster fraud.  

 

Fraud in a Disaster

Even though desperate times can inspire people to perform heroic feats and act generously with donations, disasters also reveal the scheming side in others. From taking advantage of people’s compassion with fake charities, stealing identities to collect relief money, unscrupulous contractors, to corrupt public officials who use relief money in all the wrong ways, disaster fraudsters encompass a vast array of categories—and they don’t waste much time getting their schemes up and running. For example, after Hurricane Harvey pummeled east Texas at the end of August 2017, the Texas attorney general’s office reported that it received more than 3,200 complaints about scams, fraud and price gouging in the first few weeks of recovery. The U.S. Department of Justice’s Louisiana-based National Center for Disaster Fraud (NCDF) fielded 425 fraud reports in the first week after Harvey struck. Fraud complaints arising from Harvey and Hurricane Irma, which hit Florida, include people impersonating FEMA representatives, fake charities and thieves pretending to need shelter.

 

Post-disaster frauds even seem to present themselves in phases that follow along the timelines of relief, recovery and rehabilitation. As acting director of the NCDF, U.S. Attorney Corey Amundson told NPR host Ari Shapiro, “…it starts with charity fraud, contractor fraud, emergency assistance fraud. And it evolves into program fraud as the monies come from the federal government.” The Washington Post reported in September 2017 that the phase of disaster relief that brings in the largest amount of fraud is when people make requests for payments for damages. Former U.S. Attorney Don Cazayoux told the Postthat people and businesses unaffected by the disaster file false claims during this time. And fraudulent claims aren’t just concentrated in the disaster area. Disaster fraud prosecutions between 2005 and 2011 included defendants in 49 federal districts across the United States.


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