FBI in NJ watching for Sandy fraud
Publicado el Mar. 7, 2013
The FBI doesn’t normally come knocking for fraud cases involving a few thousand dollars. But that’s likely to change very soon in New Jersey as federal investigators turn their attention to the billions in federal aid coming into the state to rebuild after superstorm Sandy.
It’s not just corrupt politicians, phony charities and multimillion-dollar public contracts they’re looking at — it’s homeowners who try to cheat insurance companies or federal aid programs out of as little as a few thousand dollars, a top FBI official said in an interview with The Record. That’s a shift for an agency whose typical fraud case involves at least $100,000.
We’re going to take cases that otherwise clearly would not be on our radar screen,” said Douglas Veivia, a supervisory special agent with the FBI in New Jersey. Some of those cases are already “in the pipeline,” he said, adding that “we want to bring some of them early in the process to serve as a deterrent.”
As of late last month, more than $1.25 billion in federal emergency assistance had been directed to Sandy victims. Governor Christie is expected to propose spending plans for $1.8 billion more in flexible grants in the coming weeks — part of a $50 billion aid package signed into law in January. All of that money moving so quickly creates opportunities for crimes both big and small, Veivia said.
More than 1,460 people have been indicted on fraud charges related to Hurricanes Katrina, Rita and Wilma, according to statistics from the National Center for Disaster Fraud, which collects complaints through a hotline and refers them to the appropriate law enforcement agencies, including the FBI.
The federal Justice Department has twice sent teams to New Jersey and New York in recent months to train investigators on disaster-related fraud. And Veivia said they will apply lessons learned from other natural disasters, including what kind of schemes to expect.
“If you can think of it, people will find a way to do it,” he said.
It’s unclear whether the focus on Sandy will come at the expense of the FBI’s other crime-fighting efforts in New Jersey. The agency is facing the prospect of employee furloughs due to the recent federal spending cuts known as the sequester, FBI Director Robert Mueller has said. Veivia wouldn’t comment on that or on what programs might see fewer resources.
“This is basically a collateral responsibility for all of us,” Veivia said of the Sandy cases. “We don’t have the ability to dedicate additional people to it. But we’re willing to surge resources onto this problem because of its significance,” he said.
The FBI is one of several law enforcement agencies that has shown interest in pursuing alleged Sandy-related improprieties in New Jersey.
The state Attorney General’s Office recently sued a Sandy relief charity based in Bergen County, alleging it misled donors by letting contributions that were supposed to be for immediate relief languish in bank accounts. Last week, a judge barred the group from soliciting contributions and ordered it to put $631,000 into an escrow account.
And the Monmouth County Prosecutor’s Office launched a task force last month to target unscrupulous contractors trying to scam storm victims rebuilding their homes.
“There’s been a great deal of effort and focus paid on this upfront from agencies at all levels,” Veivia said. The effort will likely be sustained for years, he said.
A spokesman for the U.S. Attorney’s Office in New Jersey, which would prosecute federal cases, said, “We will be taking a very serious look at cases involving individuals who are trying to take advantage of a tragedy to rip off the government.”
The most common type of fraud after a natural disaster is benefit fraud, Veivia said: for example, people claiming that preexisting damage to their car or home was caused by the storm or collecting emergency housing assistance when they are not eligible. Those cases are also likely to be smaller in dollar value, but collectively, they can add up to a significant amount, he said.
As immediate emergency relief turns to long-term rebuilding, and billions in government contracts are awarded, there will be more opportunities for corruption and procurement and contract fraud, Veivia said.
“I can tell you that on the federal level, allegations of corruption that come out of this will be a big priority,” he said. “You start talking about major, multimillion-dollar contracts. Clearly one of the things we’d be potentially looking at is, what is the process in which contracts were awarded? And not only how is the contractor selected, but is the contractor performing and billing appropriately?”
Some of those same questions are likely to arise this week — not in the context of federal investigations, but in the political arena during an election year — as the Christie administration faces criticism from the governor’s political opponents over a no-bid debris removal contract awarded to a Florida disaster recovery firm. Democratic state lawmakers have called a joint legislative hearing Friday that is expected to focus largely on the contract awarded to AshBritt Inc., which has been criticized for its local lobbying efforts, its political connections and its price tag.
The administration has fought back, saying the company was highly qualified to quickly remove the massive amount of debris, that local governments could decide themselves whether to sign onto the AshBritt contract and that the administration requested open bids for a longer-term debris removal contract about a month after the storm struck.
A review by The Record last week found that among the more than 100 subcontractors AshBritt hired for cleanup was an unregistered company run by a convicted felon. In response, AshBritt fired the subcontractor, Ace Materials, and said it was conducting an internal audit. As of Wednesday afternoon, a company spokesman said, that audit was ongoing.