Easy money?

WASHINGTON, D.C.- We are almost one month away from the anniversary of last year's Katrina disaster. For the past 11 months, taxpayers have labored in the wake of the costliest hurricane in U.S. history, plucking billions from their wallets, wiping away sweat from hundreds of thousands of volunteer hours, and marshaling millions of words to discuss FEMA fraud and bureaucratic bungle.

A question frequently asked: Can Washington officials sorting through hundreds of thousands of specialized cases ever get it right? When FEMA rules are too tough, critics rip into it for making sufferers' lives more miserable; when they're too easy, huge rip-offs occur. But lately it's the rip-offs that have people up in arms. New accounts come in every day, seemingly faster than the government can prosecute offenders.

For starters, there's the story of Kenneth R. McClain. According to the Justice Department, McClain and several unnamed cohorts swindled FEMA out of hundreds of thousands of dollars in the four months following Katrina. Using 27 aliases, McClain allegedly had disaster relief funds sent to 21 different UPS stores across Texas that he said were his residences. Packages were then forwarded to a Homestead Studio Suites hotel in Dallas, where McClain was paying a homeless man to stay each night and collect mail in the morning.

Hundreds of stories are like these: A defendant in Texas allegedly submitted more than 50 fraudulent online applications for emergency relief aid, raking in about $65,000 that she split with family members living in Dallas and Mississippi. Nine Portland, Ore., residents allegedly obtained FEMA rental-assistance checks-despite living 2,600 miles from the storm-by simply claiming they were displaced by the disaster. A New Orleans man allegedly fled to Conroe, Texas, paid people there in cash or drugs for their names and Social Security numbers, then applied for aid using their information. Another Louisiana man allegedly received 50 FEMA-funded unemployment debit cards after putting the same address and last name of either "Ramirez" or "Garcia" on every application.

To boot, congressional reports say $5.3 million went to applicants who used P.O. boxes as their damaged homes, and FEMA has admitted that some "evacuees," in fact, were incarcerated at the time of the storm. Another applicant, perhaps with a sick sense of humor (but one not immediately fatal for his claim), allegedly listed a cemetery as his home address.

Onlookers gasped at the exploitation of compassion when Tina Marie Winston of Belleville, Ill., defrauded FEMA with a tearjerker about two children she never had drowning in Katrina floodwaters. Yet the idea was hardly novel: Walter Ray Stall, a Wal-Mart worker from Palestine, Texas, conned the people of nearby Tyler with his similarly tragic tall tale.

He claimed that his wife and 3-year-old son drowned after the levees broke in New Orleans and that he narrowly escaped death by swimming to the Superdome, where he hitchhiked to Tyler-a place, incidentally, from which he was never more than an hour away. Station KLTV covered his amazing story, announcing that "devastating stories of how Hurricane Katrina tore families apart" abounded, but "there was none like [this] one." Churches and charities began donating big bucks-until Stall's sister and mother, who lived in the area, heard about the news program and exposed him.

If these stories move some to label the government officials incompetent or naive, there are worse barbs: One Louisiana Labor Department clerk, whose real last name is Lawless, allegedly accepted bribes of several hundred dollars each to give about 80 unemployment debit cards to fraudulent claimers. A councilman from Louisiana's St. Tammany Parish allegedly pressured a contractor into splitting the pay 50-50 from a debris-removal contract of which he had inside knowledge. A subcontractor in Mississippi allegedly bribed a U.S. Army Corps of Engineers employee who was stationed at a dumpsite to create false load tickets for debris the subcontractor never dumped.

And if all that further stupefies, investigators say these stories are the good news-after all, these are the cases they know about and can prosecute. Investigators estimate fraud alone-not counting the now-infamous stories of FEMA waste-at $1.4 billion, or up to 16 percent of all relief assistance. Gregory Kutz, who is investigating FEMA for the Government Accountability Office (GAO), summed up FEMA's anti-fraud program this way: "[I]t wasn't really something that FEMA put a high priority on. So it was easy to commit fraud without being detected."

Kutz's office says as much as 21 percent of the $6.3 billion victims received directly may have been distributed improperly . Red Cross officials alone say they are looking into 7,100 possible cases of fraud. Congress has added to the pile another 7,000, and federal investigators remark almost optimistically that many of the crimes carry a five-year statute of limitations.

Lawmakers are exasperated with the debacle, if a little embarrassed by this federal relief "cash cow," as Rep. Michael McCaul (R-Texas) called it. Congress has addressed the question of how to reform in a number of hearings and bills-including a Senate recommendation that FEMA be dismantled and moved out of the Department of Homeland Security. (With 190,000 employees, FEMA's personnel bloat can only encourage improper oversight and sweetheart deals, they argue.)

Three different government reports highlight FEMA's biggest blunders, often faulting the organization for failures of common sense, such as not establishing a workable system to verify that aid applicants are who they say they are, and having laxer standards for telephone applicants than for online applicants.

In another much criticized error, the organization issued more than 5,000 duplicate relief payments worth $2,000 each. As a result, $10 million went to individuals who had already received a check. Probably to save face, FEMA claimed that management "was keenly aware" of the duplicates-even issued them purposefully, since it believed many applicants would qualify for aid beyond the initial $2,000 anyway.

Yet according to government reports, FEMA's data disprove that officials knowingly made those payments; one report quotes the official responsible for managing FEMA's national disaster assistance as calling duplicate payments a "glitch" that was "not . . . a result of a deliberate action on the part of FEMA management." The GAO further estimates that 900,000, or 36 percent, of the 2.5 million total registrations following Katrina could have been duplicates.

Another oversight problem: The organization didn't instruct debit card recipients that the cards should be used only for disaster-related expenses, even though this is FEMA's policy. The result? Debit cards, the GAO says, "were used for adult entertainment, to purchase weapons, and for purchases at a massage parlor that had been previously raided by local police for prostitution." Later media reports added to this list five New Orleans Saints season tickets, bottles of Don Perignon champagne, and a sex change operation.

Yet this doesn't hold a candle to $450 million of manufactured homes, purchased by FEMA, that now sit on an airfield in Hope, Ark., where reportedly they are rotting and need jacks underneath. FEMA moved more than 10,000 homes to the airfield after officials realized the homes violated agency regulations in various ways-but not before they had ripped appliances and TV sets out of some to ensure that none had better amenities than others. (FEMA also rented the Arkansas airfield space at more than five times the market value.)

FEMA, though, may have increased the number of national chuckles through extravaganzas like "the great ice-capade": FEMA ordered 182 million pounds of ice for Katrina victims but used less than half once evacuees left Louisiana for shelters. The result? According to a Senate report, "ice went to ... distant locations around the country because FEMA decided it made more sense to move [it] to cold-storage facilities for use in new disasters than to let it melt."

One truckload the report singles out "ended up at the Reid Park Zoo in Tucson, Ariz., to be enjoyed by the polar bears and other animals. The truck driver who donated the ice to the zoo did so after traveling through 22 states without delivering a single bag of ice to hurricane victims."