Hurricane funds 'spent on holidays and champagne'

Bogus claimants spent up to $1.4bn meant for hurricane victims on tropical holidays, champagne, a divorce lawyer and even a sex change, investigators in the United States have revealed.

Bogus claimants spent up to $1.4bn meant for hurricane victims on tropical holidays, champagne, a divorce lawyer and even a sex change, investigators in the United States have revealed.

The government funds given out by the Federal Emergency Management Agency (Fema) after last year’s devastating Hurricanes Katrina and Rita were also used on diamond jewellery, season tickets to American football games and “adult erotica products“.

Agents from the General Accountability Office, the investigative arm of Congress, found that as much as 16% of the money spent in assistance went on false claims.

Among those who got their hands on the cash were prison inmates, a supposed victim who used a New Orleans cemetery for a home address and someone who spent 70 days at a Hawaiian hotel.

Investigators even told Congress that one man apparently used Fema assistance money for a sex change operation.

Texas Congressman Michael McCaul, the chairman of the subcommittee overseeing the probe into post-hurricane aid, branded the bogus spending “an assault on the American taxpayer“.

“Prosecutors from the federal level down should be looking at prosecuting these crimes and putting the criminals who committed them in jail for a long time,” he said.

Fema said it has identified more than 1,500 cases of potential fraud after has referred those cases to the Homeland Security Department’s inspector general.

The GAO said it was 95% confident that improper and potentially fraudulent payments were between $600m and $1.4bn.

Fema could not establish that 750 debit cards worth $1.5m even went to Katrina victims, the auditors said.

Among the items purchased with the cards was an all-inclusive week-long holiday to the Dominican Republic, costing $2,200.

Adult erotica products bought in Houston, Texas, cost $400 and someone spent $300 on Girls Gone Wild videos in Santa Monica, California.

Another card was used to buy Dom Perignon champagne for $200.

Some $3,700 went on diamond jewellery including a watch, earrings and a ring.

The investigative agency said it found people lodged in hotels were often were paid twice, because Fema gave them individual rental assistance and paid hotels directly.

Fema spokesman Aaron Walker said the agency, which has already come under fire over its response to Katrina, had made it his highest priority “to get help quickly to those in desperate need of our assistance“.

“Even as we put victims first, we take very seriously our responsibility to be outstanding stewards of taxpayer dollars, and we are careful to make sure that funds are distributed appropriately,” Mr Walker said.

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