Monday, July 24, 2006

Special Report: U.S. Probe of Katrina $$$ Rip-Offs Reveals One Wildly Exotic Fraud Claim Is a Hoax

Federal Investigators Find No Evidence That a Jailed Houston Hairdresser Used $36G in FEMA Funds to Pay For a Sex-Change Operation

(Revised and updated 4:30 p.m. EDT Tuesday, July 25, 2006)

By Skeeter Sanders

A widely-reported claim that a Houston man used $36,000 in Hurricane Katrina relief funds to pay for a sex-change operation is an apparent hoax, according to government investigators.

The Government Accountability Office, the investigative arm of Congress, found that between $600 million and $1.4 billion in goods and services intended for hurricane relief were allegedly obtained from the Federal Emergency Management Agency through fraudulent means -- including a Caribbean vacation, season tickets for professional football games, expensive champagne and adult videos.

But investigators found no evidence of anyone using Katrina funds for a sex-change, according to a GAO official. And, in fact, the GAO's 30-page report to Congress makes no mention of it.

Gregory Kutz, the GAO's managing director of forensic audits and special investigations, who co-authored the report, said that while his agency's Katrina Anti-Fraud Task Force was investigating a man under federal indictment with multiple counts of fraud, He
couldn't say if the sex-change allegations were true because it would be difficult to prove without tracing the money.

In an interview with the gay-oriented newspaper The Washington Blade, Kutz said even if the sex-change allegations were true, "We had enough examples of fraud that we probably wouldn't have put it in the [GAO's] report anyway. We had enough debit-card examples that could be traced to vendors."

Houston Hairdresser Indicted in $36G Fraud

On July 15, the New York Post identified the individual under investigation as Michael James Green, 25, a Houston hairdresser with a criminal record. In a federal indictment filed May 30, Green was charged with 22 counts of fraud totaling $36,000.

According to the indictment, Green allegedly used 18 different fake addresses and 18 Social Security numbers to apply for FEMA assistance, which was disbursed electronically into his account in payments of $2,000 each.

The Post, citing unidentified sources, reported that Green “wasn’t using the money for food and shelter: He used it to pay for a sex-change operation.”

But the Blade, citing other sources close to the investigation -- including representatives from the office of Assistant U.S. Attorney Jason Varnado, as well as from FEMA and the Department of Homeland Security -- reported that investigators found no evidence of Green using the funds in this manner.

Is Suspect at Center of Fraud Case Actually Transgendered? His Lawyer Won't Say

Green’s attorney, Craig Washington, told the Post that his client’s gender status was not the issue and declined to comment about the sex-change allegation. He was, however, quoted by the New York tabloid as having said about Green’s appearance: “It’s kind of hard to tell, when you really get down to it, men from women nowadays.

"I’ve seen a lot of men that look like women. I’ve seen a lot of women that look like men," said Washington. "He’s a nice-looking, very intelligent, very articulate human being.”

In a subsequent interview last week with the Blade, Washington, a former congressman, said the allegations against his client were being "sensationalized" by the media.

“You will find out that the things that have been sensationalized are more fiction than real,” he said. “When all the facts come out it won’t be nearly as newsworthy as some of the allegations that have been made.”

Did a Right-Wing Anti-Gay Congressman Plant Sex-Change Story?

Reports of Katrina funds going toward gender-reassignment surgery first emerged during a June 14 hearing in Washington of the House Homeland Security Subcommittee on Investigations.

"This is an assault on the American taxpayer," said Rep. Michael McCaul (R-Texas), chairman of the subcommittee. "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."

Kutz told the Blade that at the hearing, a congressman raised the issue by saying that he had heard about the sex-change allegations "on the news." Kutz did not identify the congressman.

More than a month after the subcommittee hearing, the identity of the congressman remains unknown. Under Capitol Hill protocol, however, committee members are usually the only representatives or senators present at committee meetings.

A visit to the House of Representatives' official Web site found that among the members of the House Homeland Security Subcommittee on Investigations is one of Congress' most outspoken opponents of gay civil rights: Rep. Dan Lungren (R-California).

Lungren, a social archconservative also known for his staunch anti-abortion views, was the primary sponsor of an early version of the Federal Marriage Amendment, which defined marriage as the union between one man and one woman.

Under Lungren's version, which he introduced in the spring of 2005, the amendment would have prevented any court -- state or federal -- from legalizing marriages between couples of the same gender, effectively invalidating the Massachusetts Supreme Court's 2004 ruling legalizing same-gender marriages in that state.

The amendment ultimately failed to muster the necessary two-thirds majorities in both the House and Senate for passage. In the House, lawmakers on July 18 fell 47 votes short the required 290. Senators never even got an opportunity to vote on it; on June 7, they fell 11 votes short of the 60 needed to cut off a filibuster, killing the amendment for this year's session.

Lungren Backed Colorado's Ill-Fated Anti-Gay Amendment

In 1995, while serving as California's attorney general, Lungren quietly signed a legal brief asking the U.S. Supreme Court to uphold a controversial anti-gay initiative in Colorado. He attacked a ruling by the Colorado Supreme Court that the state's voter-approved Constitutional Amendment 2 violated the U.S. Constitution.

Amendment 2, passed by Colorado voters in a 1992 referendum,
overturned all state and local laws banning discrimination against gays in employment, housing and public accommodations. It also barred both the Colorado legislature and the state's municipalities from passing any such laws in the future.

The state's highest court ruled that the measure violated gays' First Amendment right to petition the government for redress of grievances, their Fourteenth Amendment right to equal protection of the laws and the legislature's Tenth Amendment authority to enact such legislation.

The U.S. Supreme Court, in its landmark Romer v. Evans ruling in 1996, upheld the Colorado court's decision and struck down the anti-gay amendment.

During an earlier stint in Congress in the late 1980s, Lungren introduced an unsuccessful federal constitutional amendment to ban all abortions except in cases when the mother's life was endangered by her pregnancy. The amendment was widely criticized, even among some abortion opponents, for not creating an exception for victims of rape or incest.

Lungren's anti-abortion and anti-gay positions would come back to haunt him in his 1998 run for governor of California, when he got trounced by Democrat Gray Davis. He scored a political comeback in 2002 when he was returned to Congress.

Other Hurricane Fraud Cases Ripped Off Millions In Taxpayer Dollars

FEMA said it has identified more than 1,500 cases of potential fraud after Hurricanes Katrina and Rita and has referred those cases to the Department of Homeland Security's inspector general. The agency said it has identified $16.8 million in improperly awarded disaster relief money and has started efforts to collect the money.

The GAO said it was 95 percent confident that improper and potentially fraudulent payments were much higher – between $600 million and $1.4 billion.

The agency's auditors found people lodged in hotels often were paid twice, since FEMA gave them individual rental assistance and paid hotels directly. FEMA paid California hotels $8,000 to house one individual – the same person who received three rental assistance payments for both disasters.

In another instance, FEMA paid an individual $2,358 in rental assistance, while at the same time paying about $8,000 for the same person to stay 70 nights at more than $100 per night in a Hawaii hotel.

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

Among the questionable items purchased with the cards:

• an all-inclusive, one-week Caribbean vacation in the Punta Cana resort in the Dominican Republic.

• five season tickets to New Orleans Saints professional football games (The Saints are scheduled to return to New Orleans this fall, a year after its home stadium, the Louisiana Superdome, sustained considerable Katrina-related damage).

• adult erotica products in Houston and "Girls Gone Wild" videos in Santa Monica, California.

• Dom Perignon champagne and other alcoholic beverages in San Antonio.

• a divorce lawyer's services in Houston.

"Our forensic audit and investigative work showed that improper and potentially fraudulent payments occurred mainly because FEMA did not validate the identity of the registrant, the physical location of the damaged address, and ownership and occupancy of all registrants at the time of registration," GAO officials said.

FEMA paid millions of dollars to more than 1,000 registrants who used the names and Social Security numbers of hundreds of state and federal prisoners for expedited housing assistance. The inmates were serving time in Louisiana, Texas, Alabama, Mississippi, Georgia and Florida.

The federal disaster agency made about $5.3 million in payments to registrants who provided a post office box as their damaged residence, including one who got $2,748 for listing an Alabama post office box as the damaged property.

To demonstrate how easy it was to hoodwink FEMA, the GAO told of an individual who used 13 different Social Security numbers – including the person's own – to receive $139,000 in payments on 13 separate registrations for aid. All the payments were sent to a single address.

Likewise, another person used a damaged property address located within the grounds of Greenwood Cemetery in New Orleans to request disaster aid. Public records show no record of the registrant ever living in New Orleans.

Instead, the records indicate that for the past five years, the registrant lived in West Virginia – at the address provided to FEMA, the GAO said.

(The Associated Press contributed to this report.)

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NOTE TO READERS: This blogger is going on vacation next week. "The 'Skeeter Bites Report" will resume on Monday, August 21.

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Volume I, Number 37
Copyright 2006, Skeeter Sanders. All rights reserved.

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