NYC Agrees To Reimburse Government For Fraudulent Post-Sandy FEMA Claims

Sandy surge flooding.

New York City filed $12 million in FEMA requests following Superstorm Sandy, asking federal aid for a number of vehicles the Department of Transportation knew to be "junk." That's according to a claim the U.S. Attorney for the Southern District of New York, Geoffrey Berman, filed Wednesday, which directs the city to reimburse over $5 million in fraudulently acquired funds.

"When people lie to FEMA about the cause of property damage in order to reap a windfall, it compromises FEMA's ability to provide financial assistance to legitimate disaster victims in desperate need," Berman said in a statement, affirming his commitment "to protect[ing] FEMA and its vital programs from fraud, waste, and abuse."

Berman alleged that the DOT sent members of its Fleet Services team to survey the vehicular damage wrought by Sandy, the 2012 hurricane that killed 48 people in New York and has cost over $100 million in home repairs. The DOT did employ people with the training and knowledge to accurately assess Sandy-specific damages, according to the complaint, but that knowledge wasn't reflected in the inspections: workers simply tallied all vehicles that sustained storm injuries, regardless of whether or not they'd been in working condition before disaster struck. They came up with 132 vehicles, totaling over $12.7 million in damages. A DOT official signed off on the list, certifying that it complied with all FEMA grant conditions.

The city's own records, however, disproved parts of the claim. Seven of the included paving machines had already been earmarked for salvage; a trailer trash pump and trailer had been removed from service in 2010; and five of the vehicles had been "sitting under the highway in the dump for seven years and were being pick[ed] apart by vandals stealing brass fittings, copper wire harnesses and anything else they could sell for scrap," per a 2014 email from a DOT employee to the department's deputy commissioner. The city did not adjust the claim at that time, and indeed, only admitted to the possibility of an error when it learned that the DA was looking into the discrepancies in 2016.

When the department got wind of possible hot water on the horizon, it reportedly offered to repay $3 million, but that does not fully cover the oversight. Now, it has agreed to give back over $4.1 million and forfeit nearly $1.2 million in FEMA aid still to come. DOT officials have also admitted to signing off on paperwork without doing their due diligence as to the nature and cause of the damage, and without giving their reports sufficient instruction about what they should be looking for. As a result, the city included a number of ineligible vehicles in its claim, which it knowingly declined to update after learning about the error.

The DOT had not responded to Gothamist's request for comment at time of publication, but told NPR that the department "cooperated fully" with the investigation and "instituted stronger procedures to reduce the risk of this ever happening again, including a new grants compliance officer and a centralized, comprehensive tracking system for the agency's thousands of fleet vehicles."

The takeaway is clear: this sort of fraudulent abuse of emergency funding simply will not be tolerated in the Trump administration.