Aid workers 'stole $200,000 Katrina cash'

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By Simon Freeman, Times Online, and AFP The American Red Cross was facing fresh embarrassment over its response to Hurricane Katrina today as it emerged that at least 19 agency workers stole more than $200,000 from the victims' fund. Prosecutors in California have charged 49 people in connection with the fraud in which workers in a Red Cross call centre in Bakersfield are alleged to have handed out code numbers to friends and relatives entitling them to collect relief cheques of up to $1,565 (£908). Mary Wenger of the US Attorney’s office in Sacramento, California, said today that she expected more charges as the investigation progressed. Ms Wenger said that preliminary calculations suggest at least $200,000 (£116,000) had been stolen, adding: "We expect that figure to grow." The centre in Bakersfield was the largest of three set up to take calls from victims of Hurricane Katrina - the others were in Niagara Falls, New York, and Falls Church, Virginia. All three centres were staffed by temporary workers, and Spherion - the company which provided them - said today that it had not had time to run full background checks. Ryan

McDougal, an FBI agent, is quoted in one of the indictments explaining the background to the fraud. He told prosecutors that an emergency hotline was set up for families affected by the hurricane to ring. Once their claim had been verified the were given personal identification numbers to claim money from Western Union outlets nationwide. Mr McDougal said that a single victim was entitled to $360 (£209) and a family of five or more could receive up to $1,565. The money was intended to help with day-to-day living expenses.Lawrence Brown, first assistant US attorney in Sacramento, said that the casual employees at Bakersfield created fictitious victim accounts, issuing identification numbers to family members and friends.He said that the Red Cross became suspicious at the high number of relief payments being made from the centre and called in the FBI. Jack McGuire, acting Red Cross president, told NBC's Today: "It was the Red

Cross that found this problem. We put into effect these call centres to speed up delivery of support to people that needed it. As part of that, we put into place mechanisms to look for fraud up front and to find fraud after the fact." Mr McGuire said that none of the indicted employees worked directly for the Red Cross and added that $200,000 was a small percentage of the approximately $1.4 billion provided to Katrina victims. Of those charged, seven have so far indicated that they will plead guilty. The fraud charges carry a maximum penalty of 20 years in prison and fines of up to $250,000. The Red Cross received the bulk of the $2.6 billion (£1.5 billion) in donations after the hurricane, but was accused of not co-ordinating an effective basic response. Officials, survivors and even some its own members complained that there was a failure to respond swiftly enough in the mainly poor, mainly black suburbs of New Orleans

worst hit by storm and floods. Marsha Evans, former President and Chief Executive of the American Red Cross , resigned earlier this month after the charity's response to Katrina was savaged in Congress. Peter H

 

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