A  home damaged by Hurricane Maria in Toa Baja, Puerto Rico, is shown on Oct. 12.

A home damaged by Hurricane Maria in Toa Baja, Puerto Rico, is shown on Oct. 12. Ramon Espinosa / AP

Congress, FBI Already Investigating Potential Abuse of Federal Funds in Puerto Rico's Disaster Response

The federal government has ramped up disaster oversight post-Katrina, but current allegations involve local mayors.

A congressional committee is investigating potential abuse of federal funds and resources provided to local municipalities in Puerto Rico, citing red flags raised by the FBI.

The House Natural Resources Committee probed the Federal Emergency Management Agency and FBI regarding accusations of “mishandling and misappropriation of emergency supplies” provided by the federal government for the people of Puerto Rico. The letters from several Republican leaders on the panel came after Douglas Leff, the FBI special agent in charge for the San Juan Field Office, announced last week he was looking into accusations of abuse of federal funds.

“With so many residents still in grave need of basic supplies, it is essential that assistance from the federal government is provided in the most efficient and effective manner possible,” the lawmakers wrote in their letters. The allegations have stated that “mayors of local municipalities, or people associated with their offices, are giving their political supporters special treatment, goods they’re not giving to other people who need them,” the committee members said, citing Leff.

They added their committee “is very troubled by these allegations.”

The special agent’s public statement did not include any mention of mayors. President Trump has publicly feuded with the mayor of San Juan, Puerto Rico’s capital and largest city, blaming her for demonstrating “poor leadership” in response to the crisis and failing to coordinate with federal response efforts.

There are currently more than 20,000 federal personnel on the ground in Puerto Rico and Trump recently asked Congress for an emergency supplement of nearly $13 billion to support those and other recovery efforts. Congress last month approved $15 billion in emergency funding after Hurricane Harvey, which was split between FEMA’s disaster fund and Housing and Urban Development Community Block Development Grants.

The investigation has begun as initial response efforts are still underway, with 35 percent of households without drinking water and 80 percent of the island without power. Scott Amey, general counsel at the Project on Government Oversight, said the federal government has prioritized early oversight of disaster relief since Hurricane Katrina and the 2009 economic stimulus package. Katrina recovery was rife with fraud and abuse, with the Justice Department making charges in 1,300 cases in the aftermath of that storm. Justice has since established the National Center for Disaster Fraud, which is headquartered in Baton Rouge, Louisiana. Corey Admundson, the U.S. attorney who heads up that office, as well as Attorney General Jeff Sessions, have warned of potential fraud in the wake of hurricanes Harvey and Irma, though those warnings focused on abuses from contractors rather than local governments.

“It’s never too early,” Amey said of the oversight and investigatory efforts. “Already just between Harvey, Irma and Maria the federal government has awarded—just in contracts—over $1.6 billion. It’s not too early to start investigating fraud, waste and abuse when $1.6 billion of taxpayer dollars has gone out the door.”

By looking at potential fraud early in the process, he added, the government can send a message to anyone looking to take advantage of the victims.

“As tips are coming in, I hope the Justice department takes a serious look at them,” Amey said. “There’s a hope there’s a deterrent effect if there’s strong oversight and accountability from the outset.”

The White House is also conscious of potential fraud, with Office of Management and Budget Director Mick Mulvaney sending a memorandum to agencies to be wary of anyone looking to abuse recovery dollars.

“Unfortunately, disasters can sometimes provide cover and opportunity for corrupt individuals to perpetrate fraud by targeting disaster survivors,” Mulvaney said. “In the aftermath of a disaster, there are also frequently cases of waste and abuse, such as instances where benefits provided to survivors and communities have little nexus to recovery efforts, or where agencies continue to expend resources well beyond the period where it is reasonable to assume that recovery activities are continuing.”

He added that the public’s faith in government depended on an efficient disbursement of recovery funds.

“As you consider your agency costs, please keep in mind that such wasteful or fraudulent activities will not be tolerated; they ultimately undermine public trust in the federal government's ability to respond to disasters,” the OMB director said. “We are counting on you to provide this diligent oversight up front and throughout the recovery process.”