Archdiocese of New Orleans to Pay $1 Million to Settle FEMA Fraud Claims

The Archdiocese of New Orleans has agreed to pay more than $ 1 million to the federal government to investigate allegations of false claims for disaster relief following Hurricane Katrina, which dealt another blow to a troubled institution amid last year A growing tide has filed for bankruptcy on sexual abuse allegations.

The allegations, part of a whistleblower lawsuit by a former engineering firm employee, allege that the archdiocese received at least $ 46 million in fraudulent aid from the Federal Emergency Management Agency after Katrina devastated the city in 2005.

The Archdiocese is one of several New Orleans institutions, including Xavier University, that worked with engineering firm AECOM after the storm. Robert Romero, a former project manager for the company, filed the whistleblower lawsuit in 2016, accusing the company of inflating repair estimates for the archdiocese and others.

The lawsuit states that FEMA paid the archdiocese $ 10 million more than it should have paid to replace a school canteen building that only needed repair and $ 36 million for two assisted living buildings who the Archdiocese said suffered catastrophic flood damage on the upper floors when they suffered only wind damage.

The archdiocese had previously denied these allegations but was unwilling to comment on Tuesday on the deal reached with the government, which did not require it to be involved in fraud. The agreement, which was approved by a federal judge as part of the bankruptcy proceedings for the archdiocese, was previously reported by Nola.com and announced by the Justice Department on Monday.

Xavier had previously agreed to pay $ 12 million to clear up the allegations against him, the Justice Department said, and the case against AECOM is pending. The company declined to comment on Tuesday, but had previously announced that it would “vigorously defend” its work.

The federal government joined Mr Romero’s complaint in 2020 and later added the Louisiana Department of Education as a defendant, accusing it of also misrepresenting the damage in order to obtain fraudulent funds.

“Unfortunately, when there is government money, there is often fraud,” said Jeffrey Dickstein, an attorney who represents Mr. Romero, who is also a former federal prosecutor. “And when there is a lot of government money, there is a lot of fraud.”

AECOM has been a FEMA contractor since 1997, according to the company’s 2007 annual report. FEMA got caught in the aftermath of Hurricanes Katrina and Rita for the scale of fraudulent or inadequate payments by the agency, which were valued at $ 600 million to $ 1.4 billion, according to the United States Government Bureau of Accountability.

“In the distress of a disaster like a hurricane, there’s every motivation to say, get the money out fast, we can’t have the homeless or people starving and dying on the streets,” said Seth Kretzer, a Houston criminal lawyer who previously represented clients accused of fraudulent FEMA claims.

Investigations into fraud allegations can take years and the accused are rarely prosecuted. “Companies pay these heavy fines,” said Kretzer, “and none of the executives are charged.”

However, some emergency response experts fear that fraud issues have caused FEMA to become increasingly strict on relief funds, negatively affecting disaster survivors.

“The people who made fraudulent claims in New Orleans – they don’t represent the majority of New Orleans residents,” said Laurie Schoeman, disaster recovery specialist for Enterprise Community Partners, a nonprofit group. “But now the majority of people have to deal with a reluctance that wasn’t there before.”

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