Facing the music for 9/11 money blunders
BY RICHARD T. PIENCIAK and RUSS BUETTNER
DAILY NEWS STAFF WRITERS
Thursday, July 13th, 2006

WASHINGTON - Federal emergency officials who ran major portions of the $21.4 billion 9/11 recovery aid package for New York were slammed by lawmakers yesterday for administering a system of lax rules and failed oversight that allowed for massive fraud, waste and abuse.

A House oversight subcommittee, which launched an investigation in response to a Daily News series, focused on a troubled program that reimbursed New Yorkers for air conditioners, vacuums and special air filters purchased amid the toxic cloud unleashed by the terror attack.

Rep. Mike Rogers, the Alabama Republican who chairs the subcommittee, said The News' findings that thousands of people obtained money under the program - even though their homes were far away from the plume's path - was "really upsetting."

Richard Skinner, the inspector general for the Department of Homeland Security, said the program was destined to be abused because of "nebulous guidelines ... and confusing or conflicting instructions."

Joe Picciano, the regional director for the Federal Emergency Management Agency, responded by saying the agency had never created a program for such a catastrophe - and doesn't have one now.

"We were just confronted with an unusual situation," he said.

The hearings, which kicked off yesterday and continue today, will become part of a subcommittee report.

The News series exposed government programs that were open to people not affected by the attacks, that awarded aid intended for small businesses to big businesses, that allowed unsavory contractors to overbill for construction work, and finance luxury apartments with massive public subsidies.

Rep. Bill Pascrell Jr. (D-N.J.) called the litany of abuses uncovered by The News "utterly unconscionable."

Rep. Nita Lowey (D-N.Y.) characterized the theft of millions as particularly "shameful and inappropriate," given the fact that many New Yorkers are being "shortchanged on medical treatment" for persistent 9/11-related health problems.

Meanwhile, Picciano for the first time acknowledged a "mistake" was made in paying $300,000 for a young photographer to shoot video and thousands of pictures of the site without including a provision that the government would own the copyright to the material.

As The News reported, photographer Gregg Brown used the photos and video he took while circling the city daily for eight months in an NYPD helicopter in a bizarre documentary that juxtaposed topless women talking about their breasts with images of the smoldering twin tower ruins.

"Admittedly, we probably should have had constraints on the use of" the photos, said Picciano. "The attempt was good. We made a mistake."

The removal of debris from Ground Zero was repeatedly held up as an example of a program that worked efficiently thanks to tough monitoring - but not before flawed controls early on allowed abuse by allegedly mob-connected contractors, as revealed by The News.

Rep. Pete King (R-L.I.) called the abuse of taxpayer aid in the wrenching months after the attacks "as despicable as any crime could be." But he credited four independent monitors and the city Department of Investigation with ensuring the debris removal got completed ahead of schedule and under budget.

Several witnesses and subcommittee members repeatedly stressed that applicants' claims of eligibility should have been checked against government databases.

But they also expressed concern that prosecutors chose not to file charges against thousands of people who appeared to have gamed the programs because the amount of each case was small - averaging $1,200 - and proving criminal intent was difficult given the loose rules.

Rogers said that publicized prosecutions are an important element in discouraging fraud, and he wants to make legislative changes to prevent similar lapses in future disasters.

"I'm very disturbed by the failure to prosecute many of those people," Rogers said.

Outside the hearing, Pascrell mocked the lack of widespread prosecution and said he wants accountability across the board.

"What did they prosecute? Who went to jail in these things?" Pascrell asked. "To dismiss it simply as 'We couldn't get evidence.' ... What the hell kind of accountability is that?"