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Chabot Leads Effort to Pass Disaster Fraud Legislation
December 19, 2007

Washington, D.C. -- The House of Representatives today passed the Emergency and Disaster Assistance Fraud Penalty Enhancement Act of 2007 (S.863), a bill which would create a new criminal offense and enhance current federal penalties for fraud in connection with major disasters and emergency benefits. The legislation, which is sponsored by Senator Jeff Sessions (R-AL), is the Senate companion to a bill that was introduced earlier this year by Congressman Steve Chabot (R-Cincinnati).

“It is unfortunate that some people have chosen to exploit national tragedies for their own personal gain,” said Chabot, who led the House floor debate this afternoon. “This legislation will strengthen law enforcement’s ability to combat and deter these crimes while adding tough penalties for criminals who knowingly defraud taxpayers and private charities while preventing assistance from going to those who truly need it.”

The Emergency and Disaster Assistance Fraud Penalty Enhancement Act creates a new, specific criminal penalty to prohibit fraud in connection with any emergency or disaster benefit, including federal assistance or private charitable contributions. The bill also increases penalties for mail and wire fraud following a federal disaster declaration. In addition, the legislation directs the United States Sentencing Commission to publish new sentencing guidelines for increased penalties for these offenses and make recommendations to Congress on additional ways to combat this type of fraud.

Since hurricanes Katrina and Rita devastated the Gulf Coast, Congress has provided more than $117 billion in relief to the region for reconstruction efforts, medical services, unemployment and housing assistance, crisis counseling, and various other needs. In addition, charities like the Red Cross and Salvation Army have contributed several billion dollars in private donations to help the recovery effort.

According to a Government Accounting Office (GAO) report from March 2007, the Federal Emergency Management Agency (FEMA) has distributed up to $1 billion in fraudulent or improper payments for disaster relief associated with hurricanes Katrina and Rita. As of February 2006, FEMA had been able to recoup just $7 million of this money.

Almost immediately after FEMA and private charities began administering funds to hurricane victims, reports of fraud began to surface. While many involved non-eligible persons filing false claims for public or private benefits, others were more elaborate, like the creation of phony disaster-related websites designed to exploit those who wished to make charitable contributions to disaster relief victims.

Federal law enforcement officials formed the Hurricane Katrina Fraud Task Force in 2005 to mobilize the resources of federal state and local governments to combat widespread fraud. Since its creation, the task force has assisted 41 United States Attorneys prosecute more than 768 people. In addition, the task force's Joint Command Center in Baton Rouge, Louisiana, continues to receive more than 700 calls each month through its nationwide hotline, and has screened and referred more than 14,000 hurricane-related fraud leads to law enforcement agencies across the country.


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