Fraud in the Face of Disaster: How the False Claims Act Protects the Integrity of Government Disaster Aid
Natural disasters bring out the very best—and the very worst—in humanity. Countless individuals step forward after a hurricane, wildfire, or pandemic, risking their own safety to help those in need. Communities rally together, neighbors become lifelines, and strangers become heroes, embodying the spirit of resilience and selflessness that defines the best of who we are.
After Hurricane Harvey, a simple Instagram post started a fundraiser with a goal of $200,000. It ended up raising $41.7 million, sheltering hundreds of families and rebuilding thousands of homes. After Hurricane Katrina, volunteers with boats organized the “Cajun Navy.” They were warned that this was “not a place for you to come . . . if you’re afraid of death, possibly you get shot or killed.” Even so, hundreds of volunteers with boats showed up, ultimately rescuing more than 10,000 people from flooded homes and rooftops.
From 1992–2021, the United States spent $381 billion in disaster funding.[1] It is expected that it will cost over $100 billion to respond to Hurricanes Helene and Milton and other natural disasters in 2024.
The sheer amount of disaster spending creates opportunities to defraud these programs. For every story of courage and compassion, there are others of greed and exploitation. Fraudsters exploit government relief programs, siphoning critical resources away from the people and communities who need them most.
Common types of disaster relief fraud against the government include:
– Delivering substandard services
– Delivering services that differ from those billed to the government.
– Supplying goods (such as food, shelter, or medical supplies) that are worth less than what was billed or reimbursed
– Not delivering promised goods or services.
– Upcharging the government for goods or services without proper authorization.
– Billing for hours worked or goods provided in excess of what was actually delivered.
For example, in the aftermath of Hurricane Katrina, the Archdiocese of New Orleans, Xavier University, Dillard University, the New Orleans public school system, and the engineering firm AECOM conspired to take disaster profiteering to new lows. AECOM was the contractor preparing damage estimates for these institutions to qualify for FEMA’s public assistance grants.
An AECOM supervisor masterminded a scheme that exploited FEMA’s “50% Rule.” This rule determines whether a building should be repaired or fully replaced based on damage estimates. By inflating repair costs or fabricating damage, the supervisor and his collaborators secured full replacement funding for facilities that should have qualified only for repair grants.
The fraud was as brazen as it was inventive. Xavier University invented a bogus basement, claiming that it required repairs. The Archdiocese of New Orleans, already reeling from a bankruptcy filing tied to pandemic-related losses and lawsuits over molestation allegations, collected an estimated $46 million in FEMA overpayments. Of that, more than $36 million came from claims that the upper floors of two assisted-living facilities were catastrophically damaged—claims later revealed to be entirely false. Asked to substantiate their claims, AECOM allegedly used stock photos from the internet to document non-existent damage when real evidence didn’t align with their narrative.
This pattern of deceit would have gone unchecked if not for the actions of a whistleblower at AECOM. The whistleblower reported the fraud, leading to the firing of the supervisor who directed it. AECOM then tasked the whistleblower with continuing his investigation of the fraud. He did so and reported to AECOM’s management the full extent of the supervisor’s fraud. When the company did nothing, the whistleblower took his concerns outside the company and filed a qui tam lawsuit under the False Claims Act. His actions resulted in significant financial penalties for the perpetrators and a personal whistleblower reward of more than $2.4 million.
Disaster relief programs are meant to be lifelines for those in need—families rebuilding homes, communities finding their footing again. Fraud undermines that mission, but it doesn’t have to. When signing the False Claims Act into law, Abraham Lincoln trusted in the strength of ordinary people to stand against wrongdoing. He believed in the “better angels of our nature” and in our shared responsibility to do what’s right, even when it’s difficult.
When individuals come forward to report wrongdoing, they protect more than just money; they safeguard hope and trust in the systems meant to help us all. If you see something that doesn’t sit right—false claims, inflated costs, or outright lies—know that speaking up matters. By reporting fraud to a lawyer or the authorities, you become part of the solution. Together, we can ensure that disaster relief reaches its rightful purpose: helping people heal and rebuild. It’s not about being perfect; it’s about doing what we can, when we can, to let those better angels shine through.
MaryAnne Hamilton is an Attorney at the Miller Law Group
