Emergency and Disaster Assistance Fraud Penalty Enhancement Act of 2007

Madam Speaker, I yield myself such time as I may consume.

I rise in strong support of S. 863, the Emergency and Disaster Assistance Fraud Penalty Enhancement Act of 2007, and I want to thank and commend the gentleman from Michigan (Mr. Conyers) for his leadership on this bill as well.

In January of this year, I introduced a companion bill, H.R. 846, that would create a new criminal offense and enhance current Federal penalties for fraud associated with major disasters and emergency benefits.

Madam Speaker, August 29, 2005 was a day that this country will never forget. The images of destroyed homes, neighborhoods, communities, displaced families and friends, and lives literally torn apart by Hurricane Katrina especially will not easily fade from our memories.

The devastation in the gulf coast region reminds us of a tragedy that we would expect to see in Third World countries, not in our country, and particularly not in regions known for their history and their character.

Since Hurricanes Katrina, Rita, and Wilma devastated the gulf coast more than 2 years ago, Congress has provided more than $117 billion in relief to the region, including reconstruction efforts, medical services, human services, including funds for unemployment and housing assistance, crisis counseling, and various other needs of the victims. In addition, charities like the Red Cross and Salvation Army have contributed several billion dollars more to the effort, and many, many volunteers contributed their time.

To no one's surprise, almost immediately after FEMA and private charities began administering funds to victims, reports of fraud began to surface, such as noneligible persons filing false claims for benefits, and the creation of phony Katrina-related Web sites designed to exploit those who wished to make legitimate disaster relief contributions.

More elaborate and organized schemes have also come to light, including a group in Bakersfield, California, which conspired with employees of a Red Cross call center to defraud the charity by obtaining false claims information in order to collect assistance payments through Western Union. These scams don't just affect disaster victims, but the charities, donors and taxpayers who provide this assistance.

Federal law enforcement officials, including the Department of Justice, responded to the problem. In September 2005, the Hurricane Katrina Fraud Task Force was formed to mobilize the resources of the Federal Government, including Department of Justice, Homeland Security, Treasury, the FBI, FDC

and other Federal partners, as well as representatives of State and local law enforcement.

Since its formation in 2005, the task force has assisted 41 United States Attorneys to prosecute more than 768 people to date. In addition, the Task Force 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 leads to law enforcement agencies and field offices across the country.

Yet, despite these efforts, it is clear that current criminal penalties are insufficient to deter disaster fraud. For example, in the U.S. Attorneys Office for the Middle District of Louisiana alone, 128 individuals have been charged with hurricane-related fraud.

S. 863 would strengthen Federal law enforcement's ability to combat and deter those who would otherwise attempt to exploit another's tragedy, preventing assistance from going to those who truly need it. How? Well, first this legislation creates a new specific criminal penalty to prohibit fraud in connection with any emergency or disaster benefit, including Federal assistance or private charitable contributions, as long as the benefit was authorized or paid in interstate commerce, transported through the mails, or is something of value. The penalty for engaging in such fraud is a fine or imprisonment of up to 30 years.

Second, the bill amends the Federal mail and wire fraud statutes to add emergency or disaster benefits fraud to the 30-year enhanced penalties in those statutes. Currently, the 30-year enhancement is reserved only for financial institutions fraud.

Finally, the bill directs the United States Sentencing Commission to review existing penalties for disaster assistance fraud, amend the sentencing guidelines as necessary, and report back to the Judiciary Committee of both the House and the Senate.

The Emergency and Disaster Assistance Fraud Penalty Enhancement Act unanimously passed the House back in the 109th Congress. Tough penalties for criminals who prey on innocent disaster victims are long overdue. I urge my colleagues to support S. 863.

I once again thank the gentleman from Michigan (Mr. Conyers) for his leadership on this issue.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, I move to suspend the rules and pass the Senate bill (S. 863) to amend title 18, United States Code, with respect to fraud in connection with major disaster or emergency funds.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and include extraneous material on the bill under consideration.

Madam Speaker, I yield myself such time as I may consume.

Members of the Congress, this important legislation strengthens Federal criminal prohibitions against fraudulent misuse of emergency and disaster relief funds. It passed the Senate earlier this month without opposition. It is a good bill, and one that the House should support.

Reports of fraud surfaced almost immediately after the Federal Emergency Management Agency began distributing funds Congress had appropriated for disaster aid to victims of Hurricane Katrina, Hurricane Rita, and Hurricane Wilma. These reports included allegations that funds had been misused to purchase luxury goods, that noneligible persons had applied for and received benefits, and that criminals had established phony Katrina-related Web sites to swindle those who wished to contribute to legitimate disaster assistance efforts.

Last year, the GAO reported that it had identified numerous instances of fraud in connection with Katrina and Rita disaster relief. Although the total amount of cost of these fraud schemes is not yet known, the GAO estimates that it will certainly be in the amounts of billions of dollars.

Despite diligent efforts by Federal law enforcement agencies to prosecute these schemes, current criminal laws are not adequate to the task. The Emergency and Disaster Assistance Fraud Penalty Enhancement Act addresses that shortcoming in several respects.

The bill creates a new Federal crime that specifically prohibits fraud in connection with any emergency or disaster relief benefit as to both Federal assistance and private charitable giving, with fines up to $250,000 for an individual, and up to $500,000 for an organization, and prison terms up to 30 years. The bill also increases prison terms for engaging in mail or wire fraud in connection with emergency or disaster relief to the same levels as currently apply in cases involving bank fraud.

The bill also directs the Sentencing Commission to revise its sentencing guidelines for fraud or theft in connection with a major disaster emergency declaration in light of the new statutory changes.

It is a bipartisan measure, and will help ensure that disaster assistance funds are received by their intended recipients and used for their intended purposes. I am proud of the work that the Judiciary Committee has done on both sides of the aisle in this matter, and particularly commend the gentleman from Ohio (Mr. Chabot) in his management of this legislation.

I reserve the balance of my time.

Madam Speaker, I am pleased to yield 2 minutes to the indefatigable member of the Judiciary Committee, the gentlewoman from Texas (Ms. Jackson-Lee).

Madam Speaker, I yield back the balance of my time.

I thank the distinguished chairman of the full committee. Through his leadership, we have had a number, huge numbers of solutions being put forward, and I thank him so very much for serving the American people as he has done. Let me thank the gentleman from Ohio (Mr. Chabot) for his leadership and share some real life stories.

Madam Speaker, I lived through Hurricane Katrina and Rita and spent a good number of my days in New Orleans visiting not only with the victims of Hurricane Katrina, but also subsequently in Texas visiting with those impacted by Hurricane Rita. I also engaged extensively with small contractors and workers who indicated that in addition to trying to put themselves forward to do the best work on behalf of the victims, they were victimized. And the victims were victimized over and over again: fraudulent work being done, contracts being signed, moneys being promised, and nothing happening.

This bill will set the record straight. Not only does it send a message in times of disaster to those who come rushing in to try and provide, if you will, the saving flag or the saving grace, but hopefully it will send a message to local jurisdictions that they must have enormous oversight in ensuring that they are not subjected to criminal penalties.

As a member of the Homeland Security Committee, let me also acknowledge Chairman Thompson. In the early days after Hurricane Katrina, we had oversight hearings over the abuses that were occurring, the lack of oversight by FEMA. I went into some of the sites, if you will, where individuals were being signed up for work or benefits. But the aftermath of it was what the shame was. How people were not given the benefits they were promised, how contractors did not fulfill their duties, and how local jurisdictions were made to pay enormous prices to large contractors, and yet local small businesses, minority-owned businesses and women-owned businesses could not get business and could not be paid. Even today, there are small contractors who are waiting still to be paid.

I rise to support this legislation, the Emergency and Disaster Assistance Fraud Penalty Enhancement Act of 2007. It is long overdue.