The Lowest of the Low

Why your charity dollars may be going to crooks instead of to the victims of Hurricane Katrina.

It was just one of so many Hurricane Katrina horror stories. But it was especially heartbreaking. East Texas relief workers took in a New Orleans man named Ray Johnson, who said his wife and three-year-old son drowned before his eyes when their house flooded. On local TV he recounted the tragedy in agonizing detail: how rushing water knocked him off balance and caused him to drop his boy. How he found his wife: "She was floating, so I knew she was dead." How he pulled their lifeless bodies to the attic: "For the first two weeks I broke down every day, three, four, five, ten times a day," Johnson said.

He received an outpouring of generosity. A Tyler, Texas, church gave Johnson shelter and clothing. A funeral home offered to pay for a memorial service. And he even sent off for one of the $2,000 checks FEMA was providing victims.

But it was all a lie. Johnson was actually Walter Ray Stall, a convicted felon from Texas. His real-life estranged wife and children were very much alive. For Stall, authorities say, the horror of Katrina was just a moneymaking opportunity.

Meet the lowest of the low: the people who take advantage of natural disasters to make a buck off charitable donations and government relief efforts. Many, like Stall, get caught. In the weeks after Katrina hit, dozens of people were arrested nationwide. Thousands more may be getting away with it. By the end of October, more than 50 people had been charged with federal Katrina-related crimes, and hundreds more had been nabbed at the local level, according to Paul Bresson, a spokesman for the Justice Department's Katrina-fraud task force. Authorities also say that 3 to 5 percent of funds meant for relief may be siphoned off by crooks. When it comes to Katrina, that could mean a heist of $5 billion or more.

Disaster-relief fraudsters "are taking away money from the real victims," says John Dowdy, an Assistant U.S. Attorney in Jackson, Mississippi, on the trail of Katrina scams. "It makes them into double victims."

Unfortunately, we've seen this before. After September 11, 2001, Carlton McNish, of Tobyhanna, Pennsylvania, was arrested for falsely claiming that his wife had died at the World Trade Center. McNish, who wasn't married at all, reportedly even brought someone else's children to a bogus memorial service for the fictional wife. He netted more than $100,000 from relief agencies like the Red Cross, the Salvation Army and the Robin Hood Foundation before he was nabbed.

Among the criminals nailed after Katrina were 30 people in Bakersfield, California, charged with stealing from the American Red Cross. Ten of them had been workers at a Red Cross call center that helped Katrina victims collect charity funds. Prosecutors say that the thieves used false claim information and had accomplices pick up relief checks meant for the true victims. In Houston, people were caught trying to collect one-time payments from Red Cross relief centers on as many as three separate occasions, the police reported. And, in Atlanta, according to the New York Daily News, a local store reported that two of the FEMA debit cards were used to buy $800 Louis Vuitton handbags. Either a hurricane victim didn't really need that FEMA money or someone else got his hands on it.

Fraud charges related to Katrina have been brought everywhere from Oregon to Georgia. In some cases, scammers have used another person's address to steal funds, making it impossible for people who actually live at that address to collect their share, Dowdy says.

Maybe the only thing worse than people who try to bilk disaster funds are the scammers who steal straight from charity-giving Americans. Take Matthew Z. Schmeider, an unemployed painter from Pennsylvania. Just days after the 2004 Asian tsunami, Schmeider blasted out 800,000 e-mails falsely claiming to be from Mercy Corps. Complete with official Mercy Corps logos, the e-mails asked for contributions to aid tsunami victims. After his arrest, Schmeider told the FBI he needed cash to pay bills and fix his car.

There are tons of creeps out there. E-mail con artists were at work just days after Katrina's landfall, and within a month the FBI said more than 4,000 Katrina-related websites, many of them believed to be criminal, had sprung up. "Fraudulent ones are popping up faster than we can pound them down," the FBI's top cyber-official warned on the department's website.

Those who don't steal money often try to steal identities. They do this by hustling people for their Social Security or credit card information. You can bet even more horror stories will emerge from the soggy rubble of Katrina and Rita. After Hurricane Frances struck Florida in 2004, officials found widespread fraud there, including big payments for supposed storm damage -- often damage that never happened or occurred before the hurricane struck. According to the Sun-Sentinel newspaper, at least 203 of the 319 funeral claims FEMA paid in Florida in 2004 were for people whose deaths were unrelated to the storms -- including six who committed suicide.

When disaster hits, crooks are almost as predictable as fallen trees and flooded houses. It's impossible to catch them all. But there's sweet justice every time we nab someone like Walter Stall. These swindlers deserve every ounce of shame and punishment we can muster.

Outraged? Write to Michael Crowley at outrageous@rd.com.

From Reader's Digest - January 2006

 

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