Disaster recovery fraud, and back-office romance


Disasters like Hurricane Sandy, by and large, shine a positive light on humanity, with the heroic actions of first responders and volunteers, and the massive outpouring of support from across the nation. They also present fraud opportunities for the shady operators and criminals among us.

Hurricanes leave behind a lot of debris. Following the event, it seems every pickup truck quickly turns itself into a “debris removal company.”

I’d like to share a story which is…delicate, but based on true events. One of the first things I had to do when I started my job in state emergency management was to give a box of documents to a federal marshal.  Anyway, it seems that a “debris removal contractor,” who happened to sit on the county board, had won a contract with one of the county’s towns.  No, that is not the dilemma.  He was seemingly doing a great job and money was flowing, trash was being hauled and all was right with the world.

This gentleman was married at the time, and he and his secretary were apparently…uh…putting in a little overtime to creatively pad the bills.  You were going in a different direction, weren’t you?  Well, you would be right about that, too.  He was having his secretary falsify debris charges AND not exactly upholding his marriage vows.  As often happens, the young lady who had been assisting him after hours (with the bills.  Geez, stay with me would you?) and the gentleman had a falling out.

Next thing we knew, all the information we needed to catch the fraudster was right in our laps.

Debris removal is an enormous, complex process, and requires precise, quantitative monitoring.  The process also produces a lot of data. Companies are hired to oversee the process and data will be collected on every single truck and piece of debris removed. FEMA has numerous methods and state and local governments will do all they can to effectively manage the process.

It is typically a three-phase process. First, debris that is blocking access for emergency responders is removed. Then, vegetative matter like toppled trees are cut up and taken out. Lastly, it’s home demolition debris, ruined appliances, etc.  The combination of urgency and sheer amounts in the phases presents opportunities for fraud.

For instance, a debris removal company might be using a truck with a capacity of eight cubic yards. By adding a false bottom they can reduce the capacity by half, leading to more trips they can bill the government for. So they’re getting paid full price for moving half the debris they claim.

The question is, are we looking for needles in the haystack, trying to find which companies are, um, getting secretarial assistance and padding their bills?  I oversimplify, of course, but the reality is that technology that is being used to detect fraud in other government programs today can be easily applied to debris removal in the wake of Sandy.  Relying on solid, scientifically proven technologies to detect abnormalities in the process will greatly enhance the ability of responsible officials to find those needles and save us all a few bucks.


About Author

Chuck Ellstrom

Sr Manager, Industry Consulting

Chuck Ellstrom manages a team of subject matter experts focusing on multiple policy areas in state and local government, particularly health and human services, justice and public safety and finance. Over the past 16 years, Chuck has worked on comprehensive grants intelligence solutions, disaster planning, disaster recovery operations, and interpretation and execution of client requirements. He has extensive expertise with the challenges of managing large infusions of Federal grant dollars and projects into states. In his seven years at SAS, Chuck has helped develop several SAS technologies, including a major disaster management intelligence solution. Before joining SAS, Chuck was Deputy Chief of Operations for North Carolina’s Division of Emergency Management where he was responsible for the management of 13 Presidential Disaster Declarations and statewide disaster response operations. A former field artillery captain in the U.S. Army, Chuck holds a bachelor’s degrees in history and political science, as well as a master’s in public administration (policy analysis), from East Carolina University. Chuck takes advantage of living in a hotbed for college basketball but officiating in multiple conferences throughout the southeast U.S. He is also a proud father of a rising 9th grade “soccer star."

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