Insurance Fraud NEWS
NYC must pay $5.3M for unjust car claims after Hurricane Sandy
February 21, 2019, Albany, NY
New York City will have to repay the Federal Emergency Management Agency $5.3 million after admitting transportation officials made fraudulent claims after Superstorm Sandy in 2012.
The proposed settlement, which must be approved in U.S. district court, said city transportation officials submitted a list to FEMA of vehicles they said were damaged during the storm. Prosecutors said, however, some of those vehicles had been in need of repair before the storm.
FEMA ultimately agreed to replace 132 department vehicles, which cost millions, a statement from the U.S. Attorney's office in New York City said.
"Today's settlement is the successful outcome of a joint investigation ... which uncovered falsified submissions by the city to the federal government that allowed the city to wrongly obtain millions of dollars in federal emergency funds," Margaret Garnett, commissioner of the New York City Department of Investigation, said in a statement Wednesday.
"Our investigation found that a lack of vigilant management and inadequate training of city personnel at the Department of Transportation led to this wrongdoing in connection with a federal public assistance program."
The New York City area and many other locations in the Northeast received severe damage from the Category 3 hurricane in October 2012. All told, the storm caused nearly $70 billion in damages, making it the fourth-costliest hurricane in U.S. history.
Transportation spokesman Scott Gastel told The New York Times the department cooperated with federal prosecutors when it became aware of the fraudulent claims in 2016.
"NYC DOT has already instituted stronger procedures to reduce the risk of this ever happening again, including a new grants compliance officer and a centralized, comprehensive tracking system for the agency's thousands of fleet vehicles," Gastel said.
Under the terms of the agreement, the city will pay back more than $5.3 million and relinquish an additional $1.7 million that had been promised to the city.
"When people lie to FEMA about the cause of property damage in order to reap a windfall, it compromises FEMA's ability to provide financial assistance to legitimate disaster victims in desperate need," Manhattan U.S. Attorney Geoffrey S. Berman said. "This office will take decisive enforcement action to protect FEMA and its vital programs from fraud, waste, and abuse."