Investigations into the use of Federal Emergency Management Agency’s (FEMA) Hurricane Katrina Aid have unveiled fraud and waste on a grand scale, costing U.S. taxpayers close to $2 billion.

In one instance, a hotel owner is said to have billed FEMA for $232,000 for nonexistent victims. Another report details a case of about 1,100 Gulf Coast prison inmates scamming more than $10 million in rental and relief assistance. And 10,000 mobile homes sit at an Arkansas airfield, unused, while FEMA pays $250,000 a month in storage costs.

There are also stories of Americans claiming to be victims and using their FEMA aid on everything from football season tickets to a sex change operation.

“The blatant fraud, the audacity of the schemes, the scale of the waste—it is just breathtaking,” said Senator Susan Collins, Republican of Maine.

The money lost to misuse and fraud makes up almost 11% of the $19 billion spent by FEMA in the disaster-relief program. Another report, by the Government Accountability Office, estimates that of the $6.3 billion directly distributed to hurricane victims, 21% could have been improperly used.

In total, 335 people have been indicted on fraud charges, a record number coming from one hurricane season. Officials at the Red Cross are looking into 7,100 possible fraudulent cases, while investigators from Congress have sent more than 7,000 cases to prosecutors.

This is, by far, the most astonishing and widespread case of fraud and waste seen in America’s recent history.

Source: The New York Times; LATimes.com