NYC Admits Defrauding FEMA Out of Millions After Superstorm Sandy
By Stephen Rex Brown
A hurricane of lies about city-owned Department of Transportation vehicles supposedly damaged by Superstorm Sandy has resulted in a $5.3 million settlement with the feds.
The agreement between New York City and federal prosecutors was revealed in papers filed Wednesday in Manhattan Federal Court. After the October 2012 storm that killed 43 people and caused $19 billion in property damage, FEMA offered federal money to replace damaged city-owned vehicles.
In 2014, a DOT deputy commissioner, who was not identified in papers, certified a list of 132 vehicles the agency claimed were wrecked by the apocalyptic flood. But in reality, many of the vehicles had been out of commission for years, papers show.
Some of the vehicles on the list -- which included passenger cars, heavy equipment and commercial vehicles -- had been "junk for years," a DOT employee wrote the deputy commissioner.
"FEMA would not have agreed to pay NYCDOT any of these funds had it known that the certifications were false and that many of the vehicles listed...were ineligible," prosecutors wrote.
In one example, DOT sought $3 million for seven street pavers that had been designated for salvage years before Sandy.
Of those seven, the agency reported to the NYPD in 2009 that five paving machines "are sitting under the highway in the dump for seven years and were being pick(ed) apart by vandals stealing brass fittings, copper wire harnesses and anything else they could sell for scrap," according to papers.
Nevertheless, DOT sought FEMA money to replace the pavers.
In another example, the city sought FEMA money for a trash pump and trailer, though both were taken out of service in 2010.
The settlement between the city and federal prosecutors requires the approval of a federal judge. The $5.3 million settlement includes the city relinquishing a claim to $1 million it expected to receive from FEMA.
The agreement notes that the city and DOT "did not undertake a sufficient review" of the list of damaged vehicles. The DOT deputy commissioner also "lacked personal knowledge" sufficient to sign off on the list.
"FEMA serves a critical role in providing emergency relief to those who are tragically struck by disaster. 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 Berman said.
The DOT on Wednesday said it had taken steps to "reduce the risk of this ever happening again."
"In 2016, the U.S. Attorney for the Southern District alerted DOT that reimbursement claims submitted by the agency to FEMA included damaged vehicles that may not have been eligible for reimbursement. We cooperated fully with the subsequent review, and worked together to reach an amicable settlement," the agency said in a statement.
"As a result of the joint review, 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."
The nonprofit National Insurance Crime Bureau estimated that 230,000 insurance claims for vehicle damage were made as a result of the storm.
Sandy left cars tossed across Cross Bay Boulevard in Broad Channel, Queens. In lower Manhattan, cars were piled on top of each other in underground parking decks. Close to 20,000 damaged cars were stored on a tarmac in Calverton, L.I.
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