After Hurricane Katrina last August, the Federal Emergency Management Agency paid out fraudulent disaster assistance which may have exceeded $1 billion, according to Government Accountability Office testimony before Congress Wednesday.

In its report (PDF) to the House Homeland Security Subcommittee on Investigations, GAO said that “We estimate that through February 2006, FEMA made about 16 percent or $1 billion in improper and potentially fraudulent payments to registrants who used invalid information to apply for disaster assistance.”

GAO also said that the “estimate likely understates the total amount of improper and potentially fraudulent payments because we did not test our samples for all potential reasons why a disaster assistance payment could be fraudulent or improper.”

The report shows that many people received rental assistance for the time periods they were staying in hotels that FEMA also paid for, constituting duplicate assistance, that incarcerated people’s identities were used to obtain assistance, and that debit cards issued immediately after Hurricane Katrina were used inappropriately.

FEMA made payments to individuals who intentionally defrauded the agency by providing false Social Security numbers, false addresses of damaged property, and other “phony” information on their applications. FEMA even paid assistance to some people after it had made a determination that they weren’t eligible for assistance.

Worse, it paid assistance to people in state and federal prisons who not only were in prison during the disaster, but also phoned in their applications from prison.

The report describes some of GAO’s undercover operations where it obtained disaster assistance checks from FEMA after providing bogus registrations.

In February, GAO reported that weaknesses in FEMA’s internal controls caused many people to receive more assistance than they were entitled to, and also allowed many people to make fraudulent claims. FEMA has begun to go after many of these people to get the money back.

And to top it all off, people actually used their debit cards to buy things other than they were supposed to. This isn’t news either, but the news of someone buying a 7-night vacation in the Dominican Republic with their FEMA debit card makes headlines, I suppose. Other things people bought that GAO found were diamond jewelry, a divorce lawyer, pornography and New Orleans Saints season tickets (for what venue?).

In October, we reported that at least 51,000 FEMA debit cards were issued on fraudulent claims.