[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
AFTER KATRINA: THE ROLE OF THE DEPARTMENT OF JUSTICE KATRINA FRAUD TASK 
  FORCE AND AGENCY INSPECTORS GENERAL IN PREVENTING WASTE, FRAUD AND 
                                 ABUSE

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      FINANCE, AND ACCOUNTABILITY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 10, 2006

                               __________

                           Serial No. 109-178

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
------ ------

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

   Subcommittee on Government Management, Finance, and Accountability

              TODD RUSSELL PLATTS, Pennsylvania, Chairman
VIRGINIA FOXX, North Carolina        EDOLPHUS TOWNS, New York
TOM DAVIS, Virginia                  MAJOR R. OWENS, New York
GIL GUTKNECHT, Minnesota             PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
JOHN J. DUNCAN, Jr., Tennessee

                               Ex Officio
                      HENRY A. WAXMAN, California

                     Mike Hettinger, Staff Director
               Tabetha Mueller, Professional Staff Member
                          Erin Phillips, Clerk
            Adam Bordes, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 10, 2006.....................................     1
Statement of:
    Fisher, Alice S., Assistant Attorney General, Criminal 
      Division, U.S. Department of Justice, and Chair, Hurricane 
      Katrina Fraud Task Force...................................     6
    Jadacki, Matt, Special Inspector General for Gulf Coast 
      Hurricane Recovery, Department of Homeland Security; Ken 
      Donohue, Inspector General, Department of Housing and Urban 
      Development; Eric Thorson, Inspector General, Small 
      Business Administration; and Thomas Gimble, Principal 
      Deputy Inspector General, Department of Defense............    31
        Donohue, Ken.............................................    45
        Gimble, Thomas...........................................    59
        Jadacki, Matt............................................    31
        Thorson, Eric............................................    74
Letters, statements, etc., submitted for the record by:
    Donohue, Ken, Inspector General, Department of Housing and 
      Urban Development, prepared statement of...................    48
    Fisher, Alice S., Assistant Attorney General, Criminal 
      Division, U.S. Department of Justice, and Chair, Hurricane 
      Katrina Fraud Task Force, prepared statement of............    10
    Gimble, Thomas, Principal Deputy Inspector General, 
      Department of Defense, prepared statement of...............    61
    Jadacki, Matt, Special Inspector General for Gulf Coast 
      Hurricane Recovery, Department of Homeland Security, 
      prepared statement of......................................    35
    Platts, Hon. Todd Russell, a Representative in Congress from 
      the State of Pennsylvania, prepared statement of...........     4
    Thorson, Eric, Inspector General, Small Business 
      Administration, prepared statement of......................    77
    Towns, Hon. Edolphus E., a Representative in Congress from 
      the State of New York, prepared statement of...............   101


AFTER KATRINA: THE ROLE OF THE DEPARTMENT OF JUSTICE KATRINA FRAUD TASK 
  FORCE AND AGENCY INSPECTORS GENERAL IN PREVENTING WASTE, FRAUD AND 
                                 ABUSE

                              ----------                              


                        WEDNESDAY, MAY 10, 2006

                  House of Representatives,
Subcommittee on Government Management, Finance, and 
                                    Accountability,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:10 p.m., in 
room 2247, Rayburn House Office Building, Hon. Todd Russell 
Platts, (chairman of the subcommittee) presiding.
    Present: Representatives Platts and Towns.
    Staff present: Mike Hettinger, staff director; Dan Daly, 
counsel; Tabetha Mueller, professional staff member; Erin 
Phillips, clerk; Adam Bordes, minority professional staff 
member; and Jean Gosa, minority assistant clerk.
    Mr. Platts. This hearing of the Government Reform 
Subcommittee on Government Management, Finance, and 
Accountability will come to order.
    When Hurricane Katrina struck, our Nation's first priority 
was to provide immediate help to our fellow citizens. In the 
first 2 weeks after the storm, Congress appropriated more than 
$60 billion, nearly twice the annual budget for the entire 
Department of Homeland Security. Once the full scope of the 
disaster became apparent, Federal, State and local governments 
started the monumental task of helping Gulf Coast residents to 
recover and rebuild. Having recently completed a tour of the 
area, I must reiterate what I tell my constituents back home 
and my colleagues that have not visited the area, that the 
devastation is so massive and extensive that pictures cannot 
begin to tell the story. The road to recovery will be long and 
challenging.
    After the initial push to provide emergency assistance, a 
new and critically important priority arose, the need to ensure 
that the financial resources provided for the recovery and 
rebuilding efforts, which already amount to approximately $85 
billion, are spent wisely.
    In the immediate aftermath of Hurricane Katrina, by far the 
worst natural disaster in U.S. history, the controls that are 
normally in place to ensure accountability of disaster relief 
benefits were suspended. This was an eminently reasonable 
approach, given the urgency and magnitude of the situation. At 
the same time, however, every dollar that is wasted through 
fraud or mismanagement is a dollar that does not go to someone 
who truly needs it. It is thus important to reestablish 
controls as quickly as possible and to keep a close watch as 
taxpayer dollars continue to be expended over the long term. 
Now that we are in the more extensive recovery and rebuilding 
phase, those controls are more important than ever.
    Recovering from this disaster of unprecedented magnitude 
involves nearly every agency in the Federal Government, and it 
will continue for years to come. While FEMA is the most visible 
of these agencies, providing immediate assistance. The bulk of 
money for effective individuals will actually come from the 
Small Business Administration in the form of low interest 
disaster loans and grants from the Department of Housing and 
Urban Development. The Department of Defense, with its 
formidable resources and expertise, has also dedicated 
significant personnel and dollars to the recovery effort.
    Fortunately, each of these departments and agencies has a 
built-in watchdog, an Office of Inspector General. As soon as 
Katrina hit, the President's Council on Integrity and 
Efficiency turned to its Homeland Security Working Group, 
headed by the Department of Homeland Security, to coordinate 
the efforts of all affected IGs. This working group continues 
to operate and effectively leverage the collective knowledge 
and resource that can be targeted to ensure accountability.
    In the spirit of cooperation, the Department of Justice 
established a Hurricane Katrina Fraud Task Force soon after 
Katrina hit, drawing on the expertise of Inspectors General, 
the FBI, and State and local law enforcement personnel. The 
subcommittee is pleased today to hear from the Hon. Alice 
Fisher, Assistant Attorney General of the Criminal Division at 
the Department of Justice, and Chair of the Katrina Task Force. 
We certainly look to our work today and our conversations, and 
continue to work with the Task Force and its coordinated law 
enforcement efforts.
    We will also be pleased to hear from several of the 
Inspectors General involved with the Hurricane Katrina 
recovery. These IGs work not only to uncover and prevent fraud, 
but also to ensure the integrity of the programs they oversee. 
We will be hearing from Mr. Matt Jadacki, Special Inspector 
General for Gulf Coast Hurricane Recovery, with the Department 
of Homeland Security; the Hon. Ken Donohue, Inspector General 
for the Department of Housing and Urban Development; Mr. Thomas 
Gimble, Principal Deputy Inspector General at the Department of 
Defense; and the Hon. Eric Thorson, Inspector General of the 
Small Business Administration.
    I traveled to the Gulf Coast with Mr. Jadacki and DOD-OIG 
staff to learn firsthand exactly what controls are in place, 
and what is being done to monitor the expenditure of Federal 
funds. I was impressed by the level of coordination, not only 
among Federal agencies, but also between Federal, State and 
local governments, as well as private partners.
    I certainly thank all of our witnesses who are 
participating here today, for not just your testimony, but your 
great leadership in this important oversight responsibility 
regarding the recovery from this terrible natural disaster.
    [The prepared statement of Hon. Todd Russell Platts 
follows:]

[GRAPHIC] [TIFF OMITTED] T9931.001

[GRAPHIC] [TIFF OMITTED] T9931.002

    Mr. Platts. Our ranking member, Mr. Towns, is en route to 
the hearing, and when he joins us, we will offer him an 
opportunity for an opening statement. In the meantime, I think 
what we will do is move to our first witness.
    It is the practice of the committee, if I could ask, Ms. 
Fisher, if you could stand to be sworn in.
    [Witness sworn.]
    Mr. Platts. Thank you. You may be seated. The clerk will 
acknowledge that the witness answered in the affirmative.
    We have a general timeframe, I think, probably set at 7 
minutes, it looks like, but, please, your leadership has been 
tremendous from the first weeks of this disaster, and the 
importance of safeguarding the taxpayer funds as we provide 
that very important and necessary relief to the citizens of the 
Gulf Coast. So if you need more than that time, we want you to 
take it. We are delighted to have you here and to have your 
expertise shared with the committee and the public.

   STATEMENT OF ALICE S. FISHER, ASSISTANT ATTORNEY GENERAL, 
   CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, AND CHAIR, 
               HURRICANE KATRINA FRAUD TASK FORCE

    Ms. Fisher. Thank you, Mr. Chairman, for your kind 
comments. I am so pleased to be here today to share some of the 
work of the Hurricane Katrina Fraud Task Force with you and the 
rest of the committee.
    It has been my honor and my pleasure to serve as chairman 
of the Hurricane Katrina Fraud Task Force since its inception 
on September 8th of last year when the Attorney General set it 
up.
    The task force has had one very clear mission, and that is 
to have a coordinated law enforcement effort to make sure that 
the dollars that Congress and the private sector intend to go 
to the victims actually reaches the victims and not the 
predators, who would seek to illegally divert it for their own 
pockets. It has been a tremendous opportunity for me to work 
with my colleagues from the FBI, Secret Service, Postal 
Inspector, and the Inspector General community at large, some 
of whom are here today, and see the dedication and commitment 
and resolve that they have brought to this mission from the 
very beginning.
    It was an outpouring, as of September 8th, and has been 
since that time, of a coordinated effort, not only among 
Federal law enforcement agencies, but also with our State and 
local law enforcement partners, to combat this fraud and 
continue to combat this fraud.
    I think that we have been very successful in this effort. 
Since that time we have brought charges against over 263 
defendants in 200 cases, and 24 judicial districts from Florida 
all the way to California, in all types of cases. We've been 
focusing on charity fraud, benefits fraud, procurement fraud, 
public corruption, insurance fraud, identity theft, and all of 
the fraud schemes that come out of Katrina.
    But we've been moving beyond not only the benefits frauds 
that were kind of the initial ones with the $2,500 FEMA 
benefits, where people were applying for benefits that they 
weren't entitled to, and into some of the more complex 
contracting and public corruption cases as of late.
    Let me give you a couple of examples of that. Just last 
week, in the Middle District of Louisiana, we had a case where 
a contractor from the Louisiana Department of Labor, allegedly 
used his position in the Louisiana Department of Labor to have 
Disaster Unemployment Assistance debit cards fraudulently 
issued, and then he would go out and sell them for $100 or $150 
to others that were not entitled to it. At the time of his 
arrest last week, the defendant was accepting payment from 
another man for a fraudulent benefit card that he issued at the 
request of the other man.
    In southern Mississippi last month, we obtained two guilty 
pleas, one from a subcontractor and one from an official at the 
Army Corps of Engineers Quality Assurance, relating to a 
conspiracy to commit bribery in relation to debris removal 
contracts in Mississippi. In this case, the Federal agents 
recorded conversations between the contractor and the Corps 
employee, in which the contractor paid the Corps employee $100 
for false load tickets. When they pled guilty, they admitted to 
at least 14 of these instances where the contractor would say, 
``I hauled out this much loads of debris.'' It was completely 
false, but the Army Corps of Engineer, for a kickback, would 
agree that it was adequate. So we charged them and they have 
now pled guilty.
    Similarly, in April, in eastern Louisiana, we secured 
guilty pleas from two former FEMA managers with regard to a 
conspiracy and bribery scheme. In that scheme there were these 
two FEMA managers who worked on a contract with an individual 
who operated the base camp in Algiers, LA, and had a $1 million 
meal service contract at the base camp. The FEMA managers asked 
him to inflate the billing on that contract in return for a 
kickback for $10,000 for the scheme, again, illegal bribes. 
They have now pled guilty.
    So we have been very aggressive in these cases. We've also 
moved to fraudulent billing schemes by hotels. Last week in 
east Texas we indicted a general manager of a hotel in 
Texarkana on wire fraud charges. This defendant allegedly 
billed the Red Cross for hotel rooms where evacuees were not 
staying.
    On March 2nd, similarly in Houston, we indicted the 
principal owner of a Galveston hotel for a similar scheme of 
false claims charges to FEMA, billing FEMA for hotel rooms that 
were allegedly used for evacuees, but actually being used for 
friends and family and others.
    Even in the emergency assistance realm we're seeing more 
complex schemes, where some people will go out and recruit 
others to let them use their false names and then go apply for 
benefits in these systems.
    So we've seen a lot of patterns. We've seen a myriad of 
different fraud schemes, and we're going after all of them very 
aggressively and very pro-actively, again, because our mission 
is to make sure that the money gets to the victims who need 
them.
    Now, I said that this has been a very well-coordinated law 
enforcement effort, and I think that the reason that this task 
force has been so successful is that from the beginning we have 
been lucky enough to have the commitment and buy-in from so 
many of the Federal and local law enforcement agencies in 
supporting the task force and the mission. Everyone shares the 
resolve to make sure that the money gets into the hands of the 
victims, but that joint effort is critical to the success of 
the task force.
    A second thing that's been very critical is that we made 
the decision to have a command center down in Baton Rouge, LA, 
which I know you have been down in that area and have had the 
pleasure of meeting Mr. Dugas, who is the executive director of 
the command center, and also the U.S. Attorney for the Middle 
District of Louisiana.
    This command center is a place where our law enforcement 
agencies can be co-located. And it's worked fantastically. They 
go, they share data, they share information about 
investigations, they coordinate their investigations, share 
resources. They have weekly or biweekly meetings to talk about 
patterns and trends and analysis that they're seeing. And it's 
really been a boon.
    So not only does the Inspector General community and the 
task force have meetings up here in Washington, where we talk 
about strategy and policy and what we're seeing and what we 
should be doing to protect the money, but down on the ground we 
have law enforcement meeting at the command center and sharing 
information about investigations on a regular basis. They're 
screening thousands of fraud complaints at the command center.
    Third, I think we've been very committed in the task force 
to get the training that is needed for the people to conduct 
this mission. In October of last year we had a large meeting 
down in New Orleans, where we brought people from headquarters 
and people from on the ground--Mississippi, Alabama, Louisiana, 
Texas--to come together, again talk about the statutes we were 
going to prosecute and how to look for fraud trends, talk about 
the mission, talk about the strategy, talk about the command 
center and the importance of sharing information.
    Then later, after that conference, we have sent experts 
down to the Gulf region to train particularly on things like 
bid-rigging and procurement fraud, so the auditors and the 
investigators know what to look for from a perspective of when 
they need to be referred for criminal prosecution. Now, this is 
obviously something that investigators are trained for and the 
Inspector General community is well trained for. But we sent 
criminal prosecutors down there to work with them so they would 
know exactly what we need and what to look for.
    We have also been very aggressively proactive in that we're 
not sitting back at the command center or here in Washington at 
the task force and necessarily just waiting for a criminal 
referral to be made to us before we prosecute. We've been 
taking tips from the hotlines, we've been meeting with the 
Inspector General community. For example--the Inspector General 
of HUD is here--I've had meetings with him to talk about the 
money that's going to go out in a proactive manner and how we 
best can help to protect that and what we can do in that 
effort. We've been proactive with things like identity theft, 
where the Postal Inspector General sent out brochures to people 
in the Gulf region on how to protect their identity, so we 
don't have to only wait for the fraud to happen at the back 
end.
    And finally and, I think, very importantly, is consistently 
we have sent the message that we have zero tolerance for fraud. 
As you know, Federal prosecution generally doesn't happen at 
the low-level, $2,500, $5,000-10,000 level, because of 
resources. But in this case, we thought it very important, and 
the AG believed it was very important, to get out early and to 
send a message that we will just not tolerate people stealing 
from these victims. And we sent that message, and I think it's 
had a very good impact. In fact, since the task force was sent 
up, we've been told by FEMA and the Red Cross that they've 
received over $8 million in checks returned to them.
    Now, we can't say it's all because of our deterrent message 
and because of our prosecutions, but we've gotten evidence from 
both entities that some of the checks that have been received 
have indications that they were things that necessarily were 
evidence of fraud. So we're very happy to see that deterrent 
message coming through.
    I think in closing I would just say we are committed to 
this, to the long haul. It has been a massive effort with the 
Inspector General community and the FBI and Secret Service and 
others to come forward on this and to come together. There are 
many, many individuals that have been working hard on this. As 
for going forward, this isn't something that I see stopping. We 
are committed to this. And in fact, the Attorney General said 
to me recently that the Department of Justice is going to 
remain aggressive and committed to prosecuting fraudsters who 
take these relief funds from the people that need it to rebuild 
their homes and their lives and their cities and their 
families.
    So thank you again for having this hearing and inviting me 
here.
    [The prepared statement of Ms. Fisher follows:]

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    Mr. Platts. Thank you, Ms. Fisher. And again, my great 
thanks for your leadership. As I did tour the region, the work 
of you and your task force was something that was heralded in a 
number of different instances, and that coordination that has 
happened at all levels. I think that is so important here 
within the Federal Government and then between the various 
levels of Government and with the private sector.
    Your message that you and the Attorney General set forth 
from the beginning and which U.S. Attorney Dugas has clearly 
reinforced at the local level is that zero tolerance. I 
analogize it to Mayor Giuliani and his approach in New York 
City years ago where you don't look the other way on anything. 
And even if you start chipping away at the small violations, it 
kind of is a wave that builds till you have more and more 
success across the board because of that message of enforcement 
being out there. So I just very much commend you and all 
involved in the efforts.
    One of the issues you mentioned, an important one, is being 
in this for the long haul and that this won't be something that 
is forgotten. We are already 8 months-plus and, having been 
there after 8 months, the amount of devastation and the 
rebuilding and the cleanup and the debris removal that is still 
months and years in the making, is just overwhelming.
    In anticipating that long process from a staffing 
standpoint, if you could address that because I am sure there 
has been a need to realign a lot of staff. And for the short 
term, that is one thing, but looking at years, how that is 
going to impact your needs and ability to maintain that 
staffing level. And then maybe specifically with the command 
center at LSU, how you are preparing for that in the long term 
as well.
    Ms. Fisher. Well, I think that the command center, whether 
it stays at LSU or whether it goes somewhere else, is very 
important. It's going to be important to this effort for the 
long haul because the money is going to continue to go out over 
the next few years. It's not going to stop. So a lot of the 
fraud may happen later, and if we let our guard down, it will 
happen. So we're going to be very vigilant going forward.
    As far as staffing, I've been overwhelmed by the number of 
agents that the Inspector Generals and that the FBI and other 
law enforcement agencies have assigned to the command center 
and have assigned up here. In fact, they are continuing to 
assign people and relocate people down into the region to 
continue on these task forces.
    And we can also call on the other field offices to help 
investigate when it's happening in Mississippi or Louisiana or 
Texas and other places. So we have that investigative effort as 
well.
    From a prosecution standpoint and staffing, you know, we 
have been, obviously, besieged in that region with the amount 
of cases, and the courts. And we are reinforcing that. And I 
think we do have, actually, some requests in with regard to 
that. But as you can see, a lot of people were displaced as 
well, and so that's why we've been able to call upon all our 
U.S. Attorneys to bring these cases and to have zero tolerance. 
And they have been fabulously stepping up to the plate. In 
fact, we had a case out in Bakersfield, CA, of all places, 
where 70 defendants were charged in a false debit card scheme.
    So I think we will continue to do that and the AG has 
continued to make that a priority. So I am hoping that we have 
the staffing and resources in place and, if that changes, we'll 
have to readjust. But right now, I think we're in good shape to 
continue to investigate and prosecute these cases.
    Mr. Platts. Is there a plan--and maybe because we are only 
8 months down the road, with your agents as far as rotating 
them in from a--there is a tremendous demand on them that are 
down in that region, and the demands daily and the length of 
the day and the week. Is that something that you are looking at 
just from, again, from a manpower standpoint of how to manage 
them?
    Ms. Fisher. Well, I think from an investigation standpoint, 
again, each agency, each Inspector General may have different 
views on whether they're going to rotate people in or whether 
they're going to permanently relocate them. I know the FBI has, 
again, just sent down four new analysts. I'm not sure whether 
they're going to be there for 1 year or 2 years or 3 years, or 
how long that will be.
    Mr. Platts. Maybe a work in progress on how that plays out.
    Ms. Fisher. Yes.
    Mr. Platts. I do want to reference we have been joined by 
our ranking member, the gentleman from New York, Mr. Towns. 
Thanks for being with us.
    What I'll do is complete the round of questions, and if you 
want to do a statement or go right into questions, whichever 
you like.
    Mr. Towns. OK.
    Mr. Platts. Without objection, so done.
    Ms. Fisher. Good afternoon, sir.
    Mr. Platts. The challenge of the coordination seems to be, 
is everyone is working on the same page but the ability under 
the existing laws and regulations to share some of the data and 
the Privacy Act. Can you share with us how you think that has 
hindered in any way or what changes we should be considering 
legislatively that would ensure that not just from manpower and 
personnel coordinating, but the law allows the data to be 
shared to make sure everyone has the information they need.
    Ms. Fisher. Well, I think from--because of the command 
center, we've got the data bases keyed in to the command 
center. So for example, we have a DHS person there that has 
access to their NEMIS data base. And that information can be 
shared with the other operational investigators in the command 
center when necessary. And that's similar for the other 
agencies, that they can go back and take the information on an 
investigation or a contractor and go back and check their data 
bases to see whether there's an investigation, whether that 
person that's been convicted of or charged with defrauding the 
unemployment system is also over here trying to defraud the 
housing system or the FEMA system. So we're able to do that 
through this joint sharing operation at the command center. And 
I think that's working very well.
    The issue that I think is a more difficult one that might 
be better addressed by the Inspector General community is the 
Computer Matching Act and whether they can just take the NEMIS 
data base and take the HUD assistance data base and put them 
together and see what spits out from that. And that's a 
trickier issue because of the way that statute works with 
regard to having an agreement and publishing it in the Federal 
Register and notifying Congress that they are going to do that.
    And while we've been facilitating that conversation and 
wanting to be very helpful, it's really more of an issue for 
the investigators there because at the command center we have 
not seen it as a problem.
    Mr. Platts. At the command center, a lot of what you've 
done is very proactive in helping to deter fraud from occurring 
rather than just uncovering it after the fact, which is 
something we want to do as well. But is there a proactive 
sharing--if in the data base, you know, HUD identifies somebody 
who has committed fraud, or FEMA does, do they automatically 
then share that with the other departments and agencies that 
are involved so that they would say, hey, we have this 
individual for this type of fraud, do you want to check if they 
are getting benefits or have gotten some kind of benefit from 
your agency as well?
    Ms. Fisher. Yes. And that's exactly why the command center 
was set up, so that if we are charging people over here with 
illegal conduct with regard to one agency, that at the command 
center or at the next meeting the person from DOD-IG can stand 
up and say we've got this person that we're ready to charge, 
does anybody else have an investigation on them and can 
everybody else check their data bases to make sure that you 
don't have them engaging in suspicious conduct as well.
    Mr. Platts. Great. That came through in my visit, that type 
of coordination. It is something that is so critical with the 
number of agencies and departments in here and the scope, how 
broad of a scope the challenge is of this recovery.
    I am going to come to Mr. Towns and then come back for 
another round.
    Mr. Towns. Thank you very much, Mr. Chairman.
    Can you offer us--first, thank you for coming. I really 
appreciate that.
    Ms. Fisher. Oh, thank you so much for having me. I really 
appreciate that as well. I appreciate this hearing.
    Mr. Towns. Can you offer us criteria to justify what cases 
to pursue for those families receiving assistance? You know, 
have criminal complaints been brought against those who might 
have been provided more than the legal limit by FEMA? Do you 
have any kind of standards in terms of----
    Ms. Fisher. Yes. Yes, Congressman, we do. And that has been 
made very clear by the Attorney General in setting up this task 
force, that in the Katrina fraud cases there will be zero 
tolerance. So we don't have a monetary level for these cases 
right now. So anybody that's engaged in applying for benefits 
that they're not entitled to and conspiring with kickbacks for 
larger amounts of money and getting other types of billings for 
hotels or otherwise that they're not entitled to, when they're 
falsifying it, we will go after and prosecute those cases. And 
we've charged to date 263 defendants in 222 cases in 24 
districts across the Nation because of that message.
    Mr. Towns. Thank you. Have your investigations led to 
recommending that agencies impose financial penalties or 
debarment from certain future contracts due to vendor conduct?
    Ms. Fisher. That might be a question better posed to the 
Inspector Generals because they deal with debarment. But they 
are members of the task force and part of the command center, 
so whenever we prosecute a case, all task force members are 
aware of who the defendants are and are able to take whatever 
action they choose to do so with regard to that entity or 
individual.
    Mr. Towns. Right. You know, GAO indicated that there were 
an insufficient number of investigative personnel for adequate 
oversight. What is your opinion about that?
    Ms. Fisher. Well, from our perspective with regard to 
criminal prosecutions--and this doesn't deal with the auditors, 
but just on the criminal prosecution side, which is what we're 
doing with regard to the task force--we've had a tremendous 
amount of support from the Inspector Generals with their 
investigators and from the FBI with their investigators and 
Postal and Secret Service. So we have not seen that there has 
been a need for additional investigators to root out the fraud 
at this point. Whether that changes in the future, I don't 
know. And as to oversight, that's a different issue.
    But to investigate criminal referrals of fraud and to make 
sure that those get prosecuted, we have not seen that we need 
more resources in that area right now.
    Mr. Towns. Right. One more question, Mr. Chairman.
    Since the majority of the money for rebuilding is ahead of 
us, have you been participating in the establishment of 
internal controls and regulations for future contracts? Have 
you been involved in that at all?
    Ms. Fisher. Not from the contracting perspective because 
that's something, again, more targeted toward the people that 
actually give out the contracts. But what we have done is we've 
met with, for example, HUD, because of the money that they're 
going to send out with regard to anti-fraud programs that they 
might have and to talk to them about what can prevent fraud 
from happening in the future. And we've been training auditors 
and investigators on what red flags to look for in contracts. 
So they know, when they see fraud or something like that in the 
contracts, that they refer it immediately to the task force so 
we can look at it from a criminal prosecution perspective.
    Mr. Towns. Right. You know, I feel better with that, 
because I was thinking that they would talk to you, I mean, 
before moving forward. I mean, it seemed to me that--you know, 
I envision this as a very serious problem.
    Ms. Fisher. I agree.
    Mr. Towns. I mean, this is something that I think one 
cannot imagine in terms of how big this actually is, and that 
in order to put together a program to make certain that we're 
sort of on top of it, I think everybody has to talk to 
everybody. And so that's the reason why I was hoping that, you 
know, there would be this kind of contact, the fact that they 
would even call you before even thinking about a contract even 
going out, to get your input in it as well and because--you 
know, maybe some of the stuff we are hearing is not true, but 
if there is enough of it out there that is true and that we 
need to try to do whatever we can to prevent it.
    So, Mr. Chairman, I yield back.
    Mr. Platts. Thank you, Mr. Towns.
    The challenge here is different in the size and the scope 
of the area and the number of individuals impacted, but 
certainly is similar in the impact to those who were suffering 
losses from the hurricane, as with September 11th. Were there 
lessons learned that you took from September 11th that you 
found did work in this, a natural disaster versus a terrorist 
attack? Or ones that did not work well, good or bad?
    Ms. Fisher. Well, I think that the agencies certainly 
learned a lot of lessons about contracting and things like 
that. But from a Department perspective, I think what we 
learned and why we did the task force in this manner is that a 
coordinated effort with the mission to root out fraud would be 
the way to go, where everybody's talking to each other and 
coordinating, and really being aggressive on the fraud. So we 
stop the schemes, hopefully, before they happen and where we 
don't, people are going to be prosecuted for it.
    Mr. Platts. One of the issues we are going to talk with the 
IGs in the second panel, a specific area, I believe it is 
Mississippi, and their approach of guarding against fraud is 
that once the check is issued, that they cede oversight--you 
know, the money has been paid lawfully and what happens then. I 
think the approach of the Federal Government through our IGs 
and HUD is that we want to make sure that the actual outcome 
that is being paid for is achieved.
    Is there a role that you play in trying to get, in this 
case a State that has, I think, been very proactive, 
Mississippi, and with the Governor's leadership, but to 
encourage them to look to maybe take a different approach? Or 
is that more on the IG side?
    Ms. Fisher. Well, it is, but we have talked with Mr. 
Donohue, that I think you're going to hear from, about whether 
our expertise from a prosecution standpoint could be helpful in 
training some of the State officials that are going to be 
overseeing this amount of money that's coming from the Federal 
Government through the State. So we've certainly offered our 
expertise in that regard.
    Mr. Platts. But not as much in the kind of, say, 
negotiation or interaction with the State to get them to take a 
different approach of when they will stop their oversight? That 
is not, probably, within your office?
    Ms. Fisher. No, unfortunately, I don't think that--it's 
probably a little bit outside of my lane. But I'm willing to 
help in whatever it is I can help with. Because, you know, 
again, the Attorney General has been so committed to this 
program from the very beginning and has really directed me to 
do whatever I can to stop this fraud from happening.
    Mr. Platts. That, I think, is--your story and the story of 
the IGs is one of those--the good and the bad, the unfortunate 
or the bad, is that in this terrible natural disaster, there 
are people trying to take advantage of, really, their fellow 
citizens, because money that could be going to help those in 
need being fraudulently given to others. But the good is the 
efforts of--you know, the number of calls that have come in and 
people reporting the fraud to the hotlines, to the command 
center, and then the coordination of your Department and the 
other agencies and departments to uncover it and hold those 
accountable who have engaged in fraud and, by sending a very 
clear message, prevent others from maybe doing what they would 
otherwise do. But I guess it's human nature, that even in 
difficult times people are looking to take advantage of others.
    Ms. Fisher. Yeah. It's heartbreaking, but it's true.
    Mr. Platts. Mm-hm.
    On the data base, one of the other things I wanted to 
followup is besides the current or possible needs for changing 
with the various acts that are already in the books is the 
National Directory of New Hires. Is that something that from 
your law enforcement/prosecution standpoint, having better 
access to that--or across-the-board, all the agencies--would be 
helpful? Is that an example of something we should be looking 
at?
    Ms. Fisher. You know, I'd have to talk to the investigators 
and get back to you on that question. I'm not sure.
    Mr. Platts. OK.
    Kind of maybe a broad wrap-up is just the most important 
lessons that you've found we've learned from this. And we 
certainly don't want to have the need to repeat this type of 
operation, especially of this magnitude. But what are the most 
important lessons we should take from the first 8 months of 
this oversight and recovery effort, both good and bad? Again, 
what we should make sure we don't repeat or, you know, Congress 
should be very cognizant of, whether it is in the way we funded 
the oversight or anything that you have seen?
    Ms. Fisher. Well, I think that from a perspective of how 
the money goes out, again, that probably is best to the 
Inspector General community as far as the oversight and the 
contracting and the benefits. Because I think there was a real 
need get money to people quickly, and that was the primary 
importance, to save people and to get them the money that they 
needed to survive, for their families. And with that, 
unfortunately, we saw a lot of people that were trying to scam 
off the top of that.
    But I would say this, from a perspective of what's happened 
over the last 8 months. A good lesson is that law enforcement 
and the IG community can really come together for one mission 
together and be successful when we work together. And when you 
multiply your force in this way and share data and resources in 
this way, the results really can be incredible.
    Mr. Platts. I think that is coming clear from the 
prosecutions that you are pursuing and the success you are 
having in deterring and prosecuting the fraud that has 
occurred.
    Actually, I do have one final question, to ask if you are 
able just to expand on an issue that--are you OK?
    Ms. Fisher. Yes.
    Mr. Platts. We don't want to lose you here at the witness 
table. We need you. [Laughter.]
    Ms. Fisher. Back in September, in response to legislation 
introduced in the Senate, S. 1738, Assistant Attorney General 
Moschella regarding transferring kind of this special IG for 
Iraq to a special ID, and there was an issue raised about the 
constitutionality of that. Are you able to expand on that 
opinion?
    Ms. Fisher. No, not at this time. I can look for that 
opinion and I can certainly get back to you. It wasn't coming 
from the Criminal Division, I don't think. It was a 
constitutional issue that probably came from our Office of 
Legal Counsel.
    I will tell you that we also work for the Special IG for 
Iraq, SIGIR, and we've done some cases in that regard with 
regard to bribery relating to the contracts in Iraq, and 
they've been doing a great job there.
    But as to the Inspector General community here, they really 
have banded together. I mean, their PCIE meetings, which I 
attend or somebody from my staff attends, just amazing as far 
as their proactive ideas on how to go forward. So I think that 
process seems to be working from my perspective.
    Mr. Platts. I share that. With Iraq, there is a very 
different scenario and the funds being funneled through, 
really, one channel, whereas here, as will be represented by 
our second panel, the amount of funds that are going through so 
many different departments and agencies, and the expertise we 
have on all those are ready. To try to recreate that in a 
single IG, I think, would be very, very challenging to do and 
not the most productive in the--not in the best interests of 
the American taxpayer.
    And I think what is important and I think is a great 
message that you shared today and we have seen the benefit of 
in the last 8 months is the Attorney General in creating the 
task force, and your leadership of the task force in bringing 
all the entities together, is really having great success on 
behalf of the American people and especially those who are in 
need. Because, you know, as generous as the American public is, 
there still is a--there is not an unlimited sum of money out 
there. So ensuring that it is truly expended for those in need 
and not in a wrongful manner is really important. And as we go 
forward, as you have referenced, those dollars are going to 
increase as we get into the rebuilding and some of the large-
ticket items, infrastructure and the efforts that are really 
going to be critical to the Gulf Coast recovering fully in the 
years to come. So we can appreciate your efforts.
    Mr. Towns, did you have anything else?
    Mr. Towns. I just have one other question.
    You know, I am concerned about the coordination between the 
different agencies and law enforcement in terms of the local 
level, of course the State, whoever might be involved in it. 
Because we hear all kinds of stories, you know, about 
duplication. I have even heard some stories where the 
investigators have tried to lock each other up. You know, I 
mean--so is this exaggerated or is there a need for additional 
coordination? I am really thinking the fact of the possibility 
of just wasting money sometimes in that process if there is not 
the kind of coordination and communication that is necessary.
    Ms. Fisher. Well, and that's exactly why we have this 
coordination down at the command center in Baton Rouge, so we 
de-conflict investigations and we do not waste resources, that 
we group ourselves together in the most efficient way to 
prosecute this fraud.
    I've not heard stories about duplication in the Katrina 
fraud effort at all, or wasted resources, and I am very hopeful 
that we do not have that because of the coordination that we 
put in place.
    Mr. Towns. So that is even with the State and local folks 
that might be involved once they----
    Ms. Fisher. Well, we certainly coordinate with the State 
and locals because they are members of the task force. So we're 
constantly discussing that with them back and forth. I can't 
say that we're perfect on the State and local level, and I 
don't know how the State and locals interact with each other 
with regard to these investigations or other investigations. 
But with regard to the fraud investigations, I am aware of no 
problems or wasted resources or duplications of efforts that 
have come to my attention.
    Mr. Towns. The last question on that issue: Do you have 
adequate resources?
    Ms. Fisher. Well, I think that we have asked for some 
additional resources with regard to the Hurricane Katrina Fraud 
Task Force, with regard to prosecutors and with regard to some 
of the investigators. But right now we've been blessed with the 
commitment of the Inspector General community and the FBI, 
Secret Service, Postal, and other law enforcement because 
they've assigned agents to the command center, they've assigned 
people at headquarters to follow this anti-fraud effort. So we 
are having a great deal of people that we have resources to 
investigate and look after this fraud.
    From a prosecution standpoint, we've got 94 U.S. Attorney's 
Offices that have been directed by the Attorney General to 
watch out for this fraud and that, when they see it, they're to 
have zero tolerance. And they've been fabulous in stepping up 
to the plate, and that's why we've had prosecutions from 
Florida all the way to California.
    Mr. Towns. Thank you very, very much.
    Ms. Fisher. Thank you, sir.
    Mr. Towns. Mr. Chairman, I yield back.
    Mr. Platts. Thank you, Mr. Towns.
    And one question on the additional resource request, I 
think that is in the supplemental along with the IG? Is that 
correct?
    Ms. Fisher. Yes.
    Mr. Platts. And an example of that coordination is, during 
our visit, the Gulf Port Mississippi Center, the convention 
center there, is visiting with Federal officials and then 
getting over with a private contractor doing the audit, you 
know, the fraud prevention for the State of Mississippi----
    Ms. Fisher. Right.
    Mr. Platts. And it was a very impressive operation and it 
was clear the coordination between the Federal and State was 
very evident as well. It kind of goes to that, not just within 
the Federal Government, but Federal and State working hand in 
hand. And that was, as I say, very good to see that the 
coordination in a sense was occurring.
    But Assistant Attorney General Fisher, we, again, 
appreciate your testimony, appreciate your work, and look 
forward to continuing to coordinate with you and your staff as 
we go forward.
    Ms. Fisher. Thank you so much.
    Mr. Platts. Thank you.
    We will take a brief recess as we get the second panel set 
up.
    [Recess.]
    Mr. Platts. We reconvene the hearing. And again, I 
appreciate our second panel of witnesses being with us. We have 
Matt Jadacki, Special Inspector General for Gulf Coast 
Hurricane Recovery with the Department of Homeland Security; 
Hon. Ken Donohue, Inspector General for the Department of 
Housing and Urban Development; Mr. Thomas Gimble, Principal 
Deputy Inspector General at the Department of Defense; and the 
Hon. Eric Thorson, Inspector General of the Small Business 
Administration.
    We echo the words of thanks for your being part of this 
hearing as well as for the efforts of you and your staffs day 
in and day out in helping to both safeguard the American 
public's hard-earned tax dollars that they send to Washington 
and also your efforts in helping to promote effective, 
efficient programs within the Federal Government, not just 
about guarding the dollars but trying to make sure they are 
efficiently and wisely used in that in the end the intended 
purpose of the various Federal Government programs achieve the 
best outcomes as possible for the American public.
    Now that I have you all seated, I have to ask you to stand 
to be sworn in.
    [Witnesses sworn.]
    Mr. Platts. Thank you. You may be seated. The clerk will 
acknowledge that all witnesses answered the oath in the 
affirmative.
    We are appreciative of your written testimonies that you 
have submitted and look forward to your opening statements 
here. We are going to have, I think, 6 minutes on the clock. 
Because we have four of you and want to try to get to questions 
with all four of you, try to stay close to that, but if you 
need to go over some, we understand. Again, appreciate your 
being here.
    Mr. Jadacki, if you would like to start.

STATEMENTS OF MATT JADACKI, SPECIAL INSPECTOR GENERAL FOR GULF 
COAST HURRICANE RECOVERY, DEPARTMENT OF HOMELAND SECURITY; KEN 
  DONOHUE, INSPECTOR GENERAL, DEPARTMENT OF HOUSING AND URBAN 
 DEVELOPMENT; ERIC THORSON, INSPECTOR GENERAL, SMALL BUSINESS 
 ADMINISTRATION; AND THOMAS GIMBLE, PRINCIPAL DEPUTY INSPECTOR 
                 GENERAL, DEPARTMENT OF DEFENSE

                   STATEMENT OF MATT JADACKI

    Mr. Jadacki. Thank you, Mr. Chairman, Ranking Member Towns. 
My role here is twofold. One, I work for the Inspector 
General's Office at the Department of Homeland Security. I'm 
responsible for reviewing, overseeing the Katrina and other 
disaster activities within the Department. But I'm also in the 
role of facilitating and coordinating the efforts of the other 
Federal Inspector Generals throughout the Federal Government. 
So I'll talk briefly about some of the coordination efforts 
that you mentioned in your opening remarks and some of the 
things that Alice Fisher talked about. And I'll get specific 
briefly and talk about some of the things I'm working on within 
the Department of Homeland Security.
    On August 29th last year, Hurricane Katrina hit. I worked 
for FEMA for a number of years, and by far it was the most 
catastrophic event I've ever witnessed. The number of people 
displaced, hundreds of thousands of people, were literally 
going to every single State in the Union and in some 
territories. The area of devastation is about the size of the 
United Kingdom, and the amount of debris, about 63 million 
cubic yards of debris, is just enormous.
    Congress did act quickly, providing through three 
supplementals so far $85 billion. The bulk of that early on 
went to FEMA and, subsequent to that, to a number of other 
Federal agencies represented by the Inspector Generals we have 
sitting here.
    FEMA initially, as a coordination agency, tasks other 
Federal agencies to do a lot of the response work. For 
instance, they will task the Corps of Engineers to do debris 
removal, provide water, ice, some of the immediate needs for 
citizens, as well as other Federal agencies, too. About $8 
billion of the money FEMA initially received was tasked to 
other Federal agencies for various types of jobs.
    Early on, Inspector General Skinner realized that this 
would simply overwhelm the DHS Inspector General's Office, so 
he coordinated through the PCIE, and the Homeland Security 
Roundtable became the Hurricane Katrina Roundtable, where a 
number of IGs participated. And they agreed at that roundtable 
that they would take hold of this thing, they would provide the 
oversight that was necessary. Money that was provided from FEMA 
DHS to other Federal agencies, other Inspector Generals have 
agreed to cover those, whether it's a mission assignment, for 
contract, things like that, in many cases without additional 
resources. So they really stepped up to the plate. A lot of 
coordination going on with the Department of Justice, as Alice 
Fisher's testimony just went through.
    We have been diligently providing information to the Hill 
because we want to be full and open about the types of things 
that we're providing and overseeing. For a while, we were 
providing monthly statistical reports on the number of audits, 
reviews, arrests, investigative audit activity. We did produce 
a 90-day report, which many of you have read, that provided a 
lot of information. And just about 2 weeks ago, we produced a 
more comprehensive semi-annual report that we will continue 
doing as long as there is a need and interest by Congress and 
the American public and that information is available.
    Through the PCIE we realized that we wanted to be sort of 
consistent across the board with a lot of the work that we're 
doing. So we established a number of subgroups to handle a lot 
of common activities that are common to many of the Inspector 
Generals. We established a group dealing with contract issues 
because we wanted to make sure, as we're reviewing contracts, 
other agencies that receive it and other Inspector Generals 
reviewing it will be reviewing on a consistent basis doing risk 
assessments.
    We established a subgroup that dealt with individual 
assistance issues, because as you know, not only FEMA has 
programs deal with individual assistance but there's a number 
of Federal agencies that provide, for instance, housing and 
things like that and, you know, at several of the meetings we 
started sharing information. One of the goals is to try to find 
duplication, replication, and, you know, where FEMA is 
providing assistance, and somebody else doing that. Social 
Security was a big player. Labor is a big player with their 
unemployment assistance. So we're trying to coordinate that, 
and it's been pretty successful.
    Again, I talked about mission assignments. We're working 
with other Federal agencies that receive money to audit the 
mission assignments, what we're looking for in that particular 
area. And again, we have a separate group dealing with the 
Privacy Act issues, data sharing type things like that.
    So that's sort of a snapshot of what we do on general 
terms, and my colleagues here will talk more in detail about 
what they're doing in their particular agency.
    What I want to do for a couple of minutes is really talk 
about, within DHS, what's going on with our oversights, some of 
the types of things we're finding there. Some of the numbers 
are staggering.
    FEMA has obligated so far, through the beginning of this 
month, $34 billion for disaster assistance. About $13 billion 
is for human services alone. That's providing individual 
assistance, providing housing, providing rental assistance to 
folks, providing other needs and those types of things. That 
also includes some money for some contractors to stage mobile 
homes, travel trailers, and those types of things. So there's 
quite a bit of money early out.
    What's going to happen at this point is that as the 
individual assistance program fades out, we're going to get 
some of the bigger dollar amounts with the public assistance 
programs that are traditionally a larger part--rebuilding the 
schools, the bridges, the roads, and those types of things. So 
we're gearing up for the money going in through that.
    I mentioned earlier about $8 billion went to other Federal 
agencies. We're in the process of having the other IGs take a 
look at that and accounting back for that.
    FEMA awarded so far over 3,500 contracts worth over $5 
billion. We've issued a number of reports on contracts, and 
we're finding some issues with that. Early on, there was a 
number of contracts that were basically a verbal handshake, a 
lot of sole-source contracts worth hundreds of millions of 
dollars. What we're trying to do is be very proactive and not 
wait till the end, when the contracts are finally completed, to 
go back in. So we're issuing a series, and we've done a series, 
of what we call Management Advisory Reports, where we actually 
provide recommendations early on so management can take 
immediate corrective action to correct those.
    Our staff is currently about 100, including audits 
investigators, administrative staff, looking at a lot of 
different issues. I've mentioned we've completed 40 audit 
reports. We have a number of reports in progress already, some 
of the longer-term performance reviews. Our goal, again, is to 
be very proactive, but we're also trying to make some 
meaningful recommendations before next hurricane season, which 
is right on our doorstep.
    We've had over 4,500 hotline complaints. There are over 400 
open cases. We've 117 arrests, 140 indictments, and 40 
convictions. We've questioned, to this point, over $100 
million, and we've had over $4 million of funds put to better 
use.
    We're working closely with the Government Accountability 
Office. I can tell you, at our regular PCIE meetings on Katrina 
are widely attended. GAO attends almost every single meeting, 
as well as the Department of Justice. And we still have 
standing room only from all the other Inspector Generals 
Offices, from both the PCIE and ECIE community.
    So 8 months after the disaster, the interest is still there 
and it's still very intense.
    We will be reviewing in the future transitional housing. 
Many folks have heard some of the horror stories about the 
manufactured homes in Hope, AR. We uncovered that and put out 
an immediate report on that. There are issues on travel 
trailers, hotels--people staying in hotels. Alice Fisher 
mentioned some of the fraudulent activity in some of the hotels 
that we're looking at. We're looking at property management. 
FEMA bought tons of property, as well as other Federal 
agencies.
    Erroneous payments is a big issue. We will be taking a 
close look at that, because we did find that a lot of controls 
were dropped or overridden early on in the disaster and that 
did result in a significant number of erroneous payments and 
we're still trying to get a handle on that.
    A lot of funding came through international donations. 
FEMA's administering about $66 million in that program. We're 
taking a close look at that. And we are working closely with 
the purchase cards with GAO.
    We plan to continue. We know this is a long-term ongoing 
effort. We're expecting at least 3 to 5 years, probably longer, 
based on some of the work that we've done in other disasters. 
And we will continue our diligent and aggressive oversight.
    This concludes my opening statement, Mr. Chairman, and I 
welcome any questions. Thank you.
    [The prepared statement of Mr. Jadacki follows:]

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    Mr. Platts. Thank you, Mr. Jadacki. We appreciate your 
statement.
    Mr. Donohue.

                STATEMENT OF KENNETH M. DONOHUE

    Mr. Donohue. Good afternoon, Chairman Platts, Ranking 
Member Towns.
    Once again, an area of our Nation has been hit by an 
unexpected disaster that has taxed the emergency services and 
redirected Federal Inspectors General toward assisting local 
government and overseeing the expenditure of a large amount of 
Federal money. Congress estimates that damage to residential 
structures in the affected Gulf Coast region will range from 
$17 to $33 billion.
    To put the magnitude of that devastation in perspective 
from a HUD programmatic standpoint, in the Presidentially 
declared disaster areas, HUD's Federal Housing Administration 
Single-Family Insurance Fund insured more than 328,000 
mortgages having an unpaid principal balance of $23 billion. 
FHA's multifamily program in the disaster area insured 859 
properties comprised of 116,000 units with an unpaid principal 
balance of $3 billion. The hurricanes affected 79 Ginnie Mae 
issuers, causing Ginnie Mae to assess a $50 million risk of 
loss to its investment portfolio.
    Moreover, assets of HUD's public housing authorities 
program suffered tremendous damage, affecting housing of almost 
120,000 families. The photographs exhibited are like many shown 
in the media following the hurricanes; however, in this 
instance, they document damage to HUD-funded housing programs.
    The one to the left, the St. Bernard Housing Development 
HANO program, that water was about 5 feet water line on the 
building. Numerous vehicles are flooded and destroyed, and yet 
there was no management or tenants onsite. The other units you 
see on the top right-hand side, approximately 3 to 5 foot water 
line on buildings. Extensive looting went on. Apparent total 
loss of all buildings. Again, no management or tenants onsite.
    I bring your attention to the Abundance Square housing 
development. What you are looking at is a trailer in the middle 
of those houses. That was a rather recently built HUD program, 
and that trailer, if you look at it closely, you can see that 
there are markings on the second story of that building. In 
effect, that trailer floated about a mile inland, hitting both 
sides of that building, and it sat right in between those 
houses, to give you some idea about the water surge that 
occurred down in New Orleans.
    In addition to these pre-existing HUD programs, the 
supplemental appropriations passed late last year allocated 
$11.5 billion to HUD's Community Development Fund for 
reconstruction efforts and $390 million to the Tenant-Based 
Rental Assistance Fund. The latest supplemental, currently 
under consideration, contains billions more to be appropriated 
to HUD for disaster assistance efforts. In addition, FEMA 
initially provided $79 million in funding to HUD for the 
Katrina Disaster Housing Assistance Program to help in 
relocating evacuee families. All told, HUD is now and will be 
receiving billions of dollars in new funding that will need 
strong monitoring and oversight.
    The HUD Office of Inspector General's response to the Gulf 
States affected by Hurricanes Katrina, Rita, and Wilma was 
immediate and institutionalized based on lessons learned from 
our in-depth experience with the aftermath of September 11, 
2001, in lower Manhattan.
    We learned from our efforts that to be effective, your 
teams on the ground and at headquarters must be proactive 
rather than reactive. Although a basic concept, it is one that 
is key to the ability to make a real impact. This proactive 
posture extends to collaboration with State agencies.
    To be truly effective, you must act in real time to have a 
deterrent impact, and we hope to have additional resources so 
that we can have that effect.
    While we are engaged in overseeing these new disaster 
relief funds, we still have work on matters that are pending. 
Prior to Katrina, the Housing Authority of New Orleans [HANO], 
was in receivership and under HUD's control after a long stint 
on HUD's ``troubled'' housing authority list, contract list. 
Contracts and expenditures that occurred pre-Katrina must still 
be audited and analyzed. As to post-Katrina, we know from our 
past experiences that rehabilitation and reconstruction 
contracts set up with loose requirements are at a greater risk 
for fraud and that the sheer volume of transactions here will 
provide a rich environment.
    We believe our oversight will show that the most effective 
way to proceed is that monitoring be constant, continuous, and 
at all the different levels of activity. At this point, States 
have drawn up action plans on how to administer and monitor 
Federal grant moneys.
    The first State to submit their plan was the State of 
Mississippi, who met on several occasions with us to discuss 
their plan. From this meeting, we developed educational 
material. Homeowners applying for grant money will receive a 
HUD OIG fraud awareness bulletin in their grant application 
package.
    As to the Mississippi plan, from an audit standpoint, 
oversight and monitoring of grant funds ceases after the State 
has issued ``compensation'' funds to the homeowner ``to be used 
at the discretion of the homeowner.''
    We do not think that monitoring oversight should end at 
this phase, and we have remaining concerns about how a 
compensation plan that basically reimburses will spur the 
rebuilding of now blighted communities.
    There are also continuing problems with the execution of 
data matching among Federal agencies. Our counsel is finalizing 
a protocol with FEMA in order to use this data for matching 
purposes, but we have encountered roadblocks nevertheless.
    HUD OIG has undertaken a variety of activities and new 
initiatives relating to HUD disaster relief programs. My Office 
of Audit established an office for Hurricane Katrina oversight 
immediately after the disaster to prepare for the long process 
of recovery. Concurrently, an audit plan was developed and 
reviews in the disaster areas begun.
    Initially, the office reviewed all HUD waivers to assure 
that statutory requirements were not waived. Currently the 
office is auditing management and marketing contracts.
    My office investigation established the Hurricane Katrina 
Fraud Task Force to deal with HUD law enforcement issues.
    The Office of Investigation has created a far-reaching 
fraud prevention program. Also, HUD OIG has created, as you see 
to the right, a Suspicious Activity Report [SAR], to be given 
to grantees and sub-grantees and other associations delivering 
disaster funds. As you can see from the exhibit, the SAR is a 
method of informing HUD OIG of suspected irregularities in the 
delivery of HUD program money.
    In closing, I would like to thank the subcommittee for the 
opportunity to talk about this tremendous work we have 
accomplished since the onset of this tragic and trying event. 
Thank you.
    [The prepared statement of Mr. Donohue follows:]

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    Mr. Platts. Thank you, Mr. Donohue.
    Mr. Gimble.

                   STATEMENT OF THOMAS GIMBLE

    Mr. Gimble. Chairman Platts, Ranking Member Towns, thank 
you for the opportunity to appear before the subcommittee today 
to address the oversight work regarding Katrina.
    To date, over $85 billion has been committed for Hurricane 
Katrina relief and recovery efforts. The amount of money and 
the urgency to make funds available as quickly as possible 
increase the opportunity for fraud, waste, and mismanagement. 
Effective oversight by the Inspector General community is 
essential to minimize the risk to the taxpayers' dollars.
    The Inspector General community has responded promptly to 
establish effective mechanisms to mobilize and coordinate both 
audit and investigative resources in response to Hurricane 
Katrina. I am working in close coordination with the other 
Federal Inspectors General through the President's Council on 
Integrity and Efficiency Homeland Security Roundtable to ensure 
the proper use of DOD resources in relief and recovery efforts.
    Within DOD, we have leveraged resources by coordinating 
amongst the DOD Inspector General, the Service audit and 
investigative agencies, and other Federal agencies to avoid 
possible duplication of efforts and to ensure broad coverage.
    On total, my office and the Service audit agencies, Defense 
Contract Audit Agency, and the Defense Criminal Investigative 
organizations have employed on average a cadre of about 150 
auditors, investigators, and inspectors to provide oversight of 
the contracts and operations. Currently, my office has 11 
ongoing audits related to Hurricane Katrina. Three of the 
audits were congressionally requested. One was requested by 
DOD. The remaining seven we initiated. The OIG deferred other 
audit work to ensure resources were available for this 
important effort. We gave Hurricane Katrina audit efforts 
priority, and those efforts took precedence over some of our 
planned audit work that had not been requested or mandated.
    Further, the Service audit agencies have 14 ongoing audit 
projects. In addition, the Defense Contract Audit Agency is 
supporting both FEMA and the Army Corps of Engineers in their 
Hurricane Katrina recovery efforts.
    The audits I just discussed are listed in the appendix to 
my prepared statement. An example of what my staff is reviewing 
is the award and administration of the Corps of Engineers 
contract on ice delivery, emergency water, and the Blue Roof 
Program. Some of the areas being reviewed include the pre-award 
process for compliance with Federal regulations and 
requirements; whether the contracts were awarded competitively 
or sole source; whether the contracts were properly awarded to 
small, minority, or locally owned firms; and also payment 
information. We also plan to assess additional audit effort 
based on need and risk. In the June timeframe, the DOD audit 
community plans to initiate additional audits in the areas of 
contractor pricing and the number of layers of subcontractors 
used, demolition contracts, contracts to enhance the flood 
protection system, and reconstitution efforts at Keesler Air 
Force Base.
    In addition to the audit coverage, the Defense Criminal 
Investigative Service is working jointly with other 
investigative organizations, including the Hurricane Katrina 
Fraud Task Force. DCIS also supports the joint law enforcement 
and U.S. Attorney's Offices working group headquartered in 
Covington, LA, and the Joint Criminal Investigative Task Force 
in Mississippi. These efforts have already resulted in the 
successful conviction of two defendants.
    The DCIS has received 17 criminal allegations related to 
Hurricane Katrina and has opened 7 cases dealing with bribery, 
kickback, and possible product substitution. The DCIS agents in 
Louisiana have also examined an additional five allegations 
concerning MREs, which were referred by the Government 
Accountability Office during its Katrina review. These 
allegations were later determined not to be related to Katrina.
    Additionally, the DCIS has conducted 34 mission and fraud 
awareness briefings for the Army Corps of Engineers and 
contractor personnel.
    The Inspector General community recognized early on the 
high risk posed by the Hurricane Katrina relief efforts and we 
have stepped up to meet the challenge. Much of our work is 
ongoing, and there is still much left to be done. However, by 
devoting significant audit and investigative resources to this 
area, the Inspectors General are now a major force in detecting 
and deterring fraud and mismanagement in the use of Federal 
funds allocated to hurricane relief and recovery. By focusing 
attention on the internal controls that govern the 
administration of our contracts, our efforts will help ensure 
that Federal relief funds are used more efficiently.
    This concludes my statement. I would be happy to answer any 
questions.
    [The prepared statement of Mr. Gimble follows:]

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    Mr. Platts. Thank you, Mr. Gimble.
    Mr. Thorson.

                   STATEMENT OF ERIC THORSON

    Mr. Thorson. I appreciate very much your invitation to be 
here today to speak about our oversight of the Small Business 
Administration's disaster relief efforts. Like several of you 
have mentioned, I, too, visited the Gulf Coast area and can 
tell you I could not comprehend the forces that could cause 
that level of devastation. It is very clear that a massive 
recovery effort will be needed for some time to come, and it is 
also clear that the Inspector General community must play a 
vital role if we are to deter fraud and control wasteful 
expenditures.
    Certainly one of my highest priorities is to conduct 
effective, aggressive, and proactive oversight of the SBA 
disaster relief programs. In this effort, we are establishing 
an office in New Orleans so that we are on the ground near the 
devastated areas where the rebuilding effort will occur. We are 
now in the final steps of hiring the additional investigators 
and auditors that will be needed to staff that office.
    I think it would be helpful to very quickly summarize the 
SBA's disaster assistance program. SBA makes two types of low-
interest disaster assistance loans: first, SBA makes loans to 
businesses, homeowners, renters, and organizations to rebuild 
and replace uninsured property; second, SBA makes economic 
injury disaster loans, which provide working capital to small 
businesses until operations can be resumed. SBA has already 
approved $9 billion in disaster loans, with many applications 
still to be reviewed. SBA disaster loans are especially 
vulnerable to fraud and unnecessary losses because of SBA's 
desire to provide quick relief to disaster victims. Many SBA 
disaster loans have not yet been disbursed because borrowers 
have not obtained necessary building permits or lined up 
contractors. Also, borrowers are not required to begin repaying 
the loans until a year after the initial disbursement. Since 
many borrowers are still in the process of putting their lives 
together, it may not be to their benefit to start receiving the 
loan proceeds until they are in a position to begin actual 
construction. Once that first dollar is drawn, the clock starts 
ticking on when they have to begin paying back that loan.
    Because loan repayment is deferred 1 year, fraud and agency 
inefficiencies will not come to light for quite some time. 
Although we have already initiated a number of audits and 
investigations, we have also developed a long-term plan for our 
oversight of SBA's disaster relief effort. We are participating 
in the PCIE and ECIE Homeland Security Roundtable, and commend 
Rick Skinner at DHS for organizing the reporting on Inspector 
General efforts and establishing highly effective lines of 
communications. We have been working closely with the DHS IG to 
review problems with the interface between the SBA computer 
system and the FEMA system, which have delayed disaster 
assistance reaching victims.
    The SBA OIG has issued a series of reports to SBA 
addressing these findings, thereby helping to expedite disaster 
assistance to those in need.
    One of our most important roles is to ensure that small 
business set-aside contracts are not actually performed by 
large firms. We have developed a review guide on small business 
procurement requirements so that all OIGs can determine whether 
their agencies have complied with small business contracting 
requirements. We are actively promoting the use of this guide 
among the IG community now.
    We are closely reviewing SBA's planned upgrade of the 
disaster computer system to see whether the system will 
function correctly for its contemplated 7,000 users and that it 
will meet Federal requirements. This was a serious problem for 
SBA and initially hindered the processing of loan applications.
    We are also working with the DHS and HUD OIGs to identify 
individuals who may receive duplicative benefits. By sharing 
information within applicable legal requirements, we will be 
able to identify whether borrowers have accurately disclosed to 
SBA that they received a HUD or FEMA grant and whether the 
amount of SBA's loan has been appropriately reduced.
    We are participating in the Department of Justice Fraud 
Task Force. The task force has developed a highly effective 
model to investigate fraud by establishing a centralized case 
management system to track all hurricane-related 
investigations, reduce duplicative efforts, and identify fraud 
trends. Their contribution has been outstanding.
    We are also reviewing the agency's disaster loan approval 
and disbursement process to see if disaster loans are being 
disbursed in a timely and sound manner. We have planned a 
number of audits to thoroughly review SBA's loan operations 
from processing, through servicing, and finally to liquidation 
for any defaulted loans.
    Our office has opened investigations of multiple 
allegations of fraud relating to disaster loans. Allegations 
have included claims for property damage that never occurred, 
false statements about prior criminal records, attempted 
bribery of SBA officials, and misuse of SBA loan funds for 
gambling or other unauthorized purposes. We have referred 
several of these cases to the Department of Justice for 
prosecution and have other investigations underway.
    We have also begun several proactive projects to identify 
fraudulent conduct. One project will identify borrowers who 
make false statements about prior criminal conduct on their SBA 
loan applications. A second project is a joint effort with the 
DHS and other IGs to identify applicants for disaster 
assistance who falsely claim that they resided in the affected 
areas during the Gulf hurricanes. Your questions earlier this 
afternoon show the importance that you put on Congress ensuring 
that the OIGs receive adequate resources to allow them to 
undertake effective oversight of this massive recovery and 
rebuilding effort.
    Some have called for the appointment of a Special Inspector 
General to oversee the recovery, and I guess I would ask that 
you consider that for over 27 years, the Inspectors General 
have exhibited an extremely high level of professionalism and 
accountability. You have heard this afternoon how the IG 
community has assumed this task, and I assure you we will 
continue to perform to the highest standards.
    I very much appreciate the opportunity to have been present 
on this panel, and I look forward to whatever questions you 
might have.
    [The prepared statement of Mr. Thorson follows:]

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    Mr. Platts. Thank you, Mr. Thorson, and I share your 
opinion of the response of the IG community to this disaster in 
very quickly coming together and moving forward in a very 
coordinated fashion to, again, safeguard the American taxpayer 
funds while we provide the relief that is so much needed 
throughout the Gulf Coast region. And your description is what 
I saw as well on my visit. It is pretty staggering to see the 
devastation and appreciate what has happened there.
    Where you wrapped up is where I would like to start with a 
question. The challenge here is going to be a long-term 
challenge, and you have all stood up your offices in great 
fashion, and quickly, to provide whatever your manpower needs 
were to properly receive these billions of dollars. But given 
that it is going to be many years in the making, this recovery 
effort, what do you envision your needs--or how your needs are 
being met today or will be met long term when it comes to 
personnel and offices, I mean just general infrastructure for 
your operations? I know there are funds in the supplemental 
that will certainly help in the short term, but, you know, are 
you looking at realignment or need for more permanent increases 
because of how many years you will be involved in this recovery 
effort? And I open that up to any of our four panelists.
    Mr. Jadacki. I can respond to that from the DHS standpoint. 
When FEMA was subsumed by the Department of Homeland Security, 
the entire Inspector General's Office at FEMA became sort of 
the nucleus of the Inspector General's Office at Homeland 
Security. As other organizations came in, there were some other 
Inspector General staff that came along with that. So there was 
really the expertise within FEMA because most of the work had 
been done auditing disaster grants and disaster activities. So 
the expertise resided there.
    For the first couple years at Homeland Security, there was 
a shift in focus on more of the organization and the 
consolidation of homeland security and some of the other 
activities. So a lot of the work traditionally done by the 
Inspector General within FEMA and then DHS in the disaster area 
went by the wayside. Rick Skinner, the Inspector General after 
Hurricane Katrina hit, decided to refocus his efforts on that 
by taking some of the resources that formerly worked on 
disasters that were shifted elsewhere and putting them back on 
that disaster office. And effective October 1st, he will be 
creating a disaster oversight office that not only handles 
Katrina work, but any other disasters ongoing.
    In the President's budget in fiscal year 2007, there is $11 
million in the budget for that sort of core function to 
continue on.
    Mr. Platts. And that will be a permanent office he is----
    Mr. Jadacki. Correct. That will be a permanent office to 
handle that. Again, it is fashioned very similar to what was 
being done during the FEMA days.
    Mr. Platts. Mr. Donohue.
    Mr. Donohue. Mr. Chairman, in my experience in the 
September 11th disaster up in New York, my colleagues here as 
well, we took a proactive approach to addressing those matters 
and went in with Lower Manhattan Development Corp. with both 
auditors and investigators. That takes people, and what 
happened was it was worth its weight in gold, as far as I was 
concerned. It was easier in the fact we had a New York office. 
We had it fully constituted.
    The whole matter is different in the Gulf States. Other 
than the fact all the people are displaced, it is a much larger 
area to go. Fundamentally, to get people to move down there and 
the relocation that requires it and so on and so forth does 
have unique issues that have to be impacted. And we again are 
looking forward to some support on the supplemental side to 
augment that.
    What we did do is we sent our managers down right away and 
tried to provide the services, but, again, I think as I 
indicated in my testimony, the sheer volume of dollars, we are 
going to have a long-term commitment for some time with HUD.
    Mr. Gimble. Mr. Chairman, we actually pulled our resources 
around and realigned, reprioritized. That is the short term, as 
has been pointed out.
    Interestingly enough, and it is not just the disaster 
recovery, but we had just completed a workload assessment of 
DOD IG, and we completed it in December. At the same time we 
were doing the realigning, so it has some impact, and this is 
not totally the Katrina issue, but it is just another part of 
it.
    And what we believe is over the long term, we are about 70 
people short of what we need to do primary mission, and we have 
made that case throughout the various committees and throughout 
the Department. We are hoping to get some relief on that. We do 
not envision having a group just solely dedicated to disaster 
recovery. We have a lot of priorities, one being the--
obviously, we have a war going on in the Southwest Asia 
theater, and we have to react to that, too. That is a very high 
priority for us.
    So we have a number of competing priorities, but if you 
look at this over the long term--and we believe it is going to 
be a long term. What kind of goes unsaid, DOD does not appear 
to have that big an issue in Katrina recovery. The fact is that 
about half of the money runs through DOD to the Corps of 
Engineers, so we have a huge responsibility. It will be a long-
term commitment. And the supplementals are great. They are 
helpful in the short term. But if you are looking out over a 5 
or 10-year period, we probably need more relief on a more 
permanent basis.
    Mr. Thorson. We were fortunate to receive $5 million in 
supplemental funding for this disaster area oversight, and we 
decided to use this primarily to establish, as I mentioned in 
my opening statement, a regional office headquartered in New 
Orleans. We have to find the balance between hiring the people 
that we need to do the job versus making this money last as 
long as we can. We have been very careful in analyzing that, 
and we believe that we will probably extend the use of those 
funds for about 4 years.
    Due to the fact that we are not a first responder, 
primarily, and that our investments are primarily a lot longer 
term, we anticipate a presence for anywhere from 5 to 10 years, 
and the best way to extend past our 4 years is to produce 
results to the Congress that demonstrate that supplemental was 
a very good investment. And that is how we intend to come 
forward again if the need is there to have further funding.
    Mr. Platts. One of the important aspects of the approach 
that has been taken is this coordination with the departments 
and agencies and even within agencies themselves between IGs 
and managers and being proactive. And so we want you to be 
proactive, but as IGs, you have a responsibility of maintaining 
an independence as well. I would be interested if one or any of 
you would like to comment on how you are balancing those two 
responsibilities to work with your department senior 
management, and your financial leaders in your departments and 
agencies to be proactive preventing fraud, but at the same 
time, you know, not compromising your independence from the 
department itself.
    Mr. Jadacki. One of the things that early on OMB required 
some of the agencies receiving significant amounts of money was 
to put together what they call a ``stewardship plan.'' The 
Department of Homeland Security did put together a stewardship 
plan in two particular areas--one on internal controls, how are 
they going to establish internal controls to ensure 
accountability over the funds; and the other one over 
procurement.
    There is a weekly meeting with the Under Secretary for 
Management and her staff and procurement staff and CFO staff 
from both the department level and at the FEMA level. Rick 
Skinner and myself participate every week in that meeting. We 
advise. Things come to our attention, and I will give you an 
example. We found some potential duplication in some of the 
work we did on some of the oversight efforts by some of the 
States that were receiving management grants from FEMA to 
provide auditing services and those types of things. We brought 
it up at that meeting. They took immediate steps to review the 
management grants going out there, and they did find, in fact, 
replication and duplication, and they significantly scaled 
those things back.
    So we are providing advice, guidance. We are bringing 
things to management's attention that may not warrant a report, 
but, you know, we are bringing it to their attention and we are 
taking--you know, they are taking it seriously and they are 
taking immediate corrective action. And we continue to provide 
that on a weekly basis.
    Mr. Donohue. I think HUD may be a little different in the 
sense that the money will leave, past the Federal Government 
down to these development authorities in those respective 
States. So what I am tasked to do is not only just work with 
the Department as far as the question of waivers, but also to 
work with those authorities, because they will make those 
determinations, those tough decisions.
    What we did is we have taken a very proactive approach in 
dealing with those authorities. We sent people down. We are 
interfacing training. We are doing instruction with regard to 
educating, appraise--look for the red flags, I mean to educate 
these authorities to understand as to what they need to do to 
make sure this money is disbursed.
    We called for--and my colleagues here, we participated with 
the State auditors, simply getting them all together, sitting 
down, and talking about common issues.
    Another thing that came out of September 11th which I found 
interesting is that as a result of us getting engaged, the 
Lower Manhattan Development Corp. hired up through their 
administrative costs monitors, the idea of having people there 
that have an expertise in those areas to watch closely as far 
as how that money is distributed on a local level. And I am 
optimistic, the fact that they will go back and do that. They 
look like they're moving in that direction, certainly in the 
one that has been approved, and that is the case at this point 
with Mississippi.
    Mr. Gimble. I think we normally in the IG community, since 
our mission is to detect and prevent fraud, waste, and 
mismanagement, our audits are typically aimed at some steps to 
identify fraud indicators. Also, you have lessons learned and 
there is a lot of audit work done in the contract world before 
the award of the contract.
    In other words, if you see a contract being in an RFI State 
and you look at it and you determine that there are some things 
that are not built into that should be built into, in many 
cases we will make recommendations to management to incorporate 
that before they go out. If you have contracts that are not 
being properly competed, you also can make some recommendations 
on that. So I think as a normal course of business, we do a lot 
of proactive work and fraud and deterrence.
    The other thing is that we have a fraud awareness briefing 
that we do. As I said earlier, we gave 34 presentations on that 
in the Gulf Coast area to the Army Corps of Engineers contract 
folks and some of the contract administrators, just to make 
them aware of potential fraud issues as they do their normal 
duty.
    So we think we are fairly proactive in that, and I think 
that is probably typical of most of the IG community.
    Mr. Thorson. For SBA, we really believe the proactive 
approach does not, in any way, hinder the OIG independence. 
Being proactive can prevent fraud and waste from occurring by 
working with the agency to identify trends and to change any 
program deficiencies that could allow waste and fraud to occur.
    For example, fraud awareness briefings, developing training 
materials, quickly bringing to the agency's attention those 
kind of things that they can react to expeditiously that could 
prevent, as opposed to catch the fraud afterwards. We would 
much rather come before the Congress at later times and tell 
you what we think that we prevented. Even though that's very 
subjective, we would much rather do that than tell you we 
prosecuted 27 cases of fraud.
    Our mission is to prevent. But in no way do we believe that 
hinders our independence, either.
    Mr. Platts. Great. Thank you.
    I want to yield to the ranking member, but one question 
before I do, just Mr. Donohue specifically because of that 
proactive approach that was mentioned across the board of the 
panelists with that last question.
    Specifically to the Mississippi Development Authorities 
and, in your testimony, the issue that they see their 
responsibilities and their proactive approach differently than 
you do and I think maybe all of us here do, of how far that 
oversight should go. And they're seeing kind the checks handed 
over as they're done.
    Can you give us an update on that? And what's your ability 
to encourage them to take a different approach? We want to see 
the actual outcome achieved, that money is being given for.
    Mr. Donohue. I think we're speaking about compensation, is 
my term was, Mr. Chairman. I think it's right on the money. It 
really comes down to the question of our ability to oversee. 
The way it's designed is a substantial amount of that money is 
designed to be compensated to the homeowner. And I have--at the 
end of the day, when those folks receive that kind of money, in 
reality they have full discretion to do whatever they want.
    And my concern is simply this: I've been down myself to 
Biloxi and Gulfport in the affected areas. Some elderly woman 
that receives this kind of proceeds after the mortgage is taken 
care of and whatever is left and for whatever reason decides to 
go back and use that money for unintended purposes and finds no 
home left and finds no shelter left. And therefore is left with 
having to apply to the State for additional funds to maintain 
oneself.
    And also to the chance that area can remain in blight 
because there has been no corrective action taken on the part 
of the homeowner. So I am concerned.
    We have talked to the States. We have talked to the 
Attorney General, the State Attorney General, in regard to that 
very question. He would envision that as being a consumer fraud 
violation at that point when they receive that funds. But it, 
at this point, does not appear to have a Federal nexus with 
regard to that moment.
    It's really buyer beware. It's receiving that money for 
whatever they feel the proceeds should involve.
    Mr. Platts. Thank you. I yield to the ranking member for 
questions.
    Mr. Towns. Thank you very much, Mr. Chairman. Let me begin 
with you, Mr. Thorson. How do you keep the big guys from eating 
up the small businesses? The big guys from eating up the little 
guys? How do you prevent that from happening?
    Mr. Thorson. Actually, as I mentioned, that's one of our 
prime concerns and we have published this review guide to do 
that. There is a number of different things, one of which is to 
make sure that when these large contracts begin to really 
develop, and I don't think they have as yet, is to make sure 
that all of the IGs for the various agencies, not just SBA, are 
armed with the tools to be able to determine whether they have 
followed the right procedures. And some of them can be very 
involved.
    But to answer your question very generally, I'd say that 
the first thing we would do is follow the review guide that we 
have published in order to accomplish just that.
    Mr. Towns. What about penalties? Are there penalties, 
offenses, if all of a sudden you find that you call yourself 
awarding a small business a contract and then you find that a 
big business is really doing the work? Is there any penalties 
involved?
    Mr. Thorson. There are, especially for misrepresentation. 
There are actually criminal penalties in the statute, yes. For 
a large business that intentionally and clearly represents 
themselves as a small business in order to achieve a certain 
contract, yes.
    Mr. Towns. Let me just sort of go down the line asking you 
all. Do you really feel that the coordination now that's in 
place is sort of making certain that we are on top of the 
situation? Let me start with you, Mr. Jadacki, and come right 
down on the line. Do you really think we're on top of this now?
    Mr. Jadacki. Are you talking about the oversight 
coordination?
    Mr. Towns. Oversight coordination, yes.
    Mr. Jadacki. Yes, I believe it is.
    If you look at the money, and I talked about it earlier on, 
about the money that FEMA provided other Federal agencies, 
there's at least at last count about 54 Federal agencies that 
got money in some shape or form just from FEMA. And this was 
before the supplemental appropriations came along.
    We really have to rely on the expertise of the Inspector 
General's in each of those agencies because you just can't have 
one person or one entity coming in and expecting to understand 
each and every program.
    So I believe that working with--and if you look at some of 
the data we've compiled and some of the reviews that are coming 
out, I think the Inspector Generals are doing a good job at 
sort of getting a handle on and overseeing some of the 
activities here.
    Again, you're looking at $100 billion. You're looking at 
hundreds of thousands of victims. You're looking at a plethora 
of programs out there. Catching everything out there, I think, 
is just going to be impossible. But we're looking for some of 
the high risk things.
    For example, we're working closely with the other IGs to 
try to identify some of the high risk contracts. We're looking 
at some of the high risk type activities that we traditionally 
see. Debris removal we know, based on past history, is a very 
high risk program. It's ripe for fraud, waste and abuse. And 
we're already finding, as Alice Fisher pointed out, we're 
finding cases like that.
    But just given the sheer size of the disaster, it's going 
to be difficult to cover everything.
    But I think, in general terms overall, I think the IG 
community is doing a very good job.
    Mr. Towns. Thank you very much.
    But let me just ask this. I've heard, and I don't know 
whether it's accurate or not, but I would ask staff to just 
sort of further look into it, that there's 18,000 trailers that 
are not being used?
    Mr. Jadacki. That's correct. They're manufactured homes. 
FEMA purchased 24,000 manufactured homes. And those are 
different from travel trailers which have wheels and are 
actually very mobile. The manufactured homes are sort of 
permanent structures you would bring in.
    Yes, they were purchased. And the concern we identified in 
our review is that they're sitting at an airfield in Hope, AR, 
just waiting to be used.
    Now the problem we have is there was a lack of 
communication and, I think, a control breakdown at the 
programmatic level where FEMA bought all of these things with 
the good intent early on that they're going to house disaster 
victims. What they didn't realize and where the breakdown was, 
was that FEMA regulations preclude using these manufactured 
homes in flood plains. In most of the affected area where these 
were intended to go, they can't be used because of FEMA's own 
regulations.
    So we're looking at a major control breakdown there because 
people weren't talking, people weren't communicating. Yes, 
you're right, they are sitting there. We spent hundreds of 
millions of dollars for these things that we hope we'll be 
using for future disasters because they certainly can't be used 
for this particular disaster.
    Mr. Towns. Let me just say this, that's a real concern. I 
just feel that somewhere along the line the communication is 
just not strong enough for us to be able to be efficient and be 
able to make certain that there's no fraud, waste and abuse. 
And I hear you have the Task Force and that you meet and I keep 
hearing that. But it seems to me that something is missing 
there and that, as a result, there's a lot of waste.
    I hope I'm wrong, I hope I am. But I think about the fact 
that most of the money is yet to be spent. And I think really 
you need to be tightening it up to make certain that we don't 
waste--and this goes down another line. I'm sorry. But I have 
that concern. And that when you hear things like that, you 
wonder are you in a position to catch the crooks?
    Mr. Donohue. Mr. Towns, I would just comment that I applaud 
the commitment of my colleagues here. I've been in this 
business about 4\1/2\ years and before that law enforcement. 
These people stay busy. And my folks in my organization are 
quite busy with what they do in handling fraud oversight.
    But I can tell you what I've seen here, in my personal 
opinion, between the Department of Justice and what Ms. Fisher 
said, and my working closely with my colleagues in the FBI, 
that I've seen collective effort and work to address these 
cases. I think we're doing is we're preventing duplication of 
sorts. I think we're addressing our audit concerts 
collectively.
    I tell you, I saw the success of it in the disbursement of 
funds in September 11th, the disaster in Lower Manhattan. I saw 
it work. And I think that's what we're trying to mimic here, is 
the success.
    We pushed out, HUD pushed out about $2 billion or $3 
billion. And that was a charged situation down there. But I 
really believe that we did that successfully. We met, we talked 
about it, became a plan of action.
    I must tell you, the local and State organization involved 
were so successful in doing that. I think that's what we'll try 
and hopefully bring to this, is the State participation. They 
have such a stake here in our role that we can work 
collectively. I think we're off to a great start.
    Mr. Towns. Thank you.
    Mr. Gimble. Mr. Towns, I think--I would like to add another 
dimension to this. I think we, in the IG community, are a very 
important and integral part of the oversight. I also think 
there's a bigger piece of it out there that is actually the 
management. In other words, you've got your contact 
administrators that detect the double billings and so forth.
    You have the community at large that has the allegations 
that they make to hotlines where we have leads.
    We are obviously not staffed to have 100 percent coverage 
to stop all waste, fraud and abuse. I think that would be 
impossible.
    But I think where our concentration is and what we do is 
there is a system of internal controls that are made up of a 
number of things.
    The challenge is to make sure that those are being properly 
followed. You can make tweaks on them. You can probably improve 
the actual systems themselves. But more importantly, we need to 
be cognizant, and this is where we do our risk assessment. 
Where are the potential breakdowns in the execution of the 
existing control systems? So I think that's where we get a lot 
of our work.
    But we're only a part of the solution. A big part of that 
is on the management side. So I think when you look at the 
overall oversight of this, you probably should also consider 
that there's more than just the IG community and the law 
enforcement community.
    Mr. Towns. Thank you, very much.
    Mr. Thorson. Mr. Donohue mentioned he had been there 4\1/2\ 
years and I have been at SBA 4\1/2\ weeks.
    But in that short period of time I will tell you I have 
seen the effects of the coordination in all of these offices. 
For instance, I mentioned the interface between the SBA 
computers and the FEMA computers. That sounds rather technical 
and doesn't really tell you much. But the truth is when you can 
work out problems like that, you assist many, many people who 
get dropped out of the system for one reason or the other 
because of the lack of a proper interchange.
    We work with HUD on individual benefits to make sure that 
the agencies don't duplicate payments. There's a whole list of 
things like that. But the truth is the coordination does work 
and it's very effective.
    Mr. Towns. Is there anything that we need to do on this 
side?
    Mr. Donohue. I would just comment, sir, that I think your 
oversight and bringing us up to ask these questions is 
important. I think also one thing I would ask is that whatever 
funding is multiple year funding, money, so that we can do that 
as far as effectively plan our strategy. I think one of the 
greatest concerns is trying to hire up and then come down, and 
so on. Keep that balanced and maintain that kind of work force 
to do that.
    So I do appreciate and applaud your interest in seeing as 
to whether we have the resources that we require to do what we 
have to do.
    Mr. Towns. Thank you very much, Mr. Chairman. I yield.
    Mr. Platts. Thank you, Mr. Towns.
    Mr. Donohue, I wanted to ask on the timing issue about 
those who have claims and the $9 billion that has been approved 
and the $1 billion that's been dispersed. Actually, I guess 
that number is Mr. Thorson with SBA.
    I guess for both SBA and HUD, as far as funds that are 
going to be given out, what's the timeframe to make a claim? 
And once a claim is submitted and approved, how quickly do you 
have to draw down? What's the outside limit?
    Mr. Thorson. You don't. As far as the drawing down, that's 
up to the borrower to do. That's part of what we've made an 
effort to try and clarify, because the agency has taken a few 
hits about the level of disbursement versus the level of loan 
approval.
    Now there are certainly effective controls in place which 
do make it--there is more to do after you have loan approval. 
You have to show that you have the proper insurance. Like any 
secured loan, you're going to have to have a legal review 
before the disbursements.
    But the main thing that we're seeing and that I personally 
saw when I was down there was people aren't sure what they want 
to do. They're not sure whether they want to rebuild on this 
particular site or whether they need to wait to find out 
whether there is insurance available? Are there going to be 
power companies? Are they going to move back and reconnect?
    So they're waiting. And you can't blame them for that. 
That's probably a very good commonsensical move.
    Mr. Platts. Is there an outside limit? Once they are 
approved, 3 years or 5 years? Or can they come back 7 years 
from now? Is there an end date, as far as trying to predict 
what your oversight is going to be?
    Mr. Thorson. I was just advised it used to be 6 months and 
now it's open-ended. So they can sit with that loan approval 
for as long as they want.
    Mr. Platts. And with HUD?
    Mr. Donohue. As to HUD, they will come in, homeowners will 
come into a location center, verify in fact who they are, that 
they're authentic, and provide certain identification to 
support that. And what they will do is the application process 
will begin shortly in Mississippi, at which time the checks 
will be issued, I've been told around September. And to answer 
your question, it is open-ended.
    Mr. Platts. What type of procedures maybe again, especially 
HUD and SBA, are in place to ensure the identity and to really 
avoid the fraudulent interactions or transactions? What do you 
go through? How do you do the best possible guard against the 
fraudulent conduct?
    Mr. Donohue. Well, I'll tell you, we've sat down with--and 
of course, in this manner it's Mississippi as far as their 
approval process is concerned. The other ones are yet to be 
approved.
    What we're asking of them, when they come in to me for 
verification, they have to come up with the true data 
information that supports that they're the rightful owner, that 
they own this property clear. Of course, in my case--I should 
say, in many of these mortgages, there will be mortgage 
pending. There will still be loans outstanding. And they will 
have to address the issue of whether there's still a pending 
mortgage they have to resolve with regard to that mortgage 
company. There's a matter of insurance claims that has to be 
coordinated with regard to that matter, as well.
    And a decision, ultimately a decision as to whether they're 
going to stay and rebuild or relocate.
    So I think the idea is to set up centers for these people 
to come back and apply for this stuff and require the kind of 
information.
    I suspect that just by the homeownership itself that these 
centers should have more than enough adequate information. 
That's what we're working with, talking to them to make sure 
they do that information to authenticate the claims that has 
been applied.
    Mr. Thorson. The same is really true for us. Being that 
these are loans, you not only have title searches, you have a 
loss verification procedure. And of course, you have a credit 
check, as well. The people that are getting these loans, it is 
expected that they will repay these. So there is a substantial 
amount of checking that is done before the actual approval is 
done.
    And then, as I mentioned, there's a final legal review 
before any funds are dispersed.
    Mr. Platts. With SBA and HUD, and maybe more so already 
with DHS and FEMA, is there evidence that the controls in place 
for those who have already gone through the process are working 
to keep people from trying to come in and fraudulently work 
their way through the process?
    And I guess maybe a specific question would be do you know 
what percentage of applicants for any of the forms of aid have 
been rejected once their review was conducted?
    Mr. Jadacki. In DHS, FEMA had some pretty what I call 
strong controls in place. What happened, they were overridden 
and circumvented in some cases. So it allowed folks to defraud 
the system.
    In some cases, a simple control like a Social Security 
number was not validated to make sure that it was an existing 
Social Security number. We found cases where applicants 
received funding or individual assistance funds with a Social 
Security number of a deceased person. In one case, we found all 
zeros as the Social Security number. And we found one 
individual that received 12 forms of assistance by just adding 
sequential numbers onto a Social Security number.
    In other cases, we found controls were in place depending 
on how you applied for assistance. If you applied over the 
Internet, it did check the Social Security numbers. If you 
called on the phone, those controls were dropped and it would 
automatically generate check. So in some cases the controls are 
there. They're just overwritten and circumvented because of the 
expediency of getting the assistance out.
    We're following up. There's been about several thousand 
repayments already. Again, it's hard to identify because FEMA 
collects the money back. They've collected about $8 million. 
Whether it's because when there's arrests the media still has a 
big interest down there. You still see, when people arrested, 
they are on the front page of the news. The media has been real 
good about putting them on TV and publicizing. And 
traditionally people see that and they will turn in checks 
voluntarily.
    We've got a number of public service announcements saying 
that we're going to pursue any type of fraud. We're trying to 
get a gauge on that.
    Right now FEMA is in the process of actually matching up to 
look for duplicates. If you see a check for two people, two 
different Social Security numbers or different addresses, they 
are sending bills for collection to pursue those. So we are 
working closely with DOJ on that.
    As far as a percentage, I don't know yet. We still need to 
complete our work on that. But given the fact there's over a 
million applicants for individual assistance alone, the numbers 
are staggering.
    Mr. Platts. Is there anything with HUD or SBA, just a rough 
number that have been rejected that have thus far come in?
    Mr. Donohue. We do not have any, sir, at this point.
    Mr. Thorson. No, sir.
    Mr. Platts. The initial month or I guess 2 to 3 months 
there was this kind of waiving of controls because of the 
urgency and the conditions of those in need and just trying to 
get the money out.
    That recovery effort that's going on, those letters that 
are being sent out, is there evidence so far of how successful 
they're being? The $8 million, I understand, was really not 
money that was pursued but that came back voluntarily; right?
    Mr. Jadacki. Correct. It came back voluntarily. That's 
typical--and this is typical in any disaster. There's going to 
be a number of applicants that you're going to have to send 
bills for collection, either through a clerical error or things 
like that.
    I don't know what the exact amount is. I know it's going to 
probably get into tens of thousands of letters that go out 
asking for that money back for whatever reason.
    Mr. Platts. That you've identified?
    Mr. Jadacki. Right. But FEMA is actually going through and 
identifying those duplicate payments on their own. They're not 
the result of IG work. And that's a good control that should be 
in place. They should be going back, now that the crisis period 
is over, and re-examining and doing the checks on that.
    One of the important things I mentioned early on is the 
fact that the Federal Government has a lot of data, they're the 
repositories of a lot of data. Social Security has the Social 
Security numbers of folks. There's checks that should be done 
there.
    We found checks going to addresses that never existed. But 
the Postal Service has those checks. So we are making the 
aggressive effort right now to try to find ways that not only 
the IG but the programs within the HUD programs, the FEMA 
programs, can actually share data and kind of facilitate that.
    So again, in the future, we can sort of prevent these 
things and get some basically rudimentary controls in place to 
prevent a lot of these things from occurring.
    Mr. Platts. That was going to be my followup. has there 
been recommendations that you've made or the various IG offices 
for that initial stage, to allow the aid to be given in a fast 
manner but to have some basic controls? Have we been able to 
assimilate what happened and make recommendations? We're going 
into hurricane season in 2 weeks, hurricane season starts 
again, in case it's needed there.
    Mr. Jadacki. As soon as we identified the problem with the 
registration we sent out a management advisory letter 
immediately, saying stop, get the controls back in place. This 
has to stop. So those controls are there. Again, it's trying to 
get information.
    Validating addresses is a pretty simple thing, there's an 
address there or not. And there's private sector companies that 
can probably do that, too. So FEMA needs to explore and 
probably some of the other programs in the Federal Government 
need to explore ways to sort of validate those things.
    And a lot of the things can be transparent. It doesn't take 
weeks to do that. We understand the need to get money out 
quick, but it has to be balanced with the need for internal 
controls and accountability. And we are trying to think of ways 
or work with the other agencies and FEMA to find ways to 
prevent these things up front, while not delaying the 
assistance that the citizens need.
    So more to come. We expect to have some reports out this 
summer on how we can effectively do that. Our goal is to get 
something in place. But we can have agreements in place before 
the hurricane season. When it hits, this is the type of 
information we need to validate or run against it. There are 
ways, working closely with Justice, to do these types of 
agreements that are in compliance with the Privacy Act and the 
Computer Matching Act.
    Mr. Platts. Those discussions about having those 
agreements, they're ongoing but the agreements are not yet in 
place?
    Mr. Jadacki. That's correct. I know there's at least one 
agreement that HUD is working with FEMA to collect data and 
that's progressing. Alice Fisher mentioned before about the 
access to FEMA's data base, the NEMIS data base. That has 
progressed. Now we're looking at how we can expand that to 
other agencies.
    Because every disaster you're going to have similar 
situations. People are going to get individual assistance. 
There are going to be checks going out. So it should be some 
sort of standard thing that's negotiated prior to the hurricane 
season or should be ongoing whenever there is a disaster. And 
were trying to sort of--we're trying to facilitate that process 
right now.
    Mr. Donohue. Just data matching is very important to HUD. 
I'm so glad that Matt spoke about it. I'm glad to mention that 
as of recently as today, FEMA and the HUD OIG and DHS have sat 
down and tried to address these very issues.
    As you all know, we're not first responders, HUD. So it's 
absolutely important for us to have access to that information 
and find out who may be the wrong doers were, to prevent the 
ineligible people or the people who are not a resident or 
received payments of some sort, to get that, capture that.
    It's a little different than what I think Ms. Fisher was 
referring to, as having criminal records and so on. This is 
more information to know as to whether these people have 
already done it to you first and now they're coming back the 
second time. And that to me is so valuable and we look forward, 
we really look forward, to receiving that information from 
FEMA.
    Mr. Platts. I've got a couple more I'd like to touch on.
    Mr. Jadacki, one of our visits was the debris removal and 
what's already occurred, as well as the huge volume of debris 
yet to be removed. And some of Ms. Fisher's testimony and in 
the written testimony is about the evidence of corruption that 
was uncovered and is being prosecuted.
    Are there things we need to do differently? Or is it just 
in this case there's controls in place but human greed is 
what's trying to circumvent those controls? Or is there other 
controls we need to put in place because it's a huge sum that's 
still going to be paid out with the debris that still remains?
    Mr. Jadacki. I mentioned earlier on that the area--the 
affected area is about the size of Great Britain, which is a 
significant area. So debris removal has always been a major 
issue, something we try to keep a close eye on. Again, given 
probably the thousands and thousands of debris trucks that are 
out there, the type of debris and those types of things, having 
debris monitors almost everywhere from the onset was very 
difficult.
    In the early phases, the first 72 hours is what they 
typically refer to as the response phase, the focus is really 
on opening roads, emergency access roads and those types of 
things to allow vehicles through. In a lot of cases, there's 
not enough time for the national contract through the Corps of 
Engineers so we have to rely a lot on locals to provide that 
and we'll reimburse. So we're sort of at the mercy of what the 
locals are doing. We have to rely on them.
    Again, there's a State oversight responsibility, too, 
because the FEMA money goes through the State down to the 
locals.
    What we found early on was that a lot of the monitoring, 
the typical things you would see, were just not there. You 
would normally want to see towers there. You would like to 
measure the trucks. You would like to see whether the loads are 
full, the type of debris that comes in, and those types of 
things. I think in a lot of cases that wasn't there.
    I know as things have calmed down and again the crisis 
phase is over, we're seeing more and more of the oversight. And 
I know the Corps admitted that they're providing more and more 
staff on there. But I think in this case they were just simply 
overwhelmed.
    There's other ways you can actually check, besides looking 
in a truck. I mean, you can take the number of load tickets, 
for example, go to the debris site and say OK, well they 
brought 10 loads of debris in, we should have a bigger pile or 
a smaller pile than this. There's ways to go back and double 
check that. And when we do our audits, we actually do some of 
the alternative or innovative ways to do those types of things 
just to double check.
    But I think the most critical thing is having monitors 
onsite checking those trucks as they come in. The problem with 
inflated load tickets or false load tickets, the temptation is 
there. And it's real difficult if you just don't have those 
folks onsite. I think now there should be no excuse. Early on 
it may be difficult to keep an eye on those things.
    And we did find some cases in debris removal. For instance, 
one of the towns in Mississippi, a company came along and said 
we're a nonprofit organization. We'll remove your debris for 
free. And not knowing any better, they did it. And then several 
months later, a bill comes in for $750,000 for their free 
debris removal. So there's a lot of people in the wings, a lot 
of unscrupulous folks out there waiting because people panic, 
there's a lot going on. They want to be reactive to their 
communities. And they're being taken advantage of. And 
unfortunately, in these cases, we may or may not be able to 
reimburse some of those folks.
    Mr. Towns. I guess you were reimbursing them for the gas.
    Mr. Jadacki. That would be expensive, these days.
    Mr. Platts. We want that price to come down, right?
    Mr. Jadacki. Right.
    Mr. Platts. I want to ask, with the Army Corps, I know 
you're very involved with that debris removal, as well.
    Mr. Gimble. I think, just to add on to what Matt just told 
you, actually when this started, the contracts or the contract 
administration weren't in place so we didn't have advisers or 
overseers. That lasted just for a few days. And some of these 
issues came up because we didn't have monitoring folks in 
place, we didn't have the watchtowers in place.
    So they've made recommendations to get that fixed. The 
Corps of Engineers has taken that to heart and they're doing 
that. We think that's going to be a better news story, maybe 
not a good news story but a better news story.
    And also I would just add that the Army Audit Agency is 
doing an extensive audit of the whole process to go back in, 
probably looking at some of the trip tickets and such as that.
    So I think that was the--the bottom line of that is it was 
a problem early on, just by the nature of it. It will probably 
be a problem throughout. But it's in much better control now.
    Mr. Jadacki. I just want to add one thing real quick. We 
have had some discussions with the Corps and we think they have 
it under control.
    But debris removal process is done two ways. A State or 
locality can either select the Corps of Engineers to do it, or 
they can do it themselves and get reimbursed under a public 
assistance grant. So the ones that the Corps are doing we have 
pretty good confidence. The ones where we're relying on the 
States and the locals to do, we're not having that element of 
Federal oversight. We're sort of relying--and a lot of 
communities are doing a really good job on that. But still, we 
have to rely on their oversight and check on them periodically.
    So I just want to make clear that there's two different 
ways that we can remove debris.
    Mr. Platts. Is there a final comment you want to share with 
the committee, that you make sure we give special attention to? 
Whether it be some of the legislative issues we've talked 
about, the Privacy Act or the data sharing, that you want to 
make sure is on our radar as we go forward to assist you?
    Mr. Thorson. I would second the comments made about the 
data matching. The agreements that have to be approved by each 
individual agency and by OMB, they're quite time consuming and 
burdensome. If there is some way that it could be considered 
that the OIGs be subject to some different approach to that, it 
would be extremely helpful.
    Mr. Donohue. I just have something dear to my heart. I'm in 
the process, on behalf of the BCA and trying to move forward 
the IG Training Institute. It's something that began about 2 
years ago and I've worked very closely with members of this 
committee.
    The reason I bring this up is fundamentally what concept is 
to bring together the disciplines and we'll have new people, 
audit investigations, management training and also inspection 
evaluation folks.
    And I think by bringing that collectively together and 
housing that, I think we have the best and the brightest 
training, which is what we need. We have to have that.
    And I think certainly a situation of this type demonstrated 
that in disasters that we need that kind of support. And I'll 
tell you, I just want to say thank you to the members of this 
committee, the fact that they supported that effort and we go 
forward trying to do the best we can.
    Mr. Platts. I think the challenge that was put before you 
and your fellow IG members and how you responded speaks volumes 
of the professionalism of the IG community throughout the 
Federal Government. And the idea of the IG Institute is 
maintaining that and furthering it in the years to come, is I 
think a very important idea that we need to be looking at how 
to promote. And we will continue to have the level that you 
have exhibited in this natural disaster in the oversight of the 
recovery.
    Mr. Towns, do you have anything?
    Mr. Towns. No, I would just like to associate myself with 
the remarks you just made. Thank you very much.
    Mr. Platts. We again appreciate all four of you and your 
staffs for your preparation for the hearing and your testimony. 
And again just day in and day out, the jobs that you and your 
staffs are doing. If you can convey our committee's thanks to 
all of your staff, many of whom have relocated with probably 
little notice to be in the Gulf Coast region and performing in 
admirable fashion and are really out there looking out for the 
best interest of all Americans, and especially those in need in 
that region.
    So we appreciate you conveying those words of thanks to 
them.
    We'll keep the record open for 2 weeks for any additional 
information you would like to submit.
    And with that, this hearing stands adjourned.
    [Whereupon, at 4:12 p.m., the subcommittee was adjourned.]
    [The prepared statement of Hon. Edolphus E. Towns and 
additional information submitted for the hearing record 
follow:]

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