[Congressional Record Volume 143, Number 8 (Tuesday, January 28, 1997)]
[Senate]
[Pages S744-S745]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA (for himself, Mr. Inouye and Mr. Glenn):

  S. 214. A bill to amend the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act to combat fraud and price-gouging committed in 
connection with the provision of consumer goods and services for the 
cleanup, repair, and recovery from the effects of a major disaster 
declared by the President, and for other purposes; to the Committee on 
Environment and Public Works.


           The Disaster Victims Crime Prevention Act of 1997

  Mr. AKAKA. Mr. President, today I am introducing the Disaster Victims 
Crime Prevention Act of 1997, on behalf of myself, Senator Inouye, and 
Senator Glenn to combat fraud against victims of Federal disasters. 
Like similar legislation I introduced in the 103d and 104th Congresses, 
this measure would make it a Federal crime to defraud persons through 
the sale of materials or services for cleanup, repair, and recovery 
following a federally declared disaster.
  We are all aware of the tremendous costs incurred during a natural 
disaster. California is recovering from the devastating floods that 
have caused nearly $1.6 billion in damage and has made 42 of the 
State's 58 counties eligible for disaster assistance. Just before

[[Page S745]]

the dams and levees in California overflowed, the Pacific Northwest was 
hit with violent storms, and recently Minnesota, North Dakota and South 
Dakota have been declared Federal disaster areas, as have 13 counties 
in Idaho and four in Nevada.
  During the 1990's, a number of deadly natural disasters have occurred 
throughout the United States and its territories including hurricanes, 
floods, earthquakes, tornadoes, wild fires, mudslides, and blizzards. 
Many were declared Federal natural disasters like Hurricane Iniki, 
which in 1993 leveled the island of Kauai in Hawaii causing $1.6 
billion in damage and Hurricane Andrew which devastated southern 
Florida.
  Through instant, onscreen media coverage, the Nation has had ringside 
seats to the destruction caused by these catastrophic events. We 
sympathetically watch television as families sift through the debris of 
their lives and as men and women assess the loss of their businesses. 
We witness the concern of others, such as Red Cross volunteers passing 
out blankets and food and citizens traveling hundreds of miles to help 
rebuild strangers' homes.
  Despite the outpouring of public support that follows these 
catastrophes, there are unscrupulous individuals who prey on trusting 
and unsuspecting victims, whose immediate concerns are applying for 
disaster assistance, seeking temporary shelter, and dealing with the 
rebuilding of their lives.
  The Disaster Victims Crime Prevention Act of 1997 would criminalize 
some of the activities undertaken by these unprincipled people whose 
sole intent is to defraud hard-working men and women. This legislation 
will make it a Federal crime to defraud persons through the sale of 
materials or services for cleanup, repair, and recovery following a 
federally declared disaster.
  Every disaster has examples of individuals who are victimized twice--
first by the disaster and later by unconscionable price hikes and 
fraudulent contractors. In the wake of the 1993 Midwest flooding, Iowa 
officials found that some vendors raised the price of portable toilets 
from $60 a month to $60 a day. In other flood-hit areas, carpet 
cleaners hiked their prices to $350 per hour, while telemarketers set 
up telephone banks to solicit funds for phony flood-related charities.
  Nor will television viewers forget the scenes of beleaguered south 
Floridians buying generators, plastic sheeting, and bottled water at 
outrageous prices in the aftermath of Hurricane Andrew.
  After Hurricane Iniki devastated the island of Kauai, a contractor 
promising quick home repair took disaster benefits from numerous 
homeowners and fled the area without completing promised construction. 
These fraud victims have yet to find relief.
  While the Stafford Natural Disaster Act currently provides for civil 
and criminal penalties for the misuse of disaster funds, it fails to 
address contractor fraud. To fill this gap, our legislation would make 
it a Federal crime to take money fraudulently from a disaster victim 
and fail to provide the agreed-upon material or service for the 
cleanup, repair, and recovery.

  The Stafford Act also fails to address price gouging. Although it is 
the responsibility of the States to impose restrictions on price 
increases prior to a Federal disaster declaration, Federal penalties 
for price gouging should be imposed once a Federal disaster has been 
declared. I am pleased to incorporate in this measure an initiative 
Senator Glenn began following Hurricane Andrew to combat price gouging 
and excessive pricing of goods and services. Fortunately, citizens in 
Hawaii were spared spiraling cost increases after Hurricane Iniki 
because the State government acted swiftly to counteract attempts at 
price gouging by instituting price and rent freezes.
  There already is tremendous cooperation among the various State and 
local offices that deal with fraud and consumer protection issues, and 
it is quite common for these fine men and women to lend their expertise 
to their colleagues from out-of-State during a natural disaster. This 
exchange of experiences and practical solutions has created a strong 
support network.
  However, a Federal remedy is needed to assist States when a disaster 
occurs. There should be a broader enforcement system to help 
overburdened State and local governments during a time of disaster. The 
Federal Government is in a position to ensure that residents within a 
federally declared disaster area do not fall victim to fraud. Federal 
agencies should assist localities to provide such a support system.
  In addition to making disaster-related fraud a Federal crime, this 
bill would also require the Director of the Federal Emergency 
Management Agency to develop public information materials to advise 
disaster victims about ways to detect and avoid fraud. I have seen a 
number of antifraud materials prepared by State consumer protection 
offices and believe this section would assist States to disseminate 
antifraud-related material following the declaration of a disaster by 
the President.
  I look forward to working with my colleagues to pass legislation that 
sends a clear message to anyone thinking of defrauding a disaster 
victim or raising prices unnecessarily on everyday commodities during a 
natural disaster.
                                 ______