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Katrina aid-fraud estimate growing

The U.S. is trying to recover $494 million from people ineligible for FEMA funding.

WASHINGTON - The Bush administration now acknowledges that it is trying to recover $494 million from people who improperly received federal aid intended to help victims of Hurricanes Katrina and Rita along the Gulf Coast two years ago. It said the amount may increase.

"This is a moving target and not finite," said James McIntyre, a spokesman for the Federal Emergency Management Agency.

FEMA estimated it had paid that total to 134,000 people who were ineligible for the aid they received. More than half the money went to people who could not prove residency, according to FEMA figures. Overpayments and duplicate payments account for most of the remainder.

The amount had exceeded $500 million, but the agency wrote off nearly $27 million because of appeals or hardship waivers.

Chaotic times

Congressional investigators determined that people provided false addresses, other people's Social Security numbers, and Gulf Coast addresses that did not exist. Because of the chaotic situation and loose controls, nearly half the 11,000 people who received emergency debit cards also received FEMA checks, investigators said.

The Homeland Security Department's inspector general said its Office of Emergency Management Oversight would continue to audit how FEMA dispensed aid to hurricane victims, including new uses of data-mining programs to identify duplicate payouts.

So far, FEMA has recovered about $13.6 million. The agency itself lacks the authority to investigate suspected fraud. It steers cases to Homeland Security, which can then refer them to the Justice Department for prosecution.

Nonexistent homes

Justice has prosecuted about 800 people for charges stemming from hurricane fraud, the largest number being in southern Mississippi, according to its Hurricane Katrina Fraud Task Force.

An Associated Press analysis earlier this year reported that after Katrina and Rita struck Louisiana and Mississippi, the federal government gave out aid to more homes in some neighborhoods than actually existed.

People claiming to live in as many as 162,750 homes that did not exist before the storms may have improperly received as much as $1 billion in tax money, the AP's analysis found.

A Government Accountability Office report in February said $600 million to $1.4 billion was improperly spent on Katrina-related relief. The congressional watchdog agency said money was used for guns, strippers and tattoos, among other improper items.