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NYC Admits To Defrauding FEMA After Superstorm Sandy, Must Pay Back $5.3 Million For Fake Claims

NEW YORK (CBSNewYork/AP) — Last month, New York City's Department of Transportation (DOT) claimed it was too cold outside to paint new road lanes for drivers. Apparently the agency thinks it's never too chilly out to defraud the federal government.

On Wednesday, New York City reached a $5.3 million settlement over charges it filed fraudulent claims to Federal Emergency Management Agency (FEMA) in the wake of Superstorm Sandy. The DOT allegedly requested federal aid for city vehicles they claimed had been destroyed by the 2012 storm.

According to multiple reports, many of the storm-damaged vehicles were already unusable before Sandy even struck. DOT officials allegedly counted any car that had been effected by the storm, whether it had been scrapped beforehand or not.

The U.S. attorney's office in Manhattan announced the proposed details of the agreement to repay the government on Wednesday.

Manhattan U.S. Attorney, Geoffrey Berman, blasted the city for taking millions in aid it didn't deserve.

"FEMA serves a critical role in providing emergency relief to those who are tragically struck by disaster.  When people lie to FEMA about the cause of property damage in order to reap a windfall, it compromises FEMA's ability to provide financial assistance to legitimate disaster victims in desperate need," Berman said in a statement.

"This office will take decisive enforcement action to protect FEMA and its vital programs from fraud, waste, and abuse."

East Coast Begins To Clean Up And Assess Damage From Hurricane Sandy
Flood water engulfing parked cars during Hurricane Sandy on October 30, 2012 in New York. (Photo by Mike Stobe/Getty Images)


Prosecutors say the DOT deputy commissioner who signed off on the phony FEMA claim "lacked personal knowledge about the vehicles" and failed to direct anyone else at DOT to properly inspect the already-junked cars.

The DOT claims they're fully cooperating with the fraud investigation however, reports from the U.S. Attorney's Office show the agency knew about the phony claims for years before they acted to correct it.

DOT spokesman Scott Gastel said the city began cooperating with federal prosecutors when they were first notified about the fraudulent claims in 2016, according to The New York Times. Federal officials report that a DOT employee actually notified a department commissioner about the error in June of 2014.

"It was not until after it became aware of this office's investigation that the city took steps to notify FEMA," the Attorney's Office said, alleging New York waited until it got caught before it gave back the FEMA aid.

(© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)

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