DOJ joins whistleblower case alleging AECOM led FEMA fraud scheme for Katrina funds

DOJ is joining a whistleblower lawsuit alleging that AECOM led a FEMA fraud scheme for Katrina funds. Xavier University of Louisiana is settling its liability in case for $12 million.

Xavier University of Louisiana settles its liability in FEMA fraud case for $12M

NEW ORLEANS, LOUISIANA, June 3, 2020 – The US Department of Justice today joined a newly unsealed whistleblower lawsuit filed by Phillips & Cohen LLP that alleges AECOM and certain institutions in New Orleans cheated the Federal Emergency Management Agency out of more than $100 million in disaster relief funds by repeatedly submitting fraudulent information in violation of FEMA rules.

“The government, after methodically and thoroughly investigating our client’s allegations, decided to intervene in the case,” said Amy Easton, a partner and whistleblower attorney at Phillips & Cohen. “We are fortunate to have such a strong team of DOJ lawyers pursuing this case.”

The alleged fraud by AECOM and others involved FEMA disaster relief funds designated for non-profit educational and religious institutions that were damaged by Hurricane Katrina.

The “qui tam” (whistleblower) lawsuit alleges that AECOM, working on behalf of institutional applicants, submitted many false damage claims to boost disaster fund payments. The fraudulent information included fake photographs, claims of damage to non-existent building foundations and basements, inflated square footage of buildings and inflated cost estimates for damaged items.

The FEMA Public Assistance Program pays to repair facilities damaged by natural disasters and restore them to their pre-disaster condition. If the repair costs exceed more than 50 percent of the cost of a new building, then FEMA would pay for a new building.

The lawsuit alleges that the false damage claims caused FEMA to pay for new buildings instead of less costly repairs, as FEMA rules require.

“The government trusted AECOM, one of its prime contractors, with billions of dollars in taxpayer funds to help rebuild New Orleans after the devastation of Hurricane Katrina,” said Jeffrey Dickstein, a partner and whistleblower attorney at Phillips & Cohen. “AECOM was expected to work with these important New Orleans institutions so that they received every dollar they were entitled to, but no more than that.”

Xavier University of Louisiana, which the whistleblower and government alleged participated in the FEMA fraud scheme, has paid the federal government $12 million to settle its liability in the qui tam case. The Archdiocese of New Orleans also is named as a defendant in the case.

Xavier used FEMA funds to replace the Xavier gymnasium and the student center and make significant upgrades to its electrical distribution center, claiming all had suffered more extensive damage from Katrina than actually occurred.

For instance, Xavier applied for and received $4.7 million in FEMA funds for its student center based on its application that claimed Katrina had severely damaged the building’s basement floor. In fact, the building had no basement floor.

“The FEMA program exists to help communities devastated by natural disasters, but it can only work if participants follow the rules,” Dickstein said.

Hurricane Katrina caused extensive flooding in New Orleans in 2005 from storm surges that swamped levees. It was one of the worst hurricanes to hit the US in terms of lives lost and the amount of damage. FEMA has disbursed more than $20 billion for recovery efforts to entities in Louisiana.

Phillips & Cohen filed the qui tam lawsuit alleging violations of the federal False Claims Act on behalf of Robert Romero, an AECOM employee, in 2016 in federal district court in New Orleans. The lawsuit was filed under seal, meaning it was not publicly known, as required by law to give the government time to investigate. The court unsealed the qui tam complaint today.

“Mr. Romero thought it was important that FEMA funds were given to those who truly needed the money to repair the catastrophic damage from Katrina and its aftermath, in accordance with the rules,” said Peter Chatfield, a partner and whistleblower attorney at Phillips & Cohen. “We are proud to represent Mr. Romero, who had the courage to speak up about this important matter.”

The False Claims Act allows private citizens who know of entities and individuals defrauding the federal government to file lawsuits against them and recover funds on the government’s behalf. The law offers whistleblowers protection against job retaliation and rewards for their information and assistance. When the government joins a qui tam case, whistleblowers are entitled to 15 percent to 25 percent of the recovery.

The qui tam complaint: US ex rel. Romero v. AECOM et al. 16-cv-15092 (E.D. La.).

 

About Phillips & Cohen

Phillips & Cohen has represented whistleblowers for over 30 years and is the nation’s most successful law firm in that field, with more than $12.3 billion in civil settlements and criminal fines collected as a result of their whistleblower cases. Phillips & Cohen represents whistleblowers in qui tam lawsuits as well as cases brought under the whistleblower programs of the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Internal Revenue Service. www.phillipsandcohen.com

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