Eight Indicted in Scheme to Defraud Fema of Nearly $1 Million in Post-9/11 Disaster Relief Funds
Defendants Include Former FEMA Employee Who Assisted in the Processing of False Claims
A 52-count indictment returned by a federal grand jury in Brooklyn was unsealed this morning charging STEVEN YEE, brothers BILL CHIN and CHRISTOPHER CHIN, GREGORY ALLEN, WILLIAM WHITEHEAD, JANET MORALES, TOONG J. HOW, and JASON DELUCA with mail fraud, wire fraud, and filing false claims, arising out of their participation in a scheme to defraud the Federal Emergency Management Agency (“FEMA”) of disaster relief funds that FEMA made available to qualifying individuals shortly after the September 11, 2001 terrorist attacks. The indictment also charges YEE with making false statements to federal investigators.1
The charges were announced by ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, and RICHARD L. SKINNER, Inspector General, Department of Homeland Security.
The defendants arrested today are scheduled to be arraigned this afternoon before United States Magistrate Judge Roanne L. Mann, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The case has been assigned to United States District Judge Carol B. Amon.
As set forth in the indictment, after September 11, 2001, FEMA made available millions of dollars of relief funds to assist those who were financially hurt by the terrorist attacks. One of the ways that FEMA distributed such funds was through its Mortgage and Rental Assistance (“MRA”) program, which provided financial assistance to individuals who were about to lose their primary residence through eviction or foreclosure due to a financial hardship caused by the terrorist attacks.
In general, individuals and families qualified for MRA funds if (a) they lived or worked in Manhattan on or before September 11, 2001, or were employed by a company economically dependent on businesses located in Manhattan; (b) they lost a certain portion of their income after September 11, 2001; (c) they were United States citizens, non-citizen nationals, or qualified aliens; and (d) they received a late payment notice, or other evidence that they were in danger of possible eviction, foreclosure, or dispossession from their primary residence. To obtain MRA funds, applicants had to file a claim with FEMA proving that they qualified. By January 2003, FEMA approved nearly $100 million in MRA grants, assisting more than 11,000 qualifying applicants.
The indictment alleges that between October 2001 and May 2003, the defendants participated in a scheme to defraud FEMA by filing false claims under the MRA program. In furtherance of the scheme, the defendants obtained, or helped to obtain, MRA grants based on applications that contained, among other things, fake identities, bogus documents, inflated financial claims, and false information concerning the applicants’ residences, landlords, and employment. For example, some applications contained fake phone bills that were intended to prove residency at a particular location, contained bogus driver’s licenses, and/or identified addresses of residence that were actually commercial mail receiving facilities. The defendants also enlisted accomplices to create fake documents, submit false claims, vouch for false information provided to FEMA, and receive fraudulent proceeds. All told, the scheme resulted in the filing of more than 25 fraudulent applications, which yielded grants totaling nearly $1 million.
The indictment also alleges that the defendant STEVEN YEE, who from September 2002 to February 2003 worked at FEMA’s Applicant Assistance Center located at 141 Worth Street in Manhattan, used his position within FEMA to help ensure that fraudulent applications would be processed and approved. By virtue of his FEMA employment, YEE had access to the National Emergency Management Information System, and therefore was able to identify and track the progress of applications that had been filed.
Finally, the indictment charges that in two separate interviews in July 2005, YEE lied to federal agents who were investigating the case.
“The defendants plundered a vital government relief program designed to aid members of our community victimized by the September 11, 2001 terrorist attacks,” stated United States Attorney MAUSKOPF. “We are committed to ensuring that relief funds are not diverted from those in need by opportunists seeking personal financial gain through fraud.” Ms. MAUSKOPF thanked the U.S. Secret Service and the U.S. Postal Inspection Service for their assistance in the case and added that the investigation is ongoing.
Department of Homeland Security Inspector General SKINNER stated, “Taking unlawful advantage of disaster assistance programs that aspire to aid victims who have suffered real damage or loss is despicable. We do not tolerate disaster assistance fraud in any form or fashion. Today’s arrests are the result of our continuing post-9/11 investigations and demonstrate my office’s unwavering commitment to investigate anyone who attempts to exploit the federal government’s disaster assistance programs for unlawful gain. We will continue to investigate all cases of alleged disaster assistance fraud, whether they are in the wake of the Gulf Coast hurricanes or the post-9/11 terrorist attacks, to ensure that unscrupulous individuals are brought to justice.”
The defendants STEVEN YEE, BILL CHIN, CHRISTOPHER CHIN, and GREGORY ALLEN have been charged with mail and wire fraud conspiracy, and false claims conspiracy. If convicted of mail and wire fraud conspiracy, each defendant faces a maximum sentence of 20 years’ imprisonment, three years’ supervised release, and a $250,000 fine. If convicted of false claims conspiracy, each defendant faces a maximum sentence of 10 years’ imprisonment, three years’ supervised release, and a $250,000 fine.
All of the defendants, including WILLIAM WHITEHEAD, JANET MORALES, TOONG J. HOW, and JASON DELUCA, are charged with wire fraud and/or mail fraud, as well as with filing false claims. Each mail fraud and wire fraud count carries a maximum sentence of 20 years’ imprisonment, three years’ supervised release, and a $250,000 fine. Each false claims count carries a maximum sentence of five years’ imprisonment, three years’ supervised release, and a $250,000 fine.
STEVEN YEE is also charged with four counts of making false statements. If convicted, YEE faces a maximum sentence of five years’ imprisonment, three years’ supervised release, and a $250,000 fine on each count.
The government’s case is being prosecuted by Assistant United States Attorney Jeffrey A.Goldberg.
TOONG J. HOW
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