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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Louisiana

Wednesday, July 12, 2017

Contractor Pleads Guilty to Making False Statements and Theft of Government Funds

Acting U.S. Attorney Duane A. Evans announced that MICHAEL SPEARS, age 53, of New Orleans, pled guilty today to one count of making false statements in violation of 18 U.S.C. § 1001 and one count of theft of government funds in violation of 18 USC § 641.


According to court documents, SPEARS was a contractor for homeowners eligible to receive grants funded by FEMA through the Home Mitigation Grant Program, also known as the HMGP. These grants would allow homeowners to elevate their houses to prevent catastrophic damage from future natural disasters. In 2011 and 2012, each elevation grant from HMGP was worth up to $100,0000 with contractors and homeowners being entitled to an advanced payment of 80% of the grant prior to a contractor doing any elevation work. The HMGP expected homeowners receiving HMGP grants to commit their $30,000 Road Home elevation grant to the total cost of the elevation.


In 2011, SPEARS signed contracts with multiple homeowners in the Eastern District of Louisiana to elevate their homes through the HMGP. For many of these contracts, SPEARS received advanced payments from the HMGP prior to starting the elevation work. For at least two contracts, the homeowners gave him Road Home elevation funds prior to HGMP approving their grants or giving them an advanced payment.


On or about May 5, 2012, SPEARS was placed on a restricted status with the HMGP that prohibited him from getting any advanced payments on new elevation contracts because he was significantly out of compliance with a number of his pending elevation projects. On or about July 20, 2012, in an effort to be removed from his restricted status with the HMGP, SPEARS falsely represented to the program that certain funding recipients had requested that their elevation be delayed when, in truth and in fact, they had not requested a delay. In August 2012, the HMGP removed SPEARS from restricted status on representations from him that he would have the properties completed by the end of 2012.


However, as of 2013, SPEARS had still failed to do any work on at least three properties for which he had received $118,000 in federal funds, including the two properties for which he had received the Road Home elevation funds as down payment. Despite demands, SPEARS has not returned the funds to the government or the homeowners.


A violation of 18 USC § 1001 carries a maximum term of imprisonment of not more than 5 years, a fine of $250,000, not more than three years supervised release after imprisonment, and a $100 special assessment. violation of 18 USC § 641 carries a maximum ten year term of imprisonment, a $250,000 fine, not more than three years of supervised release following any term of imprisonment, and a $100 special assessment. U.S. District Judge Martin L.C. Feldman set sentencing for November 8, 2017.


Acting U.S. Attorney Evans praised the work of the Department of Homeland Security-OIG and the Federal Bureau of Investigation for investigating this matter.

Financial Fraud
Updated July 12, 2017