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Justice News

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

Thursday, February 1, 2018

Contractor Sentenced To 5 Years Probation For Making False Statements And Theft Of Government Funds

U.S. Attorney Duane A. Evans announced that MICHAEL SPEARS, age 53, of New Orleans, was sentenced to five (5) years probation by the Honorable U.S. District Judge Martin L.C. Feldman today for making false statements in violation of 18 U.S.C. § 1001 and 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 $100,000.00 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 $30,000.00 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 3 properties for which he had received $118,000.00 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.

 As part of the sentence imposed, SPEARS was ordered to pay $118, 000 in restitution.

U.S. Attorney Evans praised the work of the Department of Homeland Security-OIG, and the Federal Bureau of Investigation for investigating this matter. Assistant United States Attorney Emily K. Greenfield was in charge of the prosecution.

Financial Fraud
Updated February 1, 2018