Fraud Finders

When you’re counting on a killing
Always count me in –
Talk me into losin’ just as long as I can win
I want the easy –
Easy money.
        –Billy Joel, “Easy Money”

One of Donovan McMullen’s partners was a snitch, so he decided to kill him. McMullen got his hands on a Star 9-mm pistol and filed off the serial number. During a clandestine meeting in the woods outside Natchitoches, La., he handed the untraceable pistol and a magazine full of Hydroshock ammunition to his other partner-in-crime, Michael Proveaux, and told him to get the job done quickly.

During the meeting, McMullen, who had also brought along a shotgun, bragged that if FBI agents ever came after him he could kill two agents at a time. “I’ll load my shotgun with buckshot,” he said.

What made the meeting so remarkable, aside from the fact that the FBI was listening to every word, was that Donovan McMullen was no ordinary criminal. He was a Shreveport-area fire chief with no criminal record who had volunteered to spend six months in Baton Rouge helping organize medical relief efforts for victims of Hurricane Katrina. While in Baton Rouge, McMullen stole nearly half a million dollars worth of emergency medical equipment and delivered it to a contact in Texas.

After the feds discovered the theft and started poking around, McMullen put together a plan to kill his Texas connection, the man he believed was the only witness who could link him to the missing medical equipment. With so many federal dollars floating around, McMullen had thought that stealing two-dozen heart defibrillators was going to bring him some easy money.

He was wrong.

When Hurricane Katrina slammed into the Gulf Coast on Aug. 29, 2005, the killer storm unleashed an unprecedented flood of public and private emergency assistance. On the public side, the Federal Emergency Management Agency began doling out billions of dollars in disaster relief. An unintended consequence of the government’s largesse, however, has been an equally unprecedented flood of fraud and theft. According to the latest U.S. Government Accountability Office report to Congress, more than $1 billion of government disaster recovery payments were likely handed out improperly or as the result of fraud.

The Scams
Katrina was still ripping through the warm waters of the Gulf of Mexico, a day short of landfall, when Gary Kraser of Florida created a Web site called www.AirKatrina.com. The day after the storm struck, Kraser, who claimed to be a private pilot flying relief supplies into New Orleans and critically ill storm victims out, posted on his Web site a heart-wrenching description of what he had seen on his first flight: 

“I am shaking as I write this … I saw people on their roofs that had used axes to cut through the roof, waving at us as though we were Air Rescue. I saw dogs wrapped in electrical lines, still alive and sparks flying from their bodies, being electrocuted, as well as some people dead already. I will hear these screams for the rest of my life.”
Kraser asked for donations to help pay for his fuel.

On Aug. 31, he posted a message about a 7-month-old infant he said he had just rescued. “If we didn’t have the plane, I don’t think the little baby would have survived. She is undergoing transplant surgery at this moment.”

It was all a lie. Kraser never left Florida. He wrote his descriptions of the storm’s devastation based on what he saw on television. Yet, in just two days he received $40,000 in donations.

Just a few weeks after the storm, 34-year-old Tina Marie Winston filed an online application with FEMA for disaster assistance. Winston claimed to have witnessed the bodies of her two daughters, ages 5 and 6, wash away in the flood.

Like Kraser’s air rescue horror stories, Winston’s tragic tale was fiction. When the storm struck she had been living in Belleville, Ill., not New Orleans. She didn’t even have daughters.

In California, the American Red Cross set up an emergency call center so storm victims could file for assistance over the telephone. Once some of the employees working the phones found out how easy it was to get cash from the Red Cross, they started calling in applications themselves. Eventually, more than 70 people got involved in the scam.

The Task Force
On Sept. 8, 2005, Attorney General Alberto Gonzales announced the formation of the Hurricane Katrina Fraud Task Force.

That same day, Jim Letten, the U.S. Attorney for New Orleans, and his Baton Rouge counterpart, U.S. Attorney David Dugas, touched down in a DEA helicopter at an improvised landing zone on Convention Center Boulevard next to the GNO Bridge. They were there to meet Attorney General Gonzales and to show him what the city’s beleaguered cops called “Angola South” – the makeshift detention center and courthouse that federal prosecutors had helped set up at the train station on Loyola Avenue.

Violent crime was clearly the number one law enforcement concern in New Orleans at the time, but running a close second was the growing fraud epidemic. Every dollar stolen from disaster relief programs was one less dollar available to those who really needed it.

Based on the scams and swindles government relief agencies experienced after the terrorist attacks of 9/11, Letten and other Justice Department officials were expecting a tidal wave of deception and theft.

“We knew there would be an enormous amount of fraud,” Letten says. “Sadly, whenever there was going to be a lot of recovery money … there would be some predators who would do everything they could to get their hands on that money.”
The new Katrina Fraud Task Force was composed of 30 federal law enforcement agencies. Members created their own investigative database and opened a 24-hour communications and call center in Baton Rouge. One of Letten’s top litigators, Assistant U.S. Attorney Sal Perricone, helped build the communications center.

One of the first big cases the task force tackled didn’t involve relief fraud, but old-fashioned public corruption. Two FEMA officials, Andrew Rose and Loyd Holliman, supervisors at a FEMA base camp in Algiers that provided housing and meals for disaster relief workers, told a government contractor who supplied food to the camp that they could help him make a lot more money by turning in inflated reports on the number of meals he served. Rose and Holliman’s price: $20,000 up front and $5,000 a week.

The contractor didn’t want anything to do with the scheme.

“Instead of doing the wrong thing, he did the right thing,” Letten says. “He contacted the Department of Homeland Security’s Inspector General.”

FBI and DHS agents launched an undercover investigation and took down the two FEMA supervisors after they accepted a pair of envelopes, each stuffed with $10,000 in cash.

“To me, it was a textbook case that demonstrated how well the task force and the communications center worked.”

Fraud on a Grand Scale
According to the Government Accountability Office, FEMA made $20 million in duplicate payments to people claiming the same damage from hurricanes Katrina and Rita.

FEMA also paid at least $3 million to foreign students who were not eligible to receive U.S. government benefits and the agency paid $17 million in rental assistance to people after they had been given free government trailers.

The disaster was unprecedented. So was the fraud.

John Chiem received more than $10,000 in FEMA disaster relief after claiming Katrina had destroyed his house in Buras. What Chiem didn’t mention in his FEMA application was that he’d sold the house in December 2004 – eight months before the storm.

Independence, La., Police Chief Jesse Pingno and Captain Brian Lamarca bilked the government out of thousands of dollars by submitting false invoices for overtime hours and mileage on their vehicles.

Raul Miranda, a contractor with the U.S. Army Corps of Engineers, agreed to a kickback of nearly $300,000 from a subcontractor in exchange for inside information on how the Corps was going to evaluate bids for a $17 million levee reconstruction project.

In a written report to Congress in March 2007, the GAO concluded, “… our estimate of $1 billion in potentially improper and/or fraudulent payments through February (2006) is likely understated.”

Murder for Hire
The plot was hatched in a strip club.

Caddo Parish District Three Fire Chief Donovan McMullen, who had come to Baton Rouge right after Katrina to help organize medical relief efforts, and Michael Proveaux of Pineville, La., an ambulance company supervisor also volunteering in Baton Rouge, decided to steal a truckload of heart defibrillators worth nearly $29,000 each.
They knew a guy in Beaumont, Texas who could fence the defibrillators for them. It was going to be easy money.

On the night of Jan. 13, 2006, McMullen and Proveaux loaded up a truck with between 18 and 30 government-owned defibrillators and drove west, almost to the Texas border, where they met up with their contact, an ambulance driver named Rudy Adams. Adams gave McMullen $500 and gave Proveaux a bag of cocaine. They would get more later, after Adams hocked the stolen equipment.

Two months later, McMullen went back to Shreveport. Although he was aware the FBI was investigating the theft, he knew they didn’t have anything on him, Proveaux, or Adams.

That was about to change.

In September, a medical supply company in Texas discovered that a defibrillator they had recently purchased had been stolen in Baton Rouge. Company executives told the FBI they had bought the defibrillator from Rudy Adams. When agents questioned Adams, he rolled over on Proveaux and McMullen and agreed to cooperate with the FBI.

Next, the feds put the screws to Proveaux, who, like Adams, folded and agreed to cooperate.

With two of the three conspirators in their pocket, the FBI focused their attention on McMullen. With agents listening in, Proveaux called McMullen to get him to talk about the theft. To get the conversation rolling, Proveaux told McMullen he had run into Adams in Baton Rouge and he was sure that Adams was snitching on them.
McMullen said they should kill Adams.

If Proveaux could find a hitman, McMullen agreed to provide the murder weapon and to pay the killer $2,500 once Adams was dead.

On March 16, 2007, Proveaux and McMullen met in the woods outside Natchitoches to discuss the final preparations for killing Adams. McMullen handed Proveaux a box containing a Star pistol with its serial number filed off and a magazine full of Hydroshock bullets, which he mistakenly believed exploded on impact. In reality the bullets were just modified hollow-points.

A few days after their meeting in the woods, McMullen and Proveaux talked again on the phone. The hitman had found Adams leaving work but couldn’t get to him, Proveaux said. There had been too many people around.

McMullen suggested the hitman follow Adams as he left work and kill him on his way home. “Just drive up beside him and pop, pop,” McMullen said, “another drug deal gone bad.”

Two days later, Proveaux called McMullen and reported that Adams was dead.
“Great,” McMullen said. “My problems are solved. I’m going have a cold beer.”
The FBI arrested McMullen the next day for theft of government property and the attempted murder of a federal witness.

In November 2007, a federal judge sentenced the former fire chief to 14 years in prison.

Rather than having been murdered, Adams eventually agreed to a plea and received a lighter sentence in exchange for his cooperation.

The Future of Fraud Investigations
As of February, the Justice Department has prosecuted nearly 850 people for fraud in cases related to hurricanes Katrina and Rita. Two hundred and forty of those defendants have been charged in Louisiana. Prosecutors say they aren’t close to being finished. The high-dollar cases are yet to come.

“We have now gone into the second phase,” Letten says. “The more complex fraud cases, the procurement fraud cases, the big charity fraud cases that are much more complicated, that take longer to come to fruition … those investigations are still being worked, and we will continue to see some of those cases produce results into the coming months and probably years.”

In December, Congress passed a new law that makes any kind of disaster relief fraud a 30-year felony.

The Justice Department is trying to send a message, Letten says, to would-be thieves who try to profit at the expense of disaster victims.

“There will be a consequence,” he says. “There will be a price to pay for anyone who attempts to violate the public trust and to steal money from taxpayers, from charities and those individuals who desperately deserve those recovery monies.”

Letten’s message is clear: In disaster fraud rip-offs, there is no such thing as easy money.

Chuck Hustmyre is a freelance writer and author of the true crime books An Act of Kindness and Killer with a Badge and the novel House of the Rising Sun.

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