The Attorney General’s Office is continuing its aggressive efforts to investigate fraud in Sandy relief programs, working jointly with the New Jersey Department of Community Affairs (DCA) and the Offices of Inspector General of the U.S. Department of Homeland Security, the U.S. Department of Housing and Urban Development (HUD), and the U.S. Small Business Administration (SBA).
The individuals who have been charged are alleged, in most cases, to have filed fraudulent applications for relief funds offered by the Federal Emergency Management Agency (FEMA). In many cases, they also applied for funds from a Sandy relief program funded by HUD, low-interest disaster loans from the SBA, or assistance provided by the New Jersey Department of Human Services. The HUD funds are administered in New Jersey by the Department of Community Affairs.
“Each of these defendants knew the requirements to qualify for this disaster aid, but each selfishly lied about their circumstances to steal funding intended for those hardest hit by Sandy, namely homeowners who were left homeless and displaced renters forced to pay for new leases,” said Acting Attorney General Lougy. “It’s a sad truth that even in the direst of emergencies, when so many generous people step forward to lend a hand, there are others who will dishonestly exploit an offer of assistance.”
The following defendants were charged today by complaint-summons:
“We need to ensure that limited disaster relief funds are allocated to eligible victims who have the greatest needs,” said Director Elie Honig of the Division of Criminal Justice. “Through these prosecutions, we’re sending a message of zero tolerance that should deter this criminal conduct in future emergencies, so relief administrators can focus on recovery instead of policing fraud.”
“Sandy recovery remains central to DCA’s mission, and a key part of that mission is helping our law enforcement partners root out people who are trying to game the system at the expense of storm victims who legitimately qualify for help,” said DCA Commissioner Charles A. Richman. “Because defrauders and scammers impede the State’s recovery efforts and pilfer taxpayer dollars, my Department doesn’t hesitate to report suspicious applications when we see them.”
The new cases were investigated by detectives of the New Jersey Division of Criminal Justice and special agents of the U.S. Department of Homeland Security Office of Inspector General, HUD Office of Inspector General and SBA Office of Inspector General. Deputy Attorneys General Thomas R. Clark, John Nicodemo, Jonathan Gilmore and Valerie A. Noto are prosecuting the new defendants under the supervision of Deputy Attorney General Michael A. Monahan, Chief of the Financial & Computer Crimes Bureau, and Deputy Attorney General Mark Kurzawa, Deputy Bureau Chief. They are working with Lt. David Nolan, Sgt. Fred Weidman and Analyst Alison Callery, who are conducting and coordinating the investigations for the Division of Criminal Justice, along with others, including Detectives Terrence Buie, Mark Byrnes and Sonya Sullivan, and Special Civil Investigator James Parolski.
Second-degree charges carry a sentence of five to 10 years in state prison and a fine of up to $150,000. Third-degree charges carry a sentence of three to five years in state prison and a fine of up to $15,000, while fourth-degree charges carry a sentence of up to 18 months in state prison and a fine of $10,000. The charges are merely accusations and the defendants are presumed innocent until proven guilty.
On Oct. 29, 2012, Superstorm Sandy hit New Jersey, resulting in an unprecedented level of damage. Almost immediately, the affected areas were declared federal disaster areas, making residents eligible for FEMA relief. FEMA grants are provided to repair damaged homes and replace personal property. In addition, rental assistance grants are available for impacted homeowners. FEMA allocates up to $31,900 per applicant for federal disasters. To qualify for FEMA relief, applicants must affirm that the damaged property was their primary residence at the time of the storm.
In addition to the FEMA relief funds, HUD allocated $16 billion in Community Development Block Grant (CDBG) funds for storm victims along the East Coast. New Jersey has received $2.3 billion in CDBG funds for housing-related programs, including $215 million that was allocated for the Homeowner Resettlement Program (RSP) and $1.1 billion that was allocated for the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program. Under the Resettlement Program, the New Jersey Department of Community Affairs is disbursing grants of $10,000 to encourage homeowners affected by Sandy to remain in the nine counties most seriously impacted by the storm: Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean and Union counties. The RREM Program, which is the state’s largest housing recovery program, provides grants to Sandy-impacted homeowners to cover rebuilding costs up to $150,000 that are not funded by insurance, FEMA, U.S. Small Business Administration loans, or other sources.
The Small Business Administration provides low-interest disaster loans to homeowners, renters, businesses of all sizes, and most private nonprofit organizations. SBA disaster loans can be used to repair or replace real estate, personal property, machinery and equipment, and inventory and business assets damaged or destroyed in a declared disaster. Renters and homeowners may borrow up to $40,000 to repair or replace clothing, furniture, cars or appliances damaged or destroyed in the disaster. Homeowners may apply for a loan of up to $200,000 to replace or repair their primary residence to its pre-disaster condition. Secondary homes or vacation properties are not eligible for these loans, but qualified rental properties may be eligible for assistance under the business loan program.