The Attorney General’s Office is continuing to aggressively 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 some cases, they also applied for funds from a Sandy relief program funded by HUD or low-interest disaster loans from the SBA. The HUD funds are administered in New Jersey by the Department of Community Affairs.
“All of these defendants are alleged to have selfishly lied about where they were living at the time of the storm in order to steal Sandy relief funds,” said Acting Attorney General Hoffman. “We’re sending an unmistakable message that those who fraudulently drain relief funds away from deserving recipients will be exposed and will face criminal charges. Relief administrators regrettably are being forced to police this fraud and recoup misdirected aid, when they should be free to focus entirely on speeding that aid to those who need it most.”
The following defendants were charged today by complaint-summons:
“We’re working with our state and federal partners to pursue every lead and charge every offender in these Sandy fraud cases,” said Director Elie Honig of the Division of Criminal Justice. “We’re taking a very aggressive approach, because the Sandy recovery efforts are too important and the sums of money at stake are too great to do anything less.”
“Since the very beginning of the Sandy recovery effort, the staff has done their utmost to be good stewards of public funds and to ensure that assistance gets to Sandy survivors who legitimately qualify for aid,” said DCA Acting Commissioner Charles Richman. “We will continue to be vigilant about reporting those who seek to misuse Sandy recovery funds to the proper authorities.”
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. The New Jersey Department of Human Services, New Jersey Department of Labor and New Jersey Division of Taxation assisted in the investigation of the Spulocks, and the Department of Community Affairs and the Division of Taxation assisted in the investigation of the Larkins. Deputy Attorneys General Mark C. Kurzawa, Peter Gallagher and Derek Miller are prosecuting the five defendants, under the Supervision of Deputy Attorney General Michael A. Monahan, who is Chief of the Financial & Computer Crimes Bureau, and Deputy Attorney General Kurzawa, who is 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 other detectives, including Detective Jack Campanella.
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.