[Pages H4231-H4233]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

EMERGENCY AND DISASTER ASSISTANCE FRAUD PENALTY ENHANCEMENT ACT OF 2005

Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 4356) to amend title 18, United States Code, with
respect to fraud in connection with major disaster or emergency funds.
The Clerk read as follows:

H.R. 4356

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Emergency and Disaster
Assistance Fraud Penalty Enhancement Act of 2005''.

SEC. 2. FRAUD IN CONNECTION WITH MAJOR DISASTER OR EMERGENCY
BENEFITS.

(a) In General.--Chapter 47 of title 18, United States
Code, is amended by adding at the end the following:

``Sec. 1039. Fraud in connection with major disaster or
emergency benefits

``(a) Whoever, in a circumstance described in subsection
(b) of this section, knowingly--
``(1) falsifies, conceals, or covers up by any trick,
scheme, or device any material fact; or
``(2) makes any materially false, fictitious, or fraudulent
statement or representation, or makes or uses any false
writing or document knowing the same to contain any
materially false, fictitious, or fraudulent statement or
representation,

in any matter involving any benefit authorized, transported,
transmitted, transferred, disbursed, or paid in connection
with a major disaster declaration under section 401 of the
Disaster Relief Act of 1974, or an emergency declaration
under section 501 of the Disaster Relief Act of 1974, or in
connection with any procurement of property or services
related to any emergency or disaster declaration as

[[Page H4232]]

a prime contractor with the United States or as a
subcontractor or supplier on a contract in which there is a
prime contract with the United States, shall be fined under
this title, imprisoned for not more than 30 years, or both.
``(b) The circumstance to which subsection (a) of this
section refers is that--
``(1) the authorization, transportation, transmission,
transfer, disbursement, or payment of the benefit is in or
affects interstate or foreign commerce;
``(2) the benefit is transported in the mail at any point
in the authorization, transportation, transmission, transfer,
disbursement, or payment of that benefit; or
``(3) the benefit is a record, voucher, payment, money, or
thing of value of the United States, or of any department or
agency thereof.
``(c) In this section, the term `benefit' means any record,
voucher, payment, money or thing of value, good, service,
right, or privilege provided by the United States, State or
local government, or other entity.''.
(b) Clerical Amendment.--The table of sections for chapter
47 of title 18, United States Code, is amended by inserting
at the end the following new item:

``1039. Fraud in connection with major disaster or emergency
benefits.''.

SEC. 3. INCREASED CRIMINAL PENALTIES FOR ENGAGING IN WIRE,
RADIO, AND TELEVISION FRAUD DURING AND RELATION
TO A PRESIDENTIALLY DECLARED MAJOR DISASTER OR
EMERGENCY.

Section 1343 of title 18, United States Code, is amended by
inserting: ``occurs in relation to, or involving any benefit
authorized, transported, transmitted, transferred, disbursed,
or paid in connection with, a presidentially declared major
disaster or emergency, or'' after ``If the violation''.

SEC. 4. INCREASED CRIMINAL PENALTIES FOR ENGAGING IN MAIL
FRAUD DURING AND RELATION TO A PRESIDENTIALLY
DECLARED MAJOR DISASTER OR EMERGENCY.

Section 1341 of title 18, United States Code, is amended by
inserting: ``occurs in relation to, or involving any benefit
authorized, transported, transmitted, transferred, disbursed,
or paid in connection with, a presidentially declared major
disaster or emergency, or'' after ``If the violation''.

SEC. 5. DIRECTIVE TO SENTENCING COMMISSION.

(a) In General.--Pursuant to its authority under section
994(p) of title 28, United States Code, and in accordance
with this section, the United States Sentencing Commission
forthwith shall--
(1) promulgate sentencing guidelines or amend existing
sentencing guidelines to provide for increased penalties for
persons convicted of fraud or theft offenses in connection
with a major disaster declaration under section 5170 of title
42, United States Code, or an emergency declaration under
section 5191 of title 42, United States Code; and
(2) submit to the Committees on the Judiciary of the United
States Congress an explanation of actions taken by the
Commission pursuant to paragraph (1) and any additional
policy recommendations the Commission may have for combating
offenses described in that paragraph.
(b) Requirements.--In carrying out this section, the
Sentencing Commission shall--
(1) ensure that the sentencing guidelines and policy
statements reflect the serious nature of the offenses
described in subsection (a) and the need for aggressive and
appropriate law enforcement action to prevent such offenses;
(2) assure reasonable consistency with other relevant
directives and with other guidelines;
(3) account for any aggravating or mitigating circumstances
that might justify exceptions, including circumstances for
which the sentencing guidelines currently provide sentencing
enhancements;
(4) make any necessary conforming changes to the sentencing
guidelines; and
(5) assure that the guidelines adequately meet the purposes
of sentencing as set forth in section 3553(a)(2) of title 18,
United States Code.
(c) Emergency Authority and Deadline for Commission
Action.--The Commission shall promulgate the guidelines or
amendments provided for under this section as soon as
practicable, and in any event not later than the 30 days
after the date of the enactment of this Act, in accordance
with the procedures set forth in section 21(a) of the
Sentencing Reform Act of 1987, as though the authority under
that Act had not expired.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Sensenbrenner) and the gentleman from Virginia (Mr.
Scott) each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin.

General Leave

Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on H.R. 4356 currently
under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 4356, the Emergency and
Disaster Assistance Fraud Penalty Enhancement Act of 2005. Since
Hurricanes Katrina and Rita last year, Congress has provided more than
$68 billion in relief to the region, including funding for human
services like unemployment, housing assistance, and crisis counseling.
In addition, charities like the Red Cross and the Salvation Army have
contributed more than $5 billion to relief efforts.
With such vast resources put into the pipeline so quickly, fraudsters
and scam artists went into high gear in an effort to take advantage of
these government programs as well as the generosity of the American
people contributing to nongovernment organizations.
Earlier this month, the United States Government Accountability
Office testified that the Federal Emergency Management Agency paid an
estimated $600 million to $1.4 billion in improper and potentially
fraudulent disaster assistance claims in the aftermath of Hurricanes
Katrina and Rita.
GAO also reported examples of the types of disaster assistance crimes
typically perpetrated on the American taxpayer. In one common scam,
FEMA provided millions of dollars of rental assistance to cover a
thousand individuals who used the names and Social Security numbers of
prison inmates to obtain benefits.
In another instance, 750 debit cards, containing more than $1.5
million in disaster assistance funds, were provided to individuals who
were not actual victims of the storms. GAO determined that some of
these funds were used to procure things like diamond jewelry, Caribbean
vacations, professional football tickets, and divorce lawyer services.
In another case, FEMA paid $139,000 in fraudulent claims so that an
individual who used 13 different Social Security numbers could obtain
benefits.
To its credit, the Department of Justice has responded quickly to the
problem. In September 2005, the Attorney General established a
Hurricane Katrina Fraud Task Force, which includes DOJ, Homeland
Security, Treasury, the FBI, Federal Trade Commission, and other
Federal partners, as well as representatives of State and local law
enforcement. Since its formation, 24 United States attorneys have
charged 261 people in 218 cases with various criminal activities, and
have obtained so far 44 guilty pleas or convictions.
Despite these efforts, it is clear the current criminal penalties are
insufficient to deter disaster fraud. In March 2006 alone, DOJ
announced 17 new indictments and four guilty pleas for Katrina- and
Rita-related disaster fraud. In May of this year, the United States
Attorney for the Middle District of Florida charged 26 people with
similar acts of fraud.
To enhance Federal law enforcement's ability to combat and deter
disaster fraud, this bill contains the following substantive
provisions: first, the bill creates a new Federal crime to prohibit
fraud in connection with any emergency or disaster relief, including
Federal assistance or private charitable contributions, as long as the
benefit was authorized or paid in interstate commerce, transported
through the mail, or is anything of value to the United States. The
penalty for engaging in such fraud is a fine or imprisonment of up to
30 years.
Second, the bill amends the Federal mail and wire fraud statute to
add emergency or disaster benefits fraud to the 30-year maximum
penalties in those statutes. Currently, the 30-year maximum is reserved
only for cases involving fraud against financial institutions.
Finally, the bill directs the United States Sentencing Commission to
review existing penalties for disaster assistance fraud, amend the
sentencing guidelines as necessary, and report back to Judiciary
Committees of Congress.
Mr. Speaker, I urge my colleagues to support this important antifraud
and protaxpayer legislation.
I reserve the balance of my time.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume, and I rise in support of H.R. 4356, the Emergency and Disaster
Assistance Fraud Penalty Enhancement Act of 2005.

[[Page H4233]]

In the aftermath of Hurricane Katrina, we were all appalled to learn
of the rampant schemes of fraudulent benefiting of government funding
intended for victims of the disasters. While these crimes are now being
prosecuted under existing fraud laws, I believe that the crime warrants
specific and enhanced emphasis to put on notice those who would take
criminal advantage of the government's need to focus on speed and
comprehensive assistance in times of disasters and emergencies. This
bill would establish the specific crime of fraud in connection with
major disaster or emergency benefits and increases the penalties
currently available for such acts.
Recognizing the particular egregiousness of fraud claims surrounding
emergencies like Hurricane Katrina, the bill also directs the U.S.
Sentencing Commission to increase penalties under the sentencing
guidelines for those individuals who would fraudulently seek to benefit
from funding intended for victims of natural disasters and
Presidentially declared emergencies.
While I generally do not support specific directives to the
Sentencing Commission to increase penalties for crimes, I believe this
particular category of crime is egregious enough to warrant more
punishment than fraud in general, with appropriate considerations for
mitigating and aggravating circumstances.
Mr. Speaker, I am in favor, as we all are, of seeing increased
benefits being made available for victims of disasters such as
Hurricane Katrina. Many have lost everything and are now without a
permanent home or compensation for their losses. Many are still not
able to return to the area. Many still need ongoing assistance.
We can all agree that the limited disaster and emergency benefits
that are made available to victims should only go to legitimate
victims, not to scam artists or cheats who recognize that humanitarian
concerns in the middle of a disaster require a waiver of traditional
checks and balances in favor of speed and getting the relief to the
suffering victims. Those who cheat and scheme at these times deserve
more punishment.
Accordingly, I am supportive of this legislation, and I urge my
colleagues to support the bill.
Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentleman
from Texas (Mr. McCaul).
Mr. McCAUL of Texas. I thank the gentleman for his leadership on
this, and, Mr. Speaker, I rise today in support of this important piece
of legislation that will work to deter fraud in the wake of disasters
like Hurricanes Katrina and Rita.
Disaster assistance fraud is something I have been fighting for quite
some time now. I recently held a hearing in the Homeland Security
Investigation Subcommittee to uncover the findings of a 6-month fraud
investigation by the GAO. What they found was nothing short of
shocking.
The GAO testified before my subcommittee that FEMA disaster
assistance after Hurricanes Katrina and Rita was applied for and
received by criminals who used deceased individuals' identities, and
even a cemetery as an address to receive the emergency funding. Federal
investigators also testified that prisoners in jail before the
hurricanes were able to receive almost $11 million from their jail
cells by fraudulently applying for the FEMA disaster assistance funds.
The total price tag for the fraud committed after Hurricanes Katrina
and Rita is not yet known; but GAO investigators have testified that it
will, at the very least, be in the billions of dollars. This is an
insult to the victims of these natural disasters and an insult to the
ultimate victim, the American taxpayer.
Through this investigation, we have referred over 7,000 fraud cases
to the Department of Justice Task Force for prosecution, and this
legislation will ensure that they receive the harshest penalty for
their actions.
It saddens me to think about the gulf coast families that could have
used this money to rebuild their homes and their lives. We need to make
sure that these disaster victims and the American taxpayer are never
robbed like this again. This legislation is a great first step in
making that happen, and I strongly urge my colleagues to vote for the
Emergency and Disaster Assistance Fraud Penalty Enhancement Act.
Mr. SCOTT of Virginia. Mr. Speaker, I yield back the balance of my
time.
Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Wisconsin (Mr. Sensenbrenner) that the House suspend the
rules and pass the bill, H.R. 4356.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.

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