The Chicago Syndicate: Stolen Hurricane Sandy Disaster Funds Results in Arrest of 4 in @FEMA Fraud Scheme

Thursday, January 23, 2014

Stolen Hurricane Sandy Disaster Funds Results in Arrest of 4 in @FEMA Fraud Scheme

A joint investigation between the Federal Bureau of Investigation (FBI) and the Federal Emergency Management Agency (FEMA) resulted in the arrest of four individuals earlier this morning for allegedly submitting false and fraudulent applications to obtain Hurricane Sandy Disaster Relief funds. Darnell Ellis, Diana Shkolnik, Robert Gesuele, and Edward Valentin (the defendants) independently submitted fraudulent disaster relief applications and received benefits from the federal government, which they would not otherwise be entitled.

The arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, FBI, New York Field Office; and FEMA Regional Administrator Jerome Hatfield.

Disaster relief assistance Boxed Water Kitis made available after the president of the United States declares that a major disaster has occurred in a specified area. Assistance to individuals is available under the Individuals and Household Assistance Program (IHP), which provides grants funded by the United States government to people in the affected area when losses are not covered by insurance and property has been damaged or destroyed. To qualify for disaster assistance, in addition to registering with FEMA, the applicant must provide basic personal data and the location of the damaged dwelling. The applicant is also asked to verify that the damaged dwelling was in fact his or her primary residence and that he or she was unable to live in his or her primary residence due to disaster-related conditions.

As detailed in their respective complaints, each defendant claimed in their FEMA relief applications that their primary residences were affected by Hurricane Sandy, and as a result, they were seeking financial assistance. Contrary to their claims, the investigation identified that at the time they submitted their FEMA applications, defendants Ellis, Shkolnik, and Valentin were not living in the storm-affected residences identified in their paperwork. The fourth defendant, Gesuele, submitted a FEMA application for a residence he was illegally occupying and did not rent or own. In total, the defendants received tens of thousands of dollars in disaster relief funding to which they were not entitled.

FBI Assistant Director in Charge George Venizelos stated, “At a time when individuals were displaced from their primary residences and businesses due to the affects of Hurricane Sandy, the defendants saw an opportunity to make money. They submitted false claims to FEMA and lined their pockets with money intended to help those who legally qualified for assistance under the IHP. The FBI, along with its law enforcement partners, to include FEMA, will continue to investigate and bring to justice those who defraud the government for their own personal gain.”

“In the aftermath of Hurricane Sandy, FEMA Region 2 responded to those affected and provided both material and financial support. Relief funds meant to assist individuals, businesses, and communities are essential in order to restore normalcy. This process is hampered by those few who wish to defraud and siphon relief and disaster funds away from those who were most at need. FEMA R2 will continue to work with our close federal partners, including the FBI and the Department of Homeland Security-Office of the Inspector General, to identify fraud and misuse of disaster relief funds and to leverage each such violation as a clear message of deterrence to anyone considering the misuse of relief and disaster funds,” said FEMA Regional Administrator Jerome Hatfield.

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