Two Indicted for Mail Fraud and Filing a False FEMA Claim Related to Hurricane Katrina

As devastating as Hurricane Katrina was, some people still attempted to cash in on the tragedy. A federal indictment was recently unsealed in the District of Minnesota alleging that two individuals who lived in St. Paul at the time of the 2005 natural disaster fraudulently obtained hurricane relief from the Federal Emergency Management Agency (“FEMA”). The indictment, which was filed on June 15, 2010, in Minneapolis, charges Johnny R. Watson, age 34, now of Houston, Texas, with five counts of mail fraud and one count of filing a false FEMA claim, and Jovanta L. Schafer, age 25, now of New Orleans, with four counts of mail fraud and one count of filing a false FEMA claim. The indictment was recently unsealed following Watson’s arrest in Texas. Yesterday in St. Paul, Schafer made her initial appearance in federal court.

The indictment alleges that between August of 2005 and August of 2007, Watson filed an online application with FEMA for Hurricane Katrina disaster relief benefits. In response to Hurricane Katrina, FEMA made available to each eligible household Flood Insurance Premium (“FIP”) payments as well as financial assistance for food, shelter, and clothing. Watson purportedly listed a New Orleans address as his primary residence and the property that was damaged by the hurricane. Allegedly, as a result of his actions, Watson had received from FEMA $36,109.02 in housing assistance payments, $10,391.50 in other payments, and $600 in FIP payments as of April 2, 2008.

Schaffer lived with Watson in St. Paul during the time period relevant to this case, and she too allegedly filed an online FEMA relief application, citing the same New Orleans address as Watson. As of May 6, 2008, she had reportedly received from FEMA $6,647 in housing assistance payments, $10,391.50 in other than payments, and $600 in FIP payments.

Authorities subsequently learned that the property owner at the New Orleans address provided by the defendants in their FEMA relief applications did not even know them. All relief checks were mailed directly to the defendants’ St. Paul address.

If convicted of this crime, the defendants face a potential maximum penalty of 20 years in prison on each mail fraud count and five years for submitting a false claim to FEMA. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the U.S. Department of Housing and Urban Development and the U.S. Department of Homeland Security-Office of Inspector General.

In September 2005, the U.S. Department of Justice created the Hurricane Katrina Fraud Task Force, designed to deter, investigate, and prosecute disaster-related federal crimes, such as charity fraud, identity theft, procurement fraud, and insurance fraud. The Task Force is comprised of representatives from the Federal Bureau of Investigation, the U.S. Inspectors General community, the U.S. Secret Service, the U.S. Postal Inspection Service, and the Executive Office for United States Attorneys, among others.