TELECOM Digest OnLine - Sorted: Red Cross Hurricane Fraud Quite Substantial

Red Cross Hurricane Fraud Quite Substantial

Olivia Munoz (
Wed, 28 Dec 2005 10:25:04 -0600

49 Accused of Defrauding Hurricane Fund
By OLIVIA MUNOZ, Associated Press Writer 9 minutes ago

The number of people indicted in a scheme that bilked thousands of dollars
from a Red Cross fund designated for Hurricane Katrina victims has risen to
49, federal authorities said.

At least 14 employees worked at a Red Cross call center in Bakersfield and
are accused of helping family and friends file false claims for aid money,
said Mary Wenger, a spokeswoman for U.S. Attorney McGregor Scott in

Six have pleaded guilty to federal wire fraud charges since the first
indictments were announced in October, she said Tuesday.

The fake claims drained at least $200,000 from the fund, with an
average payout of about $1,000, Red Cross spokeswoman Devorah Goldburg
said. The total could rise as the investigation continues, she said.

The Bakersfield site is the largest of three Red Cross centers set up
to handle hurricane calls. Others are in Niagara Falls, N.Y., and
Falls Church, Va. Operators provided qualifying victims with a
personal identification number they then presented to receive aid
funds from Western Union, authorities said.

The Red Cross contacted the FBI after it performed an audit of the
call center and discovered an unusually high number of claims were
being paid out at Western Union outlets in the Bakersfield area.

"It was the Red Cross that found this problem," Jack McGuire, the
national group's interim president, said Wednesday on NBC's "Today."
"We put into effect these call centers to speed up delivery of support
to people that needed it. As part of that, we put into place
mechanisms to look for fraud up front and to find fraud after the

None of the indicted employees worked directly for the Red Cross.

Officials of Fort Lauderdale, Fla.-based Spherion, which operates the
call center, have said the company didn't have time to run background
checks on its 1,200 workers.

The indicted employees were providing PIN numbers to their friends and
family who would then go to Western Union to collect the funds, Scott
said in October.

"Sometimes they'd give a victim a PIN number and turn around and call
a buddy with the same PIN, and there'd be a race to Western Union," he

McGuire said $200,000 was a small percentage of the approximately $1.4
billion Red Cross provided to Katrina victims. And he said Red Cross
was working to improve its delivery and anti-fraud systems for the

McGuire, executive vice president of the charity's Biomedical
Services, was named to serve as interim leader after President Marsha
Evans announced her resignation Dec. 13.

Copyright 2005 The Associated Press.

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