FEMA halted collection plan earlier than believed

The Federal Emergency Management Agency has stopped its efforts to collect nearly $643 million in misappropriated disaster relief funds, the Orlando Sun-Sentinel reports. FEMA, which distributed more than $1 billion in disaster relief to people they believed were victims of Hurricane Katrina, reportedly ceased trying to collect the money that was inappropriately issued to more than 160,000 people. According to the report, inadequate controls, mistakes and potential fraud were the main reasons for inappropriate payments. Proper identity verification of the individuals prior to the funding issuance may have prevented the loss of millions. The paper details that FEMA halted its pursuit when a federal judge mandated that the agency alter its program, ordering it to notify people who supposedly received undeserved money and alert them of their right to an appeal. "We are and have been actively working to finalize plans to recoup misspent funds … to make sure we are recouping the right funds from the right people," FEMA spokeswoman Rachel Racusen told the Sun-Sentinel. Hurricane Katrina displaced thousands of New Orleans residents, many of whom never returned to the city but received disaster relief funding. According to the New Orleans Times-Picayune, $400 billion will be spent over the next decade in further living assistance for those displaced.