In the wake of Hurricanes Harvey, Irma and Maria, another potential disaster lies waiting for those who apply for relief funds or assist in recovery efforts: criminal prosecution and/or civil litigation. The Wall Street Journal reports that FEMA has already approved $460 million in aid for those affected by the hurricanes. If history is any predictor, the media will soon begin reporting on prosecutions and lawsuits alleging that individuals made false statements to FEMA, created fake charities designed to swindle relief donations, and/or falsely represented their qualifications related to rebuilding efforts. Such litigation can result in prison terms and treble damages.

Regulators are on high alert

The US Department of Justice presently maintains a 24-hour hotline, the National Center for Disaster Fraud, which has processed over 70,000 complaints related to disaster fraud since 2005. Recently, Puerto Rico and all three of Florida's federal districts created task forces comprised of local, state and federal agencies to combat hurricane-related illegal activity. As these efforts make clear, regulators are expecting to see fraudulent activity surrounding relief efforts, are being proactive in investigating such activity, and have been given extra resources to do so. In investigating and prosecuting suspected claims, investigators are also counting on jurors' lack of sympathy for alleged wrongdoers. Nothing is more despicable to a local juror than the theft of funds earmarked for neighbors whose lives and homes have been decimated.

Both businesses and individuals may seek disaster relief

The government is offering financial help (see also the United States Department of Agriculture and Rural Development) ranging from loans to tax relief for businesses and individuals affected by the hurricanes. Unfortunately, those applying for disaster relief need to be careful they don't find themselves in regulators' cross-hairs. The best way to ensure that regulators do not zero in on your application is to be scrupulously accurate when describing why you qualify for assistance. For instance, be sure you or your business are eligible to receive aid, do not overstate the value of any economic losses or damages sustained, and do not falsely claim ownership of property that was destroyed. Remember, the devil is in the details, and government investigators will be checking to see if aid seekers are misrepresenting qualifying facts.

Be careful when donating to relief efforts

How can individuals or businesses avoid being swindled when donating to relief efforts? Only donate to reputable organizations, and make sure to do some due diligence before contributing, particularly if you're donating via a website. In the aftermath of Hurricane Katrina, the Red Cross asked the FBI to investigate no fewer than 15 websites designed to look like Red Cross sites. The Federal Trade Commission has posted warnings describing how to identify fake charities, and has urged individuals not to donate to charities that refuse to provide detailed information about their identity, mission and costs; refuse to provide proof that a contribution is tax deductible; use a name that closely resembles that of a better-known, reputable organization; use high-pressure tactics; or ask for donations in cash or for money to be wired. Companies with matching programs also will want to be mindful of these warnings and carefully scrutinize employees’ donations before committing to match them.

If you need assistance applying for relief aid, or investigating the bona fides of organizations claiming to be relief providers, Dentons stands ready to help. Attorneys in our offices in Houston, Dallas, Atlanta and Miami can assist with your due diligence or investigative needs, locally and/or nationally, to ensure that you do not become another victim of our country’s recent weather-related calamities. Additional information can be found on the Disaster Assistance Improvement Program’s website.