Sneak Preview: Audit Finds Misuse of Funds in Lower Ninth Ward

March 1, 2012 | By Jerry Ashworth | Post a Comment

(The following was excerpted from an article in the Single Audit Information Service.) Of all the communities damaged or destroyed by Hurricane Katrina in 2005, New Orleans’ Lower Ninth Ward was perhaps the hardest hit, with widespread devastation and flooding. Although the Federal Emergency Management Agency has obligated about $2.8 million to the Ninth Ward Housing Development Corporation for 12 projects, the organization cannot receive most of those funds until it corrects current problems related to questionable cash management issues and improper procurement practices, according to the Louisiana Office of Legislative Auditor.

NWHDC submits reimbursement requests to the Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) for projects funded through the FEMA Public Assistance program. Reviewing requests that NWHDC made from 2007 to 2009, the OLA found several questionable transactions for one of those projects.

NWHDC received about $136,000 from GOHSEP for gutting an historic building in the Lower Ninth Ward. Although NWHDC submitted proposals and invoices signed by the contractor named as doing the work, the owner of the contracting firm — Myers and Sons Enterprises, LLC — said the signatures were not his. The OLA found that NWHDC had in fact paid the contractor about $7,700 for prior consulting and other activities unrelated to work on the historic building. NWHDC officials told OLA that the contractor “played an advisory role and assisted with proper procedures” for the project.

During the audit, the OLA found that another contractor — DDL Construction — had actually gutted the building, and that $38,600 was paid to that contractor. However, DDL Construction said it was not familiar with Myers and Sons even though Myers and Sons said it supervised the work on a daily basis. In reviewing other cancelled checks related to the work, the OLA determined that NWHDC used $94,924 of its grant for other purposes, in violation of FEMA’s public assistance grant guidelines.

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