New Orleans Cleanup Program Bilks Taxpayers

A taxpayer financed agency created in New Orleans to operate a home cleanup program after Hurricane Katrina instead hired politically connected contractors—including the mayor’s brother-in-law—that bilked the government out of millions of dollars.

New Orleans’ embattled Mayor Ray Nagin has adamantly defended the city-chartered agency (New Orleans Affordable Homeownership Corporation) under his control and has angrily denied that there are problems, even as federal agents raided its City Hall-adjacent headquarters this week.

Armed with a federal grand jury subpoena, more than a dozen federal law enforcement agents searched the agency’s headquarters and wheeled out boxes of files and other documents related to its finances, client files and records of payments to subcontractors.

It turns out that agency officials hired their buddies which did little or no work to clean up the hurricane-damaged homes of elderly and poor people yet collected millions of taxpayer dollars. In many cases the contractors were paid even when community volunteers did the actual work such as gutting, lawn mowing and debris removal.

The councilwoman (Stacy Head) who first discovered the problems said the city gave money to the agency without much oversight and that companies with close connections to people in decision-making positions received contracts they wouldn’t have gotten otherwise. Federal investigators say nearly 20 contractors got money for work that cannot be verified.

Among them is a firm owned by Mayor Nagin’s brother-in-law and another owned by the agency’s director. Although the $3.6 million home remediation program was supervised and financed by Nagin’s administration, he claims he did not know that his brother-in-law’s firm was hired to do work.