False Claims on Katrina Funds Plague Red Cross

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The American Red Cross along with federal and state authorities uncovered a scam involving fraudulent claims for aid intended for victims of Hurricane Katrina this week, according to news reports and a statement from the nonprofit fundraiser.

A Dec. 27 report in the Washington Post newspaper citing federal authorities said that 49 people have been indicted for defrauding the Red Cross Katrina fund out of hundreds of thousands of dollars.

Of those indicted, 17 worked at the Red Cross call center in Bakersfield, CA, which handled claims and payouts to hurricane victims. The rest of those indicted were the workers' friends and family members.

Red Cross officials became suspicious at the number of claims processed at Western Unions close to the Bakersfield call center and contacted law enforcement.

"The Red Cross takes financial stewardship very seriously and has a robust system of checks and balances in place to uncover fraud as we did at the Bakersfield Call Center," the organization said in a statement.

"In partnership with the Department of Justice Hurricane Katrina Fraud Task Force, the Red Cross works closely with the Department of Justice, FBI, Secret Service, state attorneys general and the Federal Trade Commission to investigate and prosecute fraud to the fullest extent under the law, which includes court-ordered restitution to reclaim donor dollars," the nonprofit said.

The Bakersfield call center was staffed with Red Cross volunteers and temporary workers hired by staffing company Spherion, according to reports. The Red Cross said that none of its volunteers or employees have been accused of any wrongdoing in the incident.

More indictments in the scam are expected, according to law enforcement officials.

Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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