Katrina Base Camp Managers Had Been In Area Since Hurricane Hit
POSTED: 4:46 pm MST January 27, 2006
UPDATED: 5:30 pm MST January 27, 2006
NEW ORLEANS -- The FBI arrested two Federal Emergency Management Agency employees Friday after each accepted $10,000 in cash kickbacks from a food services contractor, the U.S. Attorney said.
The contractor, who U.S. Attorney Jim Letten declined to identify for "security reasons," notified the government immediately after the suspects allegedly attempted to solicit bribes from him while he was working at a FEMA base camp in the Algiers neighborhood of New Orleans.
Letten said both suspects -- identified as Andrew Rose and Loyd Hollman, both of Colorado -- took the contractor into a locked room on Dec. 22 to discuss how they could artificially inflate the head count of FEMA workers taking meals at the camp in order to increase the contractor's revenue. They allegedly told the contractor they would need $20,000 in kickbacks to inflate the figures. The contractor was paid about $35 per person per day eating at the camp.
Hometowns were not immediately released.
Letten said federal agents used electronic surveillance and have Rose and Hollman on tape talking about the alleged scheme.
Rose and Hollman had been managers at the base camp since soon after Hurricane Katrina struck the area on Aug. 29.
Letten said the arrests should serve as a warning that federal Katrina Fraud Task Force set up in Louisiana by U.S. Attorney General Alberto Gonzales last fall is quickly responding to information about possible fraud by contractors and public officials.
"We will be watching," Letten said. "Any contractor, any citizen, any public official out there who is contemplating violating the law or stealing from citizens of this country had better think twice, because we will bring the power of the federal government upon them and do everything we can to bring them to justice."
Rose was base camp manager and Hollman was a site manager at the camp, federal authorities said.
Letten described how the two suspects repeatedly cornered the food services contractor before Friday's meeting so they could discuss ways to manipulate the numbers in the contractor's favor and how the contractor should in turn compensate them with kickbacks.
Only moments before their arrest, after they had each stuffed cash-filled envelopes in their pockets, Rose and Hollman allegedly advised the contractor they intended to continue to discreetly inflate the figures in exchange for weekly kickbacks of $2,500 apiece, Letten said.
Following the meeting with the contractor, the two suspects walked out of a building and were greeted by agents who took them into custody, said Matt Chapman, assistant special agent in charge of the New Orleans FBI office.
Chapman declined to comment on details at the scene of the arrest other than to concede that "it's safe to say they were not happy."
Letten said the assistant prosecutors intended to ask a judge not to allow bail for Rose and Hollman, arguing that they could be flight risks since they both live out of state.
"No citizen and no public official will be permitted to illegally profit at the expense of the community and citizens who so desperately need FEMA, FEMA assistance and FEMA funds in the wake of this region's terrible disaster," Letten said.
Letten said federal law enforcement agencies are benefiting from additional resources and support from the Katrina Fraud Task Force, based in Baton Rouge, and expect to uncover more cases of fraud in the coming months.
"As long as there are people who are avaricious and stupid enough in the face of this type of enforcement to continue to try to commit fraud and extortion and bribery to enrich themselves -- and they're willing to take those chances -- then these cases will keep coming, because we're out there," Letten said.
POSTED: 4:46 pm MST January 27, 2006
UPDATED: 5:30 pm MST January 27, 2006
NEW ORLEANS -- The FBI arrested two Federal Emergency Management Agency employees Friday after each accepted $10,000 in cash kickbacks from a food services contractor, the U.S. Attorney said.
The contractor, who U.S. Attorney Jim Letten declined to identify for "security reasons," notified the government immediately after the suspects allegedly attempted to solicit bribes from him while he was working at a FEMA base camp in the Algiers neighborhood of New Orleans.
Letten said both suspects -- identified as Andrew Rose and Loyd Hollman, both of Colorado -- took the contractor into a locked room on Dec. 22 to discuss how they could artificially inflate the head count of FEMA workers taking meals at the camp in order to increase the contractor's revenue. They allegedly told the contractor they would need $20,000 in kickbacks to inflate the figures. The contractor was paid about $35 per person per day eating at the camp.
Hometowns were not immediately released.
Letten said federal agents used electronic surveillance and have Rose and Hollman on tape talking about the alleged scheme.
Rose and Hollman had been managers at the base camp since soon after Hurricane Katrina struck the area on Aug. 29.
Letten said the arrests should serve as a warning that federal Katrina Fraud Task Force set up in Louisiana by U.S. Attorney General Alberto Gonzales last fall is quickly responding to information about possible fraud by contractors and public officials.
"We will be watching," Letten said. "Any contractor, any citizen, any public official out there who is contemplating violating the law or stealing from citizens of this country had better think twice, because we will bring the power of the federal government upon them and do everything we can to bring them to justice."
Rose was base camp manager and Hollman was a site manager at the camp, federal authorities said.
Letten described how the two suspects repeatedly cornered the food services contractor before Friday's meeting so they could discuss ways to manipulate the numbers in the contractor's favor and how the contractor should in turn compensate them with kickbacks.
Only moments before their arrest, after they had each stuffed cash-filled envelopes in their pockets, Rose and Hollman allegedly advised the contractor they intended to continue to discreetly inflate the figures in exchange for weekly kickbacks of $2,500 apiece, Letten said.
Following the meeting with the contractor, the two suspects walked out of a building and were greeted by agents who took them into custody, said Matt Chapman, assistant special agent in charge of the New Orleans FBI office.
Chapman declined to comment on details at the scene of the arrest other than to concede that "it's safe to say they were not happy."
Letten said the assistant prosecutors intended to ask a judge not to allow bail for Rose and Hollman, arguing that they could be flight risks since they both live out of state.
"No citizen and no public official will be permitted to illegally profit at the expense of the community and citizens who so desperately need FEMA, FEMA assistance and FEMA funds in the wake of this region's terrible disaster," Letten said.
Letten said federal law enforcement agencies are benefiting from additional resources and support from the Katrina Fraud Task Force, based in Baton Rouge, and expect to uncover more cases of fraud in the coming months.
"As long as there are people who are avaricious and stupid enough in the face of this type of enforcement to continue to try to commit fraud and extortion and bribery to enrich themselves -- and they're willing to take those chances -- then these cases will keep coming, because we're out there," Letten said.
