AECOM settles Katrina fraud allegations for $11.8 million

by Ben Vernia | October 26th, 2023

On October 24, the Department of Justice announced that it had settled a whsitleblower’s allegations against Dallas-based AECOM, arising from services it performed following Hurricane Katrina in 2005. According to DOJ’s press release:

AECOM, an architecture and engineering firm based in Dallas has agreed to pay $11.8 million to resolve allegations that it violated the False Claims Act (FCA) by knowingly submitting false claims to the Federal Emergency Management Agency (FEMA) for the replacement of certain educational facilities located in Louisiana that were damaged by Hurricane Katrina.

Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act and corresponding rules, FEMA provided institutional applicants, such as schools and universities, with public assistance (PA) funds for the repair or replacement of facilities damaged by Hurricane Katrina. Funding was limited to the cost of repairing a damaged facility, unless that cost exceeded 50% of the facility’s replacement cost, in which case full-replacement funding was available.

Between 2006 and 2010, AECOM served as a technical assistance contractor in support of FEMA disaster recovery efforts following Hurricane Katrina. In this role, AECOM prepared requests for PA funds on behalf of applicants that included, among other things, damage descriptions, estimates of the cost to repair damage and estimates of the cost to replace structures.

The settlement resolves allegations that an AECOM project officer deployed to Louisiana for the Hurricane Katrina recovery effort submitted to FEMA fraudulent requests for disaster assistance funds for several educational facilities in New Orleans, which resulted in certain applicants receiving PA funds in excess of what FEMA rules permitted, including in some cases because the facility was entitled only to repair rather than replacement costs. These facilities included the gymnasium, student center and electrical grid at Xavier University of Louisiana and a cafeteria building at the Roman Catholic Archdiocese of New Orleans’ St. Raphael the Archangel School. According to the allegations in the government’s complaint, AECOM supervisors reviewed and did not correct disaster assistance applications that included materially false design, damage and replacement eligibility descriptions.

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The whistleblower — a project specialist at the company — will receive more than $2.4 million (a 20% relator’s share), the government announced.

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