The Mississippi State Attorney General’s Office records show more than 14,000 complaints resulting after the recovery from Hurricane Katrina and about 1,300 active investigations.
Grant Hedgepeth, Consumer Protection Division director, expects complaints to “go much higher” as insurance payments come in. He said he expects home repair price gouging to pick up as people begin to rebuild and said the department had about 900 complaints about price gouging at gasoline stations and hotels.
The office has made one arrest so far. The owner of two Pearl hotels was arrested five days after Katrina for price gouging. Hedgepeth said as gasoline shortages have abated and people have begun moving out of hotels, other scams are popping up around the state.
Hedgepeth told the Associated Press he recently received his first call about home repair price gouging. Other individuals are posing as insurance adjusters and asking homeowners to pay them the policy deductibles, he said.
The Katrina Fraud Task Force, a collection of about 20 local, state and federal law enforcement agencies, is helping investigate fraud claims.
The U.S. attorney’s office, which heads up the task force, has made four arrests for fraud so far, said John Dowdy, criminal chief for the office.
Dowdy expects the number of arrests being made to increase dramatically in coming weeks. That’s why his office has put together such a broad task force, he said.
“This thing has so many tentacles of federal funds coming in that we wanted as broad a base of law enforcement as we could to look at all of these avenues,” Dowdy said.
In examining similar disasters in Florida, Dowdy said the general rule of thumb for fraud is 3 percent to 5 percent of the money involved. With Congress appropriating $60 billion toward rebuilding after Hurricane Katrina, that could mean between $1.8 billion and $3 billion in fraudulently obtained funds.
Dowdy predicted the percentage may go as high as 8 percent because Katrina represents such “astronomical amounts of money.”
About 400 calls have been placed to fraud hotlines in the two weeks since they were set up by the task force, Dowdy said.
Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Topics Fraud Mississippi
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