April 29th, 2008
10:34 AM ET

They gave him money to fix his house. Now they want it back.

New Orleans residents affected by Katrina may have to pay back the money they were given in grants.
New Orleans residents affected by Katrina may have to pay back the money they were given in grants.


Randi Kaye
360° Correspondent

Every time I go to do a story in New Orleans I hold onto a little piece of hope that things are going to be better this time.

That the community is going to be more healed, that the town is going to look more alive, and that the programs put in place to help homeowners are actually doing so.

Well, I should have known better.

Imagine this: Louisiana residents – after all they’ve been through and all they’ve lost – are now being billed by the state for nearly $200 million!

Yes – you read that right, $200 million.

Why? Well – it turns out the contractor hired by the state to dole out federal dollars designed to help homeowners rebuild... uh... well... how do I say this... OVERESTIMATED!!

The contractor, ICF International, may have overpaid as many as 5000 residents. In other words, the state gave these people too much grant money after state inspectors estimated home damages.

In all, homeowners could be asked to pay up $175 million. Some families could be on the hook for $150,000 each!

I interviewed a New Orleans man named John Montegut who had spent about $100,000 repairing his home. About $20,000 of it was from a state grant, part of that federally funded Road Home program to aid homeowners. Well, he just got a bill in the mail for $13,000 from the state telling him they’d overestimated his grant payment.

How’d that happen? Montegut told me the state’s inspector included in his damage claim the repair of six skylights (he doesn’t have any skylights!!) and the replacement of 22 windows which were far above the water levels and completely unharmed. Montegut says the inspector was in his house for five minutes and he was not allowed to see the damage claim so had no way of knowing what was included.

Here’s the killer: Montegut doesn’t have the money to pay the state. He spent that money fixing up his house. But he and every other homeowner who got a grant signed a contract with ICF agreeing to pay money back if overpayments were later discovered. Now remember, he wasn’t even allowed to see his paperwork. Montegut told me he never expected he’d owe the state money. But it turns out the actual cost of repairing his house was far greater than the grant anyway.

The contractor, ICF, told us it is a federally funded program and the state is demanding that it ask for repayments. ICF is promising a “compassionate process” and says it doesn’t expect a large number of families to be affected but we’ve learned from an advocate for the homeowners about 300 families have already been billed. The state plans to fine ICF for its mistakes and it plans to hire an auditor to review every case.

Is it cruel, as homeowners have said, to ask residents for money back after all their suffering following Hurricane Katrina? Or, as resident John Montegut told me, “They (ICF) made mistakes all along, why should people suffer?” What do you think? We'd like to know.

Program Note: See Randi Kaye's “Keeping them Honest” report on AC360 tonight at 10pm.


soundoff (601 Responses)
  1. brian newsome

    i just cant believe their inneptitude... what a sad sad day. the state on la. should eat the money because they have failed miserably..

    who is judging these people...rating them at work for their performance?

    April 29, 2008 at 5:25 pm |
  2. Chad

    Something smells funny in this story. For 100k you can tear a good size house down and darn near rebuild from bottom up. Where did the other 80k come from that he used to 'repair' home house? Are we to believe that they 'underestimated' the repairs on the house by 80k(now 93k) but overestimated others by 150k? There certainly isn't a home in the ninth ward(as the graphic implies) worth over 100k.

    Something sue stinks to high heaven about this ICS group doing such a poor job, and the goverment holding the wrong people accountable for the mistake. But you also got to question something real smelly about this story and the way its presented. Give us the WHOLE story here, not just what you can sell. Who is John Montegut, and what exactly did he spend over 100k on? How much was actually necessary repair?

    April 29, 2008 at 5:25 pm |
  3. bruce

    correction to previous comment:

    Nice to know that Louisiana did get a new governor. Too bad it wasn't sooner. I wonder how long he will last when trying to clean house. Hope for the best..

    April 29, 2008 at 5:24 pm |
  4. Chris

    What a disaster. I've been down to NOLA 2 times to volunteer with ACORN and it makes me sad, but doesn't surprise me that the government is adding insult to injury. In America we still have a city with
    hotels, gambling, Bourbon St., shopping, and bus rides through the lower 9th, but we can't seem to get anyone in lower tax brackets back up and running.

    Maybe the government will start charging residents for their oxygen usage.

    Chris, Maryland

    April 29, 2008 at 3:49 pm |
  5. Mitch

    This is a travesty. Grant recipients being forced to sign contracts with the clause of having to repay if overpayments were "later discovered" – that doesn't seem right . . .

    April 29, 2008 at 3:48 pm |
  6. Wylesha

    I am outraged by this developing story. How dare the goverenment try to charge residents of New Orleans when they have made no efforts to help them in the first place. So what happens if the families are not able to pay? Are they going to rip the families from the homes and leave the on the streets as they are just starting to get back on their feet?! This is ridiculous!!!!!

    April 29, 2008 at 3:48 pm |
  7. Michelle F

    I am a Hurricane Rita "victim", and almost a year after the inspector came to inspect my apartment, I received a letter from FEMA stating that I had to repay the money I received from them. FEMA said that my apartment was NOT damaged, and I had thirty days to repay the "assisted living" money. Apparently when the inspector came to view my apartment it was already in the process of being rebuilt (even though I showed him the pictures of it). I had to write a letter of appeal and attached the original pictures plus a letter from my former apartment complex stating they evicted me due to damage/mold.
    I guess when you are a victim of a hurricane, you become a victim of the government.

    April 29, 2008 at 3:48 pm |
  8. Takira

    Michelle- You just amaze me. I understand your concern for your friends and family in VA and I do sympathize, however, this is not a competition for sympathy. The effects of Hurricane Katrina continue to weigh very heavily on its citizens. This blog taking notice of that is just one way of keeping the rest of the world abreast of the city's progress (or the lack there of )and to point out that residents are still suffering. So while the focus of this blog is about Katrina, I'm sure its in no way discounting the tragedy in VA (fyi, the VA story is on the front page). Thus, your statement was completely unnecessary and totally devoid of the compassion you wish the rest of the world would have for your friends and family in VA. Your friends/family are in my prayers and everyone else affected are in my prayers. And so are you!

    April 29, 2008 at 3:47 pm |
  9. Kristy

    I have been a resident of Louisiana my whole life and must say that this does not suprise me . I expect next we will find out that one of our polititians had a hand in the cookie jar with this contract deal that went bad. These homeowners deserve better than a third world country ran state government. Did you also know that there are still familys in FEMA trailers in Baton Rouge? Louisianians count on yourselves! Boby Jindal you have a mess to clean up!

    April 29, 2008 at 3:47 pm |
  10. Mark

    Sue the federal government for the dyke failures? It is a sate and local responsiblity. I think we should have cut off all relief funding when they re-elected that mayor. We dumped enough money into that hole. Who would live under sea level anyway?

    April 29, 2008 at 3:47 pm |
  11. Bill

    Wait.... they were given a grant... and had to claim in on their taxes. Now they want it back?

    As others have said a grant doesn't have to be paid back. And the fact that they had to claim it on their taxes supports the fact that it was a grant, and not a loan. Monies from a loan are not taxable; monies from a grant are.

    So... they paid the taxes on it... let them keep it. It's a GRANT.

    You want to get the overage back? Get it from the contractor who overestimated. They're the ones who made the mistake! Bet they didn't administer the program for free... so take back the money from them!

    April 29, 2008 at 3:47 pm |
  12. Gary

    First of all, this was a tragic event on a grand scale. The way the article is written – is to invoke an emotional response to a tragic situation. And obviously by some of the comments – it does.
    There are errors made on small project all the time, so something this large is going to have errors. What I find amazing is that all of the fingers go pointing back to ICF and contractors.
    Every one of those 300 families should have known what they were having covered. And the example given suggests that they signed off on what ever the state inspector put down.
    Would you sign a contract without knowing the full contents of it ? Responsibility runs both ways.

    April 29, 2008 at 3:46 pm |
  13. Gary

    If a tornado hit my home, I wouldn't ask the government for money. I would call my insurance company and take care of business. If I didn't have insurance, then that is my fault.

    If you signed a contract, then you owe the money.

    April 29, 2008 at 3:45 pm |
  14. Joshua

    I’ve been dealing with the aftermath of Hurricane Katrina since the beginning and am still actively involved through my work. Over the course of the last two years I’ve tried to wrap my mind around why this event has been so difficult for the citizens of New Orleans to get through, and it has finally clicked. It takes a complete paradigm shift to understand it, or you will never get it. Imagine you’ve lived your entire life through government handouts, living in one of the most poverty stricken areas of the United States, where education is minimal at best and dealt with government corruption down to even its lowest levels. Once you get that part down you may be able to start to understand how a simple government grant program designed to help Hurricane victims could be completely botched. My advice; stay tuned in, we’ve only reached the intermission of Hurricane Katrina, the eye of the litigation storm is beginning to come ashore.

    April 29, 2008 at 3:45 pm |
  15. Deborah

    Why doesn't the government go after the people who really cheat? I watched hundreds, if not thousands of people take FEMA money after the Northridge earthquake in 1994 that they were not entitled to. People built in-ground pools and redecorated their homes when all they had initially lost were a few cups and saucers. The people of New Orleans lost everything in Katrina and deserve whatever the state of Louisiana and the federal government can give them, not take away!

    April 29, 2008 at 3:45 pm |
  16. Randy

    ICF shoudl be held accountable not he people of LA. The people did not malicously take the money, it was given to them based off of an assessment they were not allowed to see or verify. As for the individual who assesssed Montegut's residence, they should be fined for filing a false claim.

    April 29, 2008 at 3:45 pm |
  17. Reality

    Um, I own a house. I have INSURANCE. It is required by my mortgage company. And if I lived in a place that was below sea level I'd have flood insurance as well.

    If you can't afford the insurance then you can't afford to own a home. You rent. Or you live somewhere that is, say, above sea level.

    I'm not without compassion and helping out folks who got screwed first by nature and then the government, but why are we paying money to people who will AGAIN not have insurance to rebuild where they WILL get flooded again so we can bail them out another time?

    The deal should be this: If you get cash from the government because your home flooded you have to relocate somewhere else that is not in a flood zone. And that land can NEVER be used for building again.

    April 29, 2008 at 3:45 pm |
  18. Dave

    Another fine example of government at work. It frustrates me, to no end, to see how the people of our nation receive no, or very little, benefit from our government yet continue to look to "Big Brother" to meagerly dole out the money we hard working citizens earn. Our current Presidential candiate's continue to tell those whom are hurting that "we can do more, give more". When we realize that we (the people) have to hold government accountable for their wasteful spending and start demanding value for every dollar they take?

    April 29, 2008 at 3:44 pm |
  19. David

    Ok I do feel sorry for these people. To an extent. When this happened everyone org out there asked for money to help these people and millions were given out... Not one or two million but MILLIONS with a Capital M. Were did that money go? What about the people and towns who took these people in but then the crime rate went thru the roof?? Or the people destroyed the apartments and or hotel rooms they were staying in. What about the FEMA cards that were handed out with a couple hundred bucks on each card. This money was for food, clothing or what have you. Later it was found out that many people used the money at strip clubs and buying booze.

    I am sorry. It has been years, MILLIONS of my tax's dollars have been spent. If it is not working for them down there then they need to move on and stop looking for hand outs. I just cant feel sorry for these people any longer.

    Ok Flame me. Wont hurt my feelings and I believe a lot of people feel the way I do...

    April 29, 2008 at 3:43 pm |
  20. jane

    If a tornado came and took my home from underneath me tonight I would'nt receive any "grant" money from the taxpayer. I am a little upset to constantly hear of people not having insurance to cover their residences and commercial businesses. Personal responsbility is the answer to many of lifes circumstances...

    April 29, 2008 at 3:43 pm |
  21. Ryan

    This just goes to show you the USA is in NO WAY the greatest country in the world, it is the current super-power of the world. But this is a situation that just adds to the many problems that this country faces. This is a counrty that has LOST its proirities, while the rich get richer, the poor get poorer. Interestingly enough that John Montegut had spent $100,000 fixing his home, and then the same people that sent him $20,000 to help him out, later states oh, by the way, we over estimated you owe us $13,000!! Now, id be interested to know how much interest the state/corp. wants as well.

    April 29, 2008 at 3:43 pm |
  22. Ryan

    This is ashame! I have friends that didn't take the road home money because they knew there would be some kind fiascal. The feds gave billions for road home and only a small portion ended up in the hands of people. The rest was skimmed off by greedy governments, buisnesses and contractors. Now they want to take back what little they did give out. People would just be better off telling the government they don't want there money nor there help. It's so insulting ....... that the poor man gets a 20,000 grant and they want 13,000 back and he spent 100,000 repairing the house. How wrong is that. Not to mention that we all pay taxes and this is how we get taken care of when we are in need. Sound like taxation without representation.

    April 29, 2008 at 3:43 pm |
  23. lisa

    I think this is horrible. There ought to be a law holding the ICF responsible!

    April 29, 2008 at 3:42 pm |
  24. Dawn

    I'm glad they are demanding repayment. If the people received too much money, it should be repaid or it is fraud. It's about time the government is going after people that receive benefits that either don't need it, or that receive too much!!

    April 29, 2008 at 3:41 pm |
  25. CynthiaC

    This company got BIG bonuses not too long ago! For what i dont know. The staff and director were showered with huge bonuses under the pretext of doing a good job. A good job of screwing the victims of this great tragedy. Maybe the new governor has a bit more backbone than 'Henny Penny.' Maybe. We have yet to see. Stay tuned.

    April 29, 2008 at 3:41 pm |
  26. Michael, CA

    What about personal responsibility? Why is it expected that the government come in and bail everyone out? Seems to me that everyone affected was aware of the risk posed by the weather and yet

    -Chose to live in New Orleans

    -Chose not to carry enough insurance to cover their assets

    -Chose to accept grant money which carried a stipulation that it may have to be repaid

    I'm sympathetic, but I don't expect anyone other than my insurance company to pay to bail me out in these cases. If you get caught with your pants down, you live and learn and do what you can to ensure it doesn't happen again. You don't blame the government because of events brought on by your own lack of personal responsibility.

    April 29, 2008 at 3:41 pm |
  27. gene powell

    ICF should be fined twice the amount overbilled and the people should be left alone.

    April 29, 2008 at 3:40 pm |
  28. Nick

    If they were grants by the Federal Government and written by a third party company, why do the homeowners need to repay the State Government? Sounds like another case of fraud on a local level in Louisianna. I don't believe that you can ask for repayment from the individual homeowners unless they had the opportunity to sign off on the estimate. This one falls on the shoulders of the State of Louisianna and ICF. If ICF inspected these properties and did not let the homeowner look at the estimate, then ICF should have to pay the bill. Someone at ICF should be fired and whomever hired ICF should be removed from office. It boils down to responsibility. Personal responsibility to read what you sign. Corporate responsibility to notify customers and train employees properly. Government responsibility to contract the best company for the job.

    April 29, 2008 at 3:39 pm |
  29. Evan

    It is not NOLA's government that is causing all of these problems. It is the USA government.

    April 29, 2008 at 3:38 pm |
  30. scott

    It is a shame that these people are getting screwed again. And I don't mean to say this in a angry or insensitive way. I'm sure people in this part of the country love the place where they live and can't imagine living anywhere else. But the fact is this is going to happen again and again and again. These homes can't be rebuilt time and time again. With the grants that these families received they should have moved. The rest of the country now has an abundance of brand new homes that builders can't sell. With foreclosures sky rocketing money should be spent getting these families into homes and communities that need people to strengthen them. The rebuilding of New Orleans and the surrounding area is draining American resources. The only way that the city and the surrounding areas can and should be rebuilt is by the natural need to build. New Orleans will never be the pre Katrina city it was. It's going to be something different. It would appear the only thing that the rebuilding effort is fostering is the same corruption that existed before. That's the only thing the hurricane didn't blow away.

    April 29, 2008 at 3:37 pm |
  31. Emily Bell

    My family was fortunate. I moved from NOLA a year before the storm and miraculously moved my mom from NOLA ONE WEEK before Katrina hit. She had not had time to sell her house though, and when the city was flooded so was her house and she took a financial hit. She gutted her own home (to save money) and sold it for a fraction of what it was originally worth. Now, the city of New Orleans is trying to get money for utilities that she never used. The week she moved out, she shut off all water, gas, etc. Then she sold her house. The city is trying to collect on services that she did not receive from the time of the storm through last year. It wasn't even her house at that point.
    I love New Orleans, but nothing will get better if the government continues to financially rape its residents.

    April 29, 2008 at 3:37 pm |
  32. Dave

    I find it disgusting that our Government will pay BILLIONS upon BILLIONS of our hard earned tax money they so easily collect to build and rebuild other countries, then turn a cold shoulder to our own citizens in their times of need. Where have our priorities gone?

    April 29, 2008 at 3:36 pm |
  33. Gerald Tarrant

    It sounds more like the guy doing the work on his home added additional stuff to his damage claim and he got stuck with the bill for the extra. Investigating the company that did the repairs would go a long way, especially since he wouldn't let him see the paper work. I never would have signed off on it.

    April 29, 2008 at 3:35 pm |
  34. pat painter

    ICF should be responsible for the overpayments, not homeowners. You can't squeeze blood from a turnip, so to speak, and you can't honestly expect the average homeowner to be able to pay these bills. They have enough to worry about. When will they stop tormenting the people of New Orleans and instead hold the right people responsible for this awful mess?

    April 29, 2008 at 3:35 pm |
  35. dan

    Unfortunately many people abused the system and took money dishonestly. Now the government who screwed up in the first place is going after everyone.

    April 29, 2008 at 3:34 pm |
  36. JS

    hey cindy, the"ridiculous" government we have here is the same one you have. You seem to be fortunate to not have gone through a catastrophe that this country was not able to handle....on ANY level. Enough about our local government. I know that the entire world thinks that we have the market cornered on inadequate & corrupt everything, but maybe we just don't hide these things like, say, the governors of NY & NJ? or perhaps DC...Marion Barry anyone? I just hope that you love your home as much as we cherish our crazy world. Would you go through all of this BS & stay? We wouldn't be anywhere but here.

    April 29, 2008 at 3:34 pm |
  37. scott

    You would think the government would fine ICF for not showing the homeowner the paperwork that they are signing and agreeing with.
    That is a legal document and legally has to be read before being signed.

    April 29, 2008 at 3:33 pm |
  38. Meki Mull

    Our government does very little for the people now. Its more concerned about not offending anyone. But, I wish the Katrina ‘victims’ would do something positive for a change instead of whining all the time.

    April 29, 2008 at 3:31 pm |
  39. Ed

    The federal government should have insisted that audit controls be put in place from the beginning. The state government was supposed to oversight the contractor. The contractor wouldn't let the homeowner review the grant application. This was a system guarenteed to have lots of mistakes occur. Everyone is at fault except the homeowners getting screwed. To ask for repayment is absurd and a cruel joke.

    Our tax dollars at work. Pathetic.

    April 29, 2008 at 3:31 pm |
  40. Maria

    The problem was not created by the government in NOLA or by the State. It was caused by the OVER paid company: ICF International, based in Fairfax, VA. ICF was hired by the State and it was supposed to have the experience needed to manage the rebuilding money.

    April 29, 2008 at 3:30 pm |
  41. Chris

    I understand that this is a huge story that the state of LA would ask for money back. I just recently moved to the Mississippi coast, and there is still a lot of damage here. Could there be a story that someone could do about the Mississippi Gulf Coast?

    April 29, 2008 at 3:29 pm |
  42. Carolin Elsey-Lawton

    I am not surprised at all. How unfortunate that this has to happen to them. But we are a greedy country, what do you expect?

    April 29, 2008 at 3:29 pm |
  43. Mark

    If the grants were overpaid, the money should be returned in a fair way. We can't be expected to look the other way when the amount exceeds 1.7 million in over payments. Every taxpayer is the ultimate loser, when goverment spends without any recourse. We need to take note the next time elections roll around and pay attention to whom we are voting in!

    April 29, 2008 at 3:28 pm |
  44. Kendall

    How come CNN doesn't show this particular man's home? Instead they show a run down shack. My guess (and CNN only leaves me guessing) is that it was a very nice house and that may take away from the pity factor. The man got more than he was entitled to and according to the agreement he signed he needs to give it back. Way too many facts left out here by CNN.

    April 29, 2008 at 3:27 pm |
  45. Andy

    Seems to me that ICF ought to pay back the gov't for the bad estimates. Let the homeowners keep the money – ASSUMING that they actually spent the money for repair work.

    April 29, 2008 at 3:27 pm |
  46. Lumberjack

    If it's not in writing and you didn't sign it there's no legally binding document. Case closed.

    April 29, 2008 at 3:27 pm |
  47. Leah

    Honestly - does it really surprise us at all?! Let's take a long look at the corrupted history of Louisiana politics and how the state government has treated their people. Remember - this nation was ready to help them before and immediately after Katrina; however, their noble New Orleans Mayor and Governor said, "No, we have this under control." Yea, right! It took the city of Houston as well as other cities in Texas to open their doors and get those people out of that horrible mess. Louisiana has always been corrupt, and I don't see that changing anytime in the future. So, does this surprise me that the State is now requiring those folks to repay the overages? No, not at all.

    April 29, 2008 at 3:27 pm |
  48. Thomas

    Ummm... seems to me that the ICF numbers were...... ESTIMATES?

    Good grief! It is lunacy to expect money back, especailly after the real costs were invariably higher.

    It's not like this is a big moneymaking scam.

    After rereading it, I see that it was not necessarily expected to totally cover it. But still, it's pretty low to ask for the money back.

    April 29, 2008 at 3:26 pm |
  49. Diana Litton

    My family has lived in Southern Louisiana for over 18 years now. We love the area and have a lot of pride in calling ourselves residents. As more and more time goes on, I am realizing that the people of New Orleans are facing a "Road Home" with road blocks and impassable bridges. Do the policy-makers really want New Orleans to recover or are they just trying to make the appearance of effort? It is unbeliveable that things like this are still happening long after the flood waters have gone. The national government was mostly to blame for the initial aftermath but the whole group from top to bottom are to blame for this.

    April 29, 2008 at 3:26 pm |
  50. Mark

    Francie, this isn't a "country's" fault, it's an individual–i.e. the inspector. The government is simply seeking accountability for grant money funded by TAXPAYERS, something that I, as a taxpayer, fully approve. Please read that it also mentioned a compassionate process.

    This has nothing to do with the government, it has to do with a grant program totally unprepared for the devastation dealt by Katrina. Blame the government all you want, but soon after, please head up to Canada or down to Mexico.

    April 29, 2008 at 3:26 pm |
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