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. Donna Tucker

    Hopefully this is my last comment. The problem of fraud and misuse of funds did not start with Hurricane Katrina. Fraud and waste has been going on for as long as humans have been around. There was just a huge story on the waste and fraud by the Veterans Administration, the military and other government agencies. There were people who took advantage of funds from Hurricane Katrina, there were people who were unappreciative with help and there were people who were outright bandits during and after Hurricane Katrina. Many people have commented that they are sick of hearing about it and that others from other areas were affected by Katrina and other storms who are ignored. All this rings true and maybe even more things will come out. So why is Hurricane Katrina always brought up? Because the ENTIRE world watched our Federal, State and City governments mess up big time and that is egg in the face no one wants. Now our governments and citizens of the USA are trying to "throw out the baby with the bath water!" Please, my fellow citizens of the US, lost is lost. I lost my home, my job, close friends and even my church was lost. For people to tell me, hey it's been 3 years so get over it, is cruel and unfeeling. There are many that struggled and are still struggling but we are fighters and making it. I would not tell people how to grieve nor negate their struggle. All of us did not get rich, all of us are not living like fat cats and all of us didn't commit fraud. Like in any situation, the bad folks make a better story and get more pubilicity! Our stories of lost and struggle don't make good press. I pray that all the hard nosed individuals never experience lost of everything in one day, but if they do, I pray they receive the compassion they can't seem to find for others. My last three years have been hard but I am blessed and have moved on, doesn't mean I don't grieve. I grieve quietly because America is not interested in my grief. I get it. That man will have to pay that money back like all others whether it is fair or not fair. He will have to pay it back because the little man always pays for government err, just like it is America's working middle class that pays the bills for America. Thank you for reporting this story. It is good to know that some people are still out here who understand the insanity of dealing with the Federal, State and City governments! Peace to all.

    April 30, 2008 at 11:04 am |
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