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. mark

    this is just one example, what about all the examples of the people who abused the system? i spent 2 1/2 months in nola after the storm and wittnessed many abuses by all sorts of people, citizens and goverment. i saw macdonald's offering $4000 sign-on bonuses and $12/hr, but they couldn't get anyone to work for them. i saw so many able bodied people opting to spend thier fema checks at the mall on junk instead of working. i still see people living in houston who won't work blaming everything on the storm. it's two and a half years later it's time for people to stand on their on feet and stop relying on the goverment for everything.

    April 29, 2008 at 12:53 pm |
  2. mary

    if the damages were overestimated, wouldn't the homeowners have money left over after fixing their damage?
    so, wouldn't they be able to just give that left over money back?
    or did they decide to spend it on other things?

    April 29, 2008 at 12:53 pm |
  3. Gail

    I am so over this – my parents are 75 years old and could not start over so they used the Road Home money to rebuild their home. Where are they suppose to get the money to repay the Federal Government. It's bad enough that they had to go into their savings (all of it) because the little money that was given to them was not enough to totally rebuild. I say good luck trying to get this money back, because I will tell my parents not to pay, especially since they don't have any money for themselves.

    April 29, 2008 at 12:53 pm |
  4. Jayne, Connecticut

    I think that since they were not able to sign off on their estimates from the agency, that none of them should pay this money back. Maybe they should counter sue for stupidity!!!

    April 29, 2008 at 12:53 pm |
  5. Lula

    I once worked with a woman right after the katrina incident here in Nashville, TN who completely abused the system. Not only did she make 32k at a position that was handed to her out of pity, she managed to pocket 2k, then another 2k from FEMA along with an additional 10k from FEMA for her 'house and car' that were damaged by the storm. She enjoyed attention from people and even went so far to get pity during local thunderstorms by stating how severe weather reminded her of the hurricanes. She admitted to me she left that Thursday and was not in the actual hurricane or evacuation traffic. Funny how she lived off of the government before the hurricanes and had no working vehicle to begin with but managed to comfortably live here in TN off of free housing, electricity and food stamps for over a year. I always saw her getting her hair done and buying new outfits but the only bills she had was a cell phone and car note. She cried when after 6 months, she was forced to pay her own electric bill. Abuse like this is what gives hard working people who need government grants to rebuild look bad.

    This story is in fact sad, why lend money to residents wanting to rebuild then extract it?

    April 29, 2008 at 12:53 pm |
  6. Mike, Dallas, TX

    OMG!? The Government screws up again???? Well let me search for my "surprised" face! The poor people of New Orleans; why is it (in this case) Mr. Monetgut's fault when he was not allowed to see his estimate?? NOT ALLOWED TO SEE THE ESTIMATE??? Hello! I find it disgusting that the State of Louisianna has the audacity to ask Mr. Montegut and the other families involved for the money back! Let the court's decide! The ICF screwed up!!! What country are we living in folks??? Sue the H.E. double toothpics out of ICF for wrongful business practices and committing to defraud the State of Louisianna for it's "estimates." Don't make the already emotionally distraught and torn citizens of New Orleans pay for yet "another" Govt. contract gone awry. THAT IS UN-AMERICAN!!!

    April 29, 2008 at 12:53 pm |
  7. Emily Coletta from Elmira, New York

    I pay my taxes. When my house catches fire, the fire department doesn't present me with a bill to put it out. I can't believe the gall of our government to demand repayment for the assistance they offered.

    A grant is free money, not a loan. If the government gave too much, its on them. At least the victims did something productive with their money–rebuild their lives. What would the government have done with it? Burned it on Iraq, I imagine.

    April 29, 2008 at 12:52 pm |
  8. Morgan, Ottawa, Canada

    Your whole country is sick and is not getting better. If the contractor overestimated then they should pick up the tab. But in your country, as well as in mine, business always takes the profit but is never responsible for losses.

    April 29, 2008 at 12:52 pm |
  9. Sarabeth, Louisiana

    That is absolutely ridiculous and very sad. Good article, but please don't forget about the parts of New Orleans that are alive and kicking because they do exist.

    Baton Rouge, Louisiana

    April 29, 2008 at 12:51 pm |
  10. John

    Causing a need to return 65% of monies given is not a sign of overestimation, it is a mark of negligence. If the error is caught and affected parties notified prior to the money being spent, then the overpayment should be returned, but if the homeowner is doing with the money what they were supposed to do with the money and have already spent it on repairs, then the money should be considered gone. Final note, any costs and stress caused by such negligence should also be recoverable with the homeowner suing ICF. There is no excuse for such incompetence from government contractors.

    April 29, 2008 at 12:51 pm |
  11. Laurie, IL

    What a disgrace! The state of LA and our federal govt should be ashamed of themselves. They owe the people much more than what they have received. Shame on them for now asking for a refund because of their mistakes. What about the $5 billion that was somehow lost in IRAQ on contractors? They can eat that mistake, but not this! Our founding fathers are surely screaming from their graves for this latest injustice being heaped on all the others we've already seen in New Orleans and other areas affected by Katrina. I'm shaking my head in disbelief!

    April 29, 2008 at 12:50 pm |
  12. Steve

    Just another fine example of the total incompetence of any level of government as stewards of taxpayer funds.

    And we have Hillary and Barack that wish to do soooooooo much more for us.

    April 29, 2008 at 12:49 pm |
  13. Dottie

    Why hasn't the government found out where the millions of donated money for katrina been located ? Every thing has been kept hushed. Now the crooked estimates without owners' signatures are still being demanded ? Come On ! Isn't there anyone out there with even a small consciousness of honesty able to step in and DO SOMETHING ABOUT IT?

    April 29, 2008 at 12:49 pm |
  14. Sib

    People go to jail as criminals for less!

    April 29, 2008 at 12:49 pm |
  15. Vignesh

    Normally if a contractors "messes up", they take the cut. Basically, they take the money out of their own profits. Generally, thats the way it works, and if an individual messes up, they too take the cut.

    April 29, 2008 at 12:48 pm |
  16. Joe

    There are many people here in LA that needed money and received assistance. It's a tragedy to have someone who ligitamately needed the grant....received the grant...used it for it's correct purpose and is now asked to pay it back. I live here. I lost everything and I have rebuilt. I would like to see you attack this story from a different angle. I personally know people that got so much money from Grants and Road Home and Insurance and FEMA that they now have rebuilt there homes and have paid off their mortgages. In other words the system has overpaid them so much that they were made better than whole. At the same time you have people still in FEMA trailers waiting for assistance. A very large amount of people recieved too much money, trust me I am here 24/7... I see it everyday.

    April 29, 2008 at 12:48 pm |
  17. Libby

    Oh no...tell me this is not happening. Katrina has been one of the single most defining moments of disappointment for our current administration. The way that these people have been treated, all they have gone through and still go through causes me great embarassment for my country. How does this happen? My thoughts....bill ICF $17.5 million and leave those people alone to get their lives back together. The government has caused them enough pain and suffering. Geez...can the Bush administration get anything right????

    April 29, 2008 at 12:48 pm |
  18. Roger

    I think this is what happens when the government starts redistributing wealth. Remember, every dollar the government gives to someone is taken from someone else.

    As in so many cases, responsible people who don't build in flood plains and who pay for their own insurance get screwed by the government via taxes to pay for freeloaders.

    Not one penny should be spent on people by the government for this sort of thing. That's what insurance is for. If a person doesn't buy insurance, and their home is wiped out by a hurricane – TOO BAD! They made a decision. They should live with it. I live in a hurricane prone area and carry no coverage for flooding. If my home floods, I am prepared to accept the consequences. (On the other hand, I made it a point to check that I am not in a flood prone area.)

    That said, inspectors who filed clearly fraudulent inspection reports should be punished. They were paid to do a job they clearly did not do.

    Katrina was a disaster. But government incompetence and waste of tax dollars is a disaster of similar magnitude all its own.

    The best that we can hope for in the future is that government GET OUT OF THE WAY.

    April 29, 2008 at 12:48 pm |
  19. Lisa

    So they are upset that they have to give free money back? This isnt supposed to be a windfall and given the outright fraud that has plagued the whole Katrina fiasco (like LV bags with the debit cards) I dont think its the taxpayers responsibility to shoulder this mistake.

    People signing papers they didnt read yet again? This is getting to be a pretty handy excuse these days.

    April 29, 2008 at 12:47 pm |
  20. Linda in FLA

    If the home owners could not see the estimates, then the contractor company should be held liable for the repayment, not the homeowner. The contractors committed fraud. Why should the people of NOLA be held accountable for it? Let me guess, is ICF a subsidiary of Halliburton?

    April 29, 2008 at 12:46 pm |
  21. Dave; Arlington, VA

    Well overshadowed by the war and the economy, the situation in New Orleans is just pathetic. It makes me sick to know just how much money is being thrown at big time contractors in Louisianna, then to hear that some greedy company wont eat into its HUGE profit on this disaster to right their own error, but instead malicously pass the buck on to poor people trying to get on with their lives...well that makes me just want to vomit. These contractors seem incapable of understanding the, "bitting the hand that feeds you," concept; I think it's high time we vulnerable middle and lower class started bitting back!

    April 29, 2008 at 12:46 pm |
  22. neal

    This is so typical of our government. Now the government's going to spend more money auditing a government contractor. I'm sure that the auditing agency will be contracted out as well. I don't think enough has been done for those people in New Orleans to begin with. Leave them alone! They've suffered enough. Bush's too involved in the war over oil to care about people in this country. That's why the housing market and economy is in the shape it's in. THANKS BUSH FOR ALL YOU'VE DONE and the republicans that voted him into office! I'll take Bill Clinton's infidelities over Bush's war anytime. At least Bill cared about the American people.

    April 29, 2008 at 12:46 pm |
  23. Deborah Ortiz

    The money hungry administration strikes again!

    April 29, 2008 at 12:46 pm |
  24. Yankee Air Pirate

    No surprise at all,people are always trying to "game the system ".There were numerous other instances of abuse during this tradegy.

    April 29, 2008 at 12:46 pm |
  25. John

    Why are these people described as victims?and why is the govt. responsible for helping them rebuild? Some people feel the govt has an obligation to PAY for them to rebuild. I think the govt has no obligation to PAY for someone to reubuild there house. What happend to all that "charity" money all these Hollywood liberals raised for them?give me a break. NOLA was and is a dump, remember this is the same town that re-elected Ray Nagin... people get the govt they deserve.

    April 29, 2008 at 12:45 pm |
  26. Denise

    Why do these stories only come out of New Orleans and not Mississippi where Katrina hit worse. The people of Mississippi have been forgotten in the media but have come together and supported each other and worked hard to rebuild.

    How about more success stories.

    April 29, 2008 at 12:45 pm |
  27. Kevin

    Only in George Bush's America.....

    The wealthy of this country get wealthier and are actively remove large amounts of money from the country's economic system at a staggering rate. And who gets to pay the bill?
    Homeowners being asked to return money to the state. (In the Monopoly game it was called "bank error in your favor" and you didn't have to return it)
    A woman who is in need of daily care for the rest of her life because of a traffic accident gets sued by the wealthiest company in America – they back off only because of bad publicity.
    And just yesterday, we learn that soldiers in our army can't even rely on working plumbing in a permanent structure

    How much more proof do we need that the infrastructure of this country is falling apart? The government is living on credit now because it's given huge tax breaks to the wealthiest of its citizens on the backs of the hard-working majority. The US is fast becoming a 3rd world nation right before our eyes, yet no one is doing anything to reverse it.

    very sad.

    April 29, 2008 at 12:44 pm |
  28. Megan

    Wow Cindy...I don't think it's NOLA and LAs ridiculous gov't...I believe it MIGHT be the federal gov't. Be careful...it could happen to you.

    April 29, 2008 at 12:44 pm |
  29. joe

    There should have been checks and balances in place. However, if people were dishonest and listed false items such as skylights, I have little sympathy. It is no different than the IRS. If you cheat on your tax return, they can come back on you for the money you owe the government. Why should this be any different. Millions of dollars have given to aid victims. If one person is going to try and cheat the system by submitting false claims information, they should have to pay it back. You would have to pay the IRS back for submitting false deductions.

    April 29, 2008 at 12:44 pm |
  30. Jims1973

    $2 Million... The government wastes more than that in a hour... Let it slide! If you raise taxes 0.00001 % you'll recoup that money in less than a month!

    April 29, 2008 at 12:44 pm |
  31. Doug

    The problems with New Orleans continue to amaze me. I would like to know how the current administration can explain the continued incompetence in the handling of this entire situation. There is such blatant disregard for the victims and the rebuilding of this city from the government. The only thing this administration was interested in was a photo-op. Now the state is trying to correct the unprofessional handling of the estimates. Let it go. If the state is so lax in their handling of the estimates then the state needs new politicians. Maybe ones who would be fiscally responsible. Had the current state politicians been fiscally responsible, this would not have happened.

    April 29, 2008 at 12:42 pm |
  32. Gerald Hobson

    The State of Louisiana is bullying their own residents. ICF is the party at fault here, and they should be getting the bills for repayment.

    April 29, 2008 at 12:42 pm |
  33. FatDan

    United we stand, together we fall.

    April 29, 2008 at 12:41 pm |
  34. McCain-in-4, Clarksburg, MD

    It is disturbing, but not surprising, that a government service was contracted out to the lowest bidder, only to find the winner wasn't capable of handling the service as advertised. If citizens are left holding the bag, then it has to be the state government's responsibility to criminally prosecute the company's officers then black-ball those responsible from ever providing a government service.

    Martha Stewart can no longer run her own company, because she is a felon. It appears she will not be alone.

    April 29, 2008 at 12:40 pm |
  35. Dg

    ICF made the mistake, let them repay the government. It is totally unrealistic to expect homeowners who have already lost everything and endured so much to now risk losing their homes in order to repay the government. When will the maddness stop?

    April 29, 2008 at 12:39 pm |
  36. Michael, NC

    I have been to New Orleans twice, in late 2005 and early 2007, and I know that these people need this money more than the government. The extensive work needing to be done on these homes and communities is monumental. I can't believe they wouldn't even let these people see the bill before signing it over to the heads of officials down there, then have the audacity to demand repayment. It's a damn shame that people in dire need like this are getting screwed by the system. I have made a lot of close friends during my visits, and I wish the best for them.

    April 29, 2008 at 12:39 pm |
  37. david

    There were reports that alot of residents spent monies on personnal possesions and to top it off they committed fraud by tryiny to conspire in false documentation, which increased their award monies. Again we have an example of a downtrodden and homeless people who only hope for survival is to con their way into free handouts, and in this case they hit the jackpot. one can bet that they are back on the street with their drugs and mad dog bottle of wine.

    April 29, 2008 at 12:39 pm |
  38. Jason

    This story and the email reactions demonstrate where we've come to in this country. It has nothing to do with compassion, but a feeling of entitlement. A man gets $13,000 more than he should get in household repair assistance (essentially free insurance money), and you suggest that he should keep the money. Randi, you should do a story on the unbelievable amount of assistance that has already been poured into that area, and the amount that has been already bilked by the local, City, and State governments. You should do a separate story on how many individuals have scammed the system to receive more assistance than they are entitled to. There are tens of thousands of them out there. The results of a well conducted story will be enlightening, and will show that one victim in this whole ordeal is the American taxpayer. Perhaps the taxpayers are entitled to get that $13,000 back.

    April 29, 2008 at 12:39 pm |
  39. Snacks (The Voice Of Protest )

    I am speechless.. Call your congressman... Call a TV star.. This is a hit so far below the belt I felt it in Texas... These people have suffered enough.. Let them keep the money.. Heck, we should send them more.. As a tax payer,, I would like to see a Government Bill passed for enough money to rebuild every house destroyed by Katrina.. Our Government wastes enough money in one week, to cover the cost of rebuilding every single home lost to Katrina.. Instead of wasting it, Lets put it to some good use..

    April 29, 2008 at 12:38 pm |
  40. Stevesintn

    Never fear, people will be along any minute to blame this all on George Bush!!!!

    April 29, 2008 at 12:37 pm |
  41. USAman

    It seems to me, from the story of John Montegut, that ICF needs to be investigated. If they included payment for damage to undamaged articles and/or added damaged articles that did not even exist, and did not allow the homeowner to verify the final inspection details, our extremely unfortunate fellow Americans in Louisiana are being Katrina'd again.

    Was ICF just trying to be nice and help homeowners get more money or were they tired and got sloppy? As long as all the money has been dispersed there can't be any claims of embezzlement. After all that's happened after Katrina we can't allow THIS to happen. It's easy for me to say, "if I had the money I would pay it", but I would.

    Let's hold a USA wide benefit concert/telethon for these people. I think millions of Americans can still afford fifty cents or a dollar each. There are a lot of high profile Americans already trying to help. I don't expect them to pull the money out of their own pockets, (which they could easily do), but they can certainly put a plan like this into action.

    April 29, 2008 at 12:37 pm |
  42. Buster

    I find it ironic that you never once heard the folks out in California complaining when the massive wildfires burned homes and property, why?? because they were to busy picking themselves up and doing what they had to do, instead of crying "poor me, help me"

    April 29, 2008 at 12:35 pm |
  43. Sarah H

    "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."

    I agree that they have suffered enough... but I have to ask, did they sign a separate paper from the contract? If so, that's a breach isn't it? You can't exclude the paperwork and have someone sign only the signature page. Then again, if you are signing something and all the pages are there, you should have read through them.

    Good job CNN for investigating it, I love CNN!!

    April 29, 2008 at 12:35 pm |
  44. Alice

    Why am I not surprised?

    April 29, 2008 at 12:35 pm |
  45. Jack

    That's F-ed up! That's all to it.

    April 29, 2008 at 12:35 pm |
  46. John, Maryland

    I am not surprised by this. Contract issues continue to be discovered by the Federal Inspector General group(s), Take the latest games the DoD has done with work in Iraq. The sad thing is that Federal employees sometimes are so disconnected with what the impact of their poor project management does to contracts overall that they just assume the impact will "work itself out", because the Federal government has "so much" slush monies.

    The fact is that the programs who run these contracts and grants programs do not understand that monies don't just get transferred from one program to another when things go bad. In the end, someone has to pay and in many cases it may be the people who can't.

    The reality is that $2 million to the government is nothing. There are IT contracts that blow that in a year on software that doesn't work. I would love to see someone take the time to care about this situation, and leave the people alone. Fine the contractor and make them absorb the costs of their mistakes. That way they won't do it again.

    I feel for these people and hope the next administration gets things a bit closer to right.

    April 29, 2008 at 12:35 pm |
  47. Glenn, Virginia

    I think the real question here is why the government keeps bailing people out. We wouldn't be in this spot if we stopped relying on the government and took personal responsibility. Where in the constitution does it say the government will pay for your home after a natural disaster?

    April 29, 2008 at 12:33 pm |
  48. Shaun, Mpls. Mn.

    This is truely stupid! No wonder the Bush administration 2 will go down as one of the worse in U.S. history. Hey George, thanks for 8 years of nothing.

    April 29, 2008 at 12:33 pm |
  49. Alex

    So did these people not even get the opportunity to see the estimates? If so, then they should have no obligations to pay. But if they were given the opportunity, then it's their own fault.

    April 29, 2008 at 12:33 pm |
  50. Emilie

    If the contractor made the mistake, the contractor should pay the state back the difference — not the people who weren't even allowed to see the estimates. How ridiculous that the state would even condone that type of a method in evaluating people's homes and then making them blindly sign something agreeing to repay overestimates.
    As I said, the contractor should repay it — or the state should just eat it.

    April 29, 2008 at 12:33 pm |
1 2 3 4 5 6 7 8 9 10 11 12 13