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. objective perspective

    i dont understand how we can live in the most powerful country in written history arguably, and a scenario like katrina could develop this way. why is it always tough love and tougher legislation for minorities of all races in the U.S.. that bridge fell in minnesota and the federal government was all over that, even in 911 the government stepped in with reconciliation legislation, countless other examples of favoritism. but katrina victims, they get scattered all over the damn country after being left to fiend for themselves for days without aid. the BIGGEST natural disaster in U.S. history, new orleans was almost totally lost and those U.S. citizens are now being asked to give money to the government that drew up this faulty, unconsiderate legislation. – the truth is the U.S. (not the people, but the policy driven government) does what they want to do, when they want to do it. so when they say that they cant fix katrina, guess what....its cause they dont want to.

    April 29, 2008 at 1:50 pm |
  2. Stephanie Rutledge

    Before the state gets back one dime....I think the people affected should initiate a class action suit. I think that they should require the state to substantiate their claims based on a case by case – work requirement submitted against work paid for. The fact that the owners of the houses were not allowed to SEE what the contractor said needed repair/replacement should have been a huge red flag. The state didn't do their due diligence per the people they hired – not the fault of the homeowner. If overpayment was made....the state should be required to justify it...line by line.

    April 29, 2008 at 1:50 pm |
  3. Troy

    They should be happy they are alive. Most of them were to dumb to evacuate. I had a flood ruin my house and since my home was in a flood zone it was considered my fault for building there. Fighting with my insurance company was ridiculous, but I got money from them, money from a policy I had paid into for years. I got no federal or state aide. And if I would have I would've paid back every cent. See, I'm one of those people who considers himself a true American, someone who pays for what he owns through hard work. Since when is our government responsible for mother nature. Grow up, suck it up, and repay the money you owe. Who signs a contract they can't read anyway. Let that money go back to the state to repair and fix the levees that broke. In my opinion its pretty dumb to live in an area that is known to be flood prone anyway. Just my two cents!

    April 29, 2008 at 1:49 pm |
  4. Elaine

    This entire mess has been mishandled from the day Katrina hit, and it just doesn't get any better. Sadly, the people most affected seem to have too much Big Easy in the blood. If these were New Yorkers, I can guarantee that Washington DC would be mobbed with protesters, insurance companies that have refused to do the honorable thing would be driven out of town and local politicians tossed into Lake Ponchartrain. But then again, that implies that people have some hope things are going to get better. Will anyone ever offer it – or just words, and TV specials?

    April 29, 2008 at 1:49 pm |
  5. Jonathan

    I agree. The contract they signed should be void on the basis that the State did not act in good faith by not allowing the residents to review their estimates. Especially if there is a clause saying they'd pay back any money. I very much doubt many people would have taken the chance. This is ridiculous. I'd take it to court.

    April 29, 2008 at 1:48 pm |
  6. Elizabeth, Quincy, IL

    If ICF made the mistakes, ICF should have to pay the money back! Thanks to the 360 crew.....no one would have ever known if you hadn't refused to stop covering the story.

    April 29, 2008 at 1:48 pm |
  7. Chuck

    If the state is fining ICF it should be for 1.75 million dollars, and the state should not fine the home owners a thing.
    I have a hard time buying into the home owner not be allowed to see the estimate of damages and the apparent total lack of oversight at all levels – the entire Katrina cleanup has been nothing but one paper work drill after another delaying any and everything according to media reports – why was this one thing any different than all the rest?

    One last rant; last time a tree fell in a wind storm at my house I didn't get a grant to fix it, why are the poor suffering people of Katrina my problem?

    April 29, 2008 at 1:47 pm |
  8. Krissie

    Hi – I am in Gulfport, MS – less than an hour from New Orleans. I am totally aware of the hardship and the process of trying to rebuild that is going on there. For the government to request back funds GRANTED to victims is – in one word – ludicrous. I believe that the homeowners should go through the bills of everything that was required to rebuild their homes and BILL the government for funds not presented to them to make up the difference in what these victims had to pay out of pocket because the government would rather spend money on war than help their own. Basically, it should work like this: the government granted funds of $20,000 to an individual to repair $50,000 of work. Take all the bills, including materials and labor, minus the $20,000 granted and send copies of the bill to the ICF company and to the state governor – even the senator. Let's see how it adds up. And of course it would have to be a group effort with a representative, but I think it would be prudent and would certainly stop requests for repayments of funds that were so sorely needed to reconstruct their homes! I would LOVE to see how they react to that!

    April 29, 2008 at 1:47 pm |
  9. Janet

    It sounds like the contractor, ICF made the mess. Let them clean it up! Ask ICF to pay back the money they received for a job poorly performed, and back-charge them for their errors, not the homeowners.

    April 29, 2008 at 1:47 pm |
  10. Absolutely!

    Simple answer: yes, it is cruel. Come on!!! Had they seen the paperwork, maybe. But, in this situation, absolutely inappropriate.

    April 29, 2008 at 1:47 pm |
  11. C Lowman

    I would have to believe that if the state had a "contract" with ICF – then there is a "fiduciary" responsibility on the part of ICF – if they failed to accurately estimate – due to recklessness- like not spending the time to note that building does or does not have skylights- then the state should be going after ICF- not the recipients of the grants- and what about the federal agencies- if there is gross negligence – it seems to me they ought to be involved in correcting it, isn't the federal grant- sufficient identification of their need to be involved

    April 29, 2008 at 1:46 pm |
  12. Henry Miller, Cary, NC

    Government in action: You make a mistake, you pay for it; they make a mistake, you pay for it.

    This is one of the reasons I so vehemently oppose government involvement in people's lives: government is fundamentally irresponsible, and when they screw up, as they do with appalling frequency, it's the people who get screwed.

    There's a lot of clamour for various programs that make government responsible for paying everyone's medical bills. Katrina affected a very small percentage of the U.S. population–how bad are the government screw-ups going to be in a government program that affects everyone?

    More government is never the solution–it just shifts the problems around, making them worse in the process.

    April 29, 2008 at 1:45 pm |
  13. Jay, Knoxville, TN

    My sister and her husband were in New Orleans the months following the hurricane with other volunteers assisting in the initial re-building of housing. Their group and others like it were eventually forced out by the federal bureaucracy demanding sometimes 2-3 inspectors from different governmental levels be actively involved in their efforts. How many hands are going to end up in these people's pockets??????

    April 29, 2008 at 1:45 pm |
  14. Daniel

    This is typical of our great country, America. We as a society do not care about the less fortunate. Period.

    April 29, 2008 at 1:45 pm |
  15. Trey

    What I don't understand with everyone is if you made an overpayment to your electric company, your mistake. Wouldn't you want that money back? Before using that money, it was their resposibility to ensure that it was their money to use. They assumed it was without verification. That is a shame, hopefully they've learned their lesson. Next time if you live in a flood plain, buy flood insurance along with your home owners insurance. That way, you won't be out any money.

    April 29, 2008 at 1:45 pm |
  16. Claudia

    This is no surprise, there have been so many excuses of misappropriation of funds in New Orleans. Now the government has found a way to put the burden on the homeowners while the real theives walk away with millions.

    April 29, 2008 at 1:44 pm |
  17. Mark A Republican


    April 29, 2008 at 1:44 pm |
  18. Dave E

    Not a day goes by where I don't read something like the above...it makes me shake my head in disbelief and wonder what dimension I am actually living in...because it isn't reality. For all those poor people in New Orleans who had their lives irrevocably altered by Katrina...to be further screwed by the government and a system that clearly doesn't work...to then CHARGE them BACK when the money the received probably didn't cover close to all of their repairs...it just makes me sick.

    April 29, 2008 at 1:44 pm |
  19. Kerry Fontenot

    All of my life I have seen one bungling after another when dealing with the government. I have told my childeren time and time again, do not deal with the government. I say to all Americans, do not deal with the government. Pay your taxes and stay as far away from them as you can.

    April 29, 2008 at 1:44 pm |
  20. Frank

    I am amazed that people are surprised by this. LA is one of, if not the most, corrupt state in the union. This really isn't surprising considering they practice civil law rather than common law. Basically, the courts have very little ability to over-rule the legislature. So, there is no pressure on the legislature to pass laws that don't infringe on the rights of citizens. There is also no court oversight of government contracts, so they go to whomever the gives the best bribe.

    April 29, 2008 at 1:43 pm |
  21. Gary

    You have only to thank your great democratic reps who run the state and according to their party are compassionate. Yea right!!

    April 29, 2008 at 1:43 pm |
  22. ASHLEY


    April 29, 2008 at 1:42 pm |
  23. steve

    I think I am going to throw up.

    April 29, 2008 at 1:42 pm |
  24. JC - Kansas

    Nothing surprises me any more with regard to the absolute mismanagement of recovery from Katrinia.

    So lets see it a state hired contractor, state issued grant, federal money. Let the state eat the costs, they have not seemed to have done anything right so far so why penilize the residents of New Orleans unless there was crimminal intent.

    April 29, 2008 at 1:41 pm |
  25. steve

    i think i am going to throw up....hopefully you will bring enogh negative publicity to this situation that the state backs down

    April 29, 2008 at 1:41 pm |
  26. Jeanne

    The people who received the grant money, signed an agreement stating that if overpaid, they would have to pay the money back. Sounds simple to me.

    April 29, 2008 at 1:40 pm |
  27. Pat

    This certainly is an example of the "plumbers law" (all fecal objects travel down). I think that the effected residents should file a class action suit against ICF International. I would explore the possibility if I were in their position

    April 29, 2008 at 1:40 pm |
  28. SRB

    I think they should be going after the real prbloem here, ICF International. They are the ones who falsely reported damages resulting in the overpayments. They are the ones who are fraudulant, I mean who over estimates. $1.7 million. They need to repay the money and leave these poor victims alone. ICF created and submitted the reports NOT the residents.

    April 29, 2008 at 1:40 pm |
  29. Jeff Ridout

    My Question is this. Does ICF make commission off each inspection? If so is it based upon the value or estimate of damage done?
    Even though they have been ordered to get back some of the cash, aren't they, the estimators liable?
    In Canada if you are given an estimate in writing that is the final amount. Any overage MUST be accepted in a separate receipt.
    They were given money to rebuild without knowing the amount?? something sounds fishy.

    The government should make ICF accountable for this blunder. One could argue though that the residence should have been aware, but in this day and age, its hard to keep track of and monitor every minutiae law, contract fund etc etc. Thats why we trust these companies.

    April 29, 2008 at 1:39 pm |
  30. James Lewis

    I think this is pure obsurd for the state to even consider such an assinine move due to there poor choices. These poor people have endured enough stress in there lives in the last 21/2 years to last them for a lifetime. This kind of shananigans seems very typical of the whole state of Louisiana, and just like our whole govt. system WE the PEOPLE have to stand up against this kind of corruptness and make the changes so badly needed.

    April 29, 2008 at 1:39 pm |
  31. Wes

    If any money should be returned, it is the money that was paid to the firm that did the incorrect estimates. Our government needs to do a better job when selecting the companies they want to do business with.

    April 29, 2008 at 1:38 pm |
  32. Justin

    I don't understand, why they would think that it's needed to bill these people who have already suffered, why cause more hardship. they have already lost so much, but i guess in some people's eyes why not just keep taking from them until they really have nothing left.

    April 29, 2008 at 1:38 pm |
  33. Kristie Ardoin

    I am not a victim, but I am from central Louisiana. This is just insane, the victims need to be left alone. If they could afford to repair and rebuild they would not have turned to the STATE of LOUISIANA in the first place!!!!!!!!!! I am not shocked at all for Louisiana to pull something so evil . The state needs to just eat the mistake of their so-called inspector. Better yet, let the state bill him!!!!!!!!! Thanks, Kristie Ardoin

    April 29, 2008 at 1:38 pm |
  34. Toni

    If the state is fining ICF for the overestimates and they ask for money back from the residents, isn't that like double dipping? The ICF should pay for their mistakes. If a cashier gives the wrong change they are responsible for making the cash draw balanced!

    April 29, 2008 at 1:38 pm |
  35. Jillian

    I think that this is absolutely disgusting! First, we leave these poor people down there to suffer, starve, and die. Now we have the nerve to ask for money back, when it should have never been an issue, and they had to wait so long for help in the first place. Both the state and government should be ashamed of themselves!

    April 29, 2008 at 1:38 pm |
  36. MannyG

    Is there anyone out there with at least half a brain? Has anyone ever heard of forgiveness? How much more must these American citizens endure, because of the blunders of others? Forget about it!

    April 29, 2008 at 1:37 pm |
  37. kari

    While some families used the grants and federal funding to help rebuild, others "took the money and ran" so to speak. I know, personally, of several people who filed false claims and used what money they received for anything BUT rebuilding. Those people were trusted to tell the truth about how much they spent on reconstruction and they lied. These people were not in New Orleans, but on the gulf coast of Mississippi where Katrina actually came ashore. I hope that one day all of this will work out and those at fault will be punished. But I don't see that happening anytime soon.

    April 29, 2008 at 1:37 pm |
  38. Rashaad in Fort Worth

    Our goverment continues to put emphaisis on foriegn affairs while the american people suffer at home. These people should not have to fall for the short fall of our goverment. I am so sick of our countries putting everything before the american people.

    April 29, 2008 at 1:37 pm |
  39. Michelle

    This is an outrage. IFC made the mistakes, they should pay the state back. Not the little guy.

    April 29, 2008 at 1:37 pm |
  40. Jacque

    Also investigate the public adjusters that came here after the storm and lied to get more money from insurance companies for their clients some didn't even have damage and the adjusters lied just to make a dime. I'm so tired of hearing about these poor people keep getting screwed. You know what investigate every single person including me that had anything to do with getting free money and I guarantee close to 75% of all Katrina so called victims received to much compensation. There is so much fraud in this state that it makes me sick. Even investigate pictures taken and given to insurance companies and you will probably find a crap load of people that used pictures of other peoples property to enrich themselves. I know a few it makes me sick. Then the other 25% that got screwed by the road home and their insurance cos. and their condo presidents that spent their insurance money on other things should be awarded compensation for getting screwed. So quit whining and pay back the dam money or show proof that you really had that much damage. Its called receipts.

    April 29, 2008 at 1:37 pm |
  41. did you not read it cindy?

    Cindy, read it again. It was not the local government of NOLA that made "the mistake". It was Federal.

    April 29, 2008 at 1:37 pm |
  42. David

    I assure you not a single applicant for this grant money has any idea how the contractor determined the amount of each grant. Not a single applicant. How can that be? The contractor refused to give this information to the grant applicants! Grant recipients were not able to see any of the reports done by the inspectors. The general consensus was that the contractor had no idea how the grants were being determined. If you questioned the amount of the grant the contractor told you that the appeals process could take months and that it was possible that the program would have no money to pay out by the time the appeal was completed.
    For those that are unaware, this contractor was not selected by the City of New Orleans. No one in local government was given any say so in how these funds were to be distributed. This was a STATE RUN program put in place by the former Governor of the state.

    April 29, 2008 at 1:37 pm |
  43. Mike

    I am from Louisiana. I can tell you FIRST HAND that the majority of the Katrina "victims" are only victims of their own self destruction. It has been 3 years since that storm hit the gulf coast! When are these LAZY people going to get up off their behinds and do for themselves?!? My grandmother use to say "God helps those who help themselves". This logic seems to be lost on the larger portion of the people effected by Katrina. When that storm hit, it was a modern day version of Sodum & Gomora! God flushed the toilet and all the crap came out! That place is 100% better off for it. I am sure I offended a lot of people with my comments, but the truth hurts!

    April 29, 2008 at 1:36 pm |
  44. Roberta Sampere

    Make ICF pay back the overpayments and let the homeowners alone.

    April 29, 2008 at 1:36 pm |
  45. Marie

    nothing surprises me much any more with our current administration and its behavior..

    looks like an attorney windfall to me – either way, the people will lose, if they stand up for themselves then they will have to pay legal fees, either way, they will be out $$s..

    will this nightmare never end.. !!

    April 29, 2008 at 1:36 pm |
  46. Bushed

    And here we were led to believe that the Feds were the screw-ups! Paybacks should come out of the Governor's salary.

    April 29, 2008 at 1:35 pm |
  47. Ken

    ICF made the mistakes. ICF should be fined the amount to cover their mistakes.

    April 29, 2008 at 1:35 pm |
  48. David

    I feel horrible for some of these people, but... living through a disaster does NOT allow people to treat the Gov't (i.e. US) and this unfortunate time as their personal windfall! There should have been additional checks and balances in place by ICF, but in true form, everyone goes into reactionary mode and starts giving out money so no one gets a black eye or accused of mistreatment. But... bottom line, if people lied on their forms and made false claims, they should be held accountable. We should only assist to bring their property back to the condition it was before. No better, no worse. Plus, I wonder how much other assistance these same people received from all the other "katrina" victims funds that were also handed out.

    April 29, 2008 at 1:35 pm |
  49. Steve

    Can someone please explain to me why the "state" is responsible for covering the losses of these people? The tragedy that NOLA residents have experienced is obviously real and painful, exacerbated by some of the most inept government (at ALL levels) I have witnessed in my lifetime. But the overall idea that ANY level of government is somehow obligated to indemnify us against natural disasters is not sustainable. As pointed out in one of the previous postings, where is the money to come from for these catastrophes? While it breaks our collective heart that so many were devastated, and that their suffering continues to this day, the best thing we can do as a nation is to teach people to start preparing for the next catastrophe. CNN could play a very useful role in this regard.

    April 29, 2008 at 1:34 pm |
  50. Jo Ann - HOUSTON

    ICF should be sued by the governement and their money gotten back.
    But to put these people through all of this remember this is the USA not a third world company. I am sure the people appreciated the President last week there dancing I guess that was because he knew
    what was comming down the tubes. This is so sad! Anderson Cooper we the people thank you for staying on top of the job.

    Now CNN, Fox,MSNBC,ABC,CBS and NBC have something worthy to
    report on other than Rev. Wright get the hint there is real trouble here so you don't have to follow Rev Wright's every move. I am sure CNN
    360 will only be the one reporting on. The other newscarriers want to tell you who should talk and who should not.

    April 29, 2008 at 1:33 pm |
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