More superstorm Sandy
fallout: The disaster-grant money New Yorkers owe back to feds
Jeanne Lieberman stands in front of her Kismet home in this photo
taken on Monday, Aug. 31, 2015.
Updated October 11, 2015 10:49
By EMILY C. DOOLEY firstname.lastname@example.org
Credit: Steve Pfost
500 superstorm Sandy victims in New York owe $3.4 million in disaster grant
money back to federal authorities, and if they do not pay on time the U.S.
Treasury can assess penalties of twice that of average credit card interest
Emergency Management Agency wants to collect $14 million in grant money from
2,000 New York victims of Sandy the agency believes it overpaid or improperly
As of Aug. 4, 533 of those
victims' cases had been sent for collection to Treasury, where officials can
charge between 28 and 30 percent more in penalty fees.
from Treasury give people 10 days to pay or risk the penalties, and it includes
a payment coupon outlining the ways to do so -- from personal check to credit
it hits the U.S. Department of Treasury it's sort of like hitting a debt
collector," said Daniel Strafer, staff attorney at Touro Law School's
disaster relief clinic, which is helping Sandy victims appeal the debt
collection cases. "It's just onerous. It could ruin someone's life."
penalties and interest rates charged were revealed after Newsday filed a
Freedom of Information Act request.
federal disaster grant money cannot be used to cover costs that would otherwise
be paid by private insurance, loans or other assistance programs. FEMA can
recoup money if benefits were duplicated, which is barred by the Stafford Act,
said Rafael Lemaitre, FEMA's director of public affairs.
are notified that FEMA wants to claw back money, recipients are given 30 days
to pay the debt in full or risk interest charges. Appeals must be filed within
60 days and penalties begin within 90 days of the initial letter. If there is
no response within 120 days, the case goes to Treasury. And from there the
penalties rise -- 28 percent for debt less than 2 years old and 30 percent for
debt older than that.
Lemaitre said FEMA will work
with people to settle debts and can set up payment plans or reduce the money
owed based on financial need.
"Our guiding principle at
FEMA is to put survivors first," he said. "When we do identify funds
that need to be recouped we do everything we can before it ever gets to the
point before it gets referred to Treasury."
Jeanne Lieberman, who lives in
Kismet on Fire Island more than half the year and has a rent-controlled
apartment in Manhattan, received a notice in May from Treasury saying she owed
more than $14,000. If she did not pay within 10 days, the letter said, the
amount would go up to more than $18,000 because of fees, interest and
was devastating," said Lieberman, who retired in 1999 as a physical
therapist after open heart surgery. "They're dictating the terms of your
defines a primary residence as a place where an applicant lives more than six
months of the year, and Lieberman said she more than qualifies.
certainly come away with a different feeling of government," Lieberman
said. "This is not for the people, it's against the people."
Strafer, who is handling her case, questioned the administrative fees
and whether they accurately accounted for the costs Treasury incurs. "This
shouldn't be some sort of moneymaking enterprise here," he said.
He was able
to get her case moved back to FEMA for review. Two other cases were dismissed
at Treasury, only after the people appealed, were denied and turned to Strafer,
who had a contact inside FEMA.
it's good that we are getting favorable dispositions it shows me that many of
the debts that are sent to Treasury should not be recouped if they were looked
at more thoroughly by FEMA," Strafer said in an email.
officials said the agency does not make money on the collection, and the fees
cover administrative costs, which can include hiring private collection
Treasury is sent a debt notice, the agency searches a database to see if the
money can be collected electronically by garnishing tax refunds, wages,
retirement pay or benefits such as Social Security. In those cases, the fees
assessed are between $17 and $27, according to a high-level official with
Treasury's Bureau of Fiscal Service, which collects debt.
year 2014, 74 percent of FEMA debt Treasury collected was through database
queries and garnishment, said Bureau of the Fiscal Service spokesman Tom
Of the more
than 3,500 debt collection notices sent to Sandy applicants in New York and New
Jersey, less than one-quarter were during the 2014 fiscal year cited by
Longnecker, federal records show.
If Treasury must do more, such as
work with debtors or use a private debt collection agency, the 28 to 30 percent
interest is charged.
is trying to cover its costs of collection," the official said.
"We're not making a profit on this."
also apply for their case to be reviewed. "We can't, by law, just waive
fees and costs but we can look at people's financial circumstances," the
are trying to halt the collections but have not been successful.
the House of Representatives and the Senate are looking to waive the debt so
long as it was not the result of fraud. A bill sponsored by Sen. Robert
Menendez (D-N.J.) has been referred to the committee on homeland security and
governmental affairs. A House version, filed by Rep. Lou Barletta (R-Pa.), is awaiting
floor consideration and should be brought up this month, said Gabriel J. Bitol,
legislative director for Rep. Gregory W. Meeks (D-St. Albans).
to introduce legislation that would give individuals more protection when debt
goes to collection, including restricting when Treasury can collect debt, Bitol
superstorm Sandy victims to repay thousands of dollars in aid, 2 1/2 years after
the storm, is wrong and counterproductive, since these funds have already been
spent on necessary repairs," Sen. Chuck Schumer (D-N.Y.) said. "FEMA
should waive all debt among superstorm Sandy victims, except where there is
clear evidence of fraud."
Kathleen Rice (D-Garden City) called the penalties "bureaucracy at its
most baffling and most outrageous, and it has to stop."