New Orleans Catholic archdiocese, universities sued over alleged Hurricane Katrina aid fraud

St Louis Cathedral in New Orleans Credit travelview Shutterstock St. Louis Cathedral in New Orleans. | travelview/Shutterstock.

A federal lawsuit alleges that the Archdiocese of New Orleans, as well as two historically black New Orleans universities, improperly applied for and received millions of dollars in federal funds in the wake of Hurricane Katrina.

The archdiocese has denied wrongdoing and says its staff worked diligently to be good stewards of the federal money received after the disaster.

The hurricane, which hit New Orleans during August 2005, killed at least 1,800 people and devastated much of the city. In the years since Katrina and Rita, which hit the region the month after, the Federal Emergency Management Agency has paid out nearly $20 billion in relief.

A whistleblower employee of the contractor that handled the reconstruction projects, AECOM, filed a federal suit in 2016, which alleges that inflated claims of damage after the hurricane resulted in millions of dollars for projects at Xavier and Dillard universities and for several archdiocesan properties, the Associated Press reported.

It names Xavier and Dillard, the archdiocese, and an AECOM employee who compiled the damage claims as defendants, and alleges that AECOM intentionally overestimated damages in order to bill its clients for additional time and enhance its perceived productivity.

Last week the U.S. District Court in New Orleans unsealed the lawsuit.

The Department of Justice has joined the lawsuit, seeking the return of the alleged overpayments and the money that the federal government paid to AECOM for consulting work, reported. The DOJ portrays AECOM as the primary culprit; AECOM has denied wrongdoing.

The two projects involving the archdiocese are the former St. Raphael School building and two residential buildings run by the archdiocese' affordable housing program for seniors in New Orleans.

The suit alleges the archdiocese received about $10 million more in FEMA funding than it should have for the St. Raphael building and about $36 million more for the senior housing complex, the archdiocese said June 3.

According to the suit, the funding claim said the top two floors were catastrophically damaged, which was not the case, reported.

The archdiocese denied in its June 3 statement the allegations that it had improperly received excessive funds.

"In the aftermath of this disaster, the Archdiocese of New Orleans received a significant amount of money from FEMA to restore the extensive damage incurred to property of the parishes, schools and social service ministries of the Archdiocese of New Orleans," the statement read.

"Our finance office worked diligently and relied upon the knowledge and expertise of FEMA and their designated agencies and field representatives. Our staff was committed to working responsibly and being good stewards of the money received, and our documentation reflects that."

The archdiocese pledged to cooperate with the government investigation.
"Every dollar of FEMA funds received has gone back into the restoration of parish, school and other properties to serve the people of the Greater New Orleans community. We deny the allegation that the Archdiocese of New Orleans knowingly conspired to submit false information," it continued.

As of 2018, FEMA had obligated nearly $184 million to the Archdiocese of New Orleans for Katrina-related recovery work. At least 32 archdiocesan facilities sustained damage in the storm, FEMA says.

The suit alleges that Xavier University received $6.6 million from FEMA to repair a concrete gymnasium foundation, when "in fact, the building had no such foundation."

The university's attorney declined to comment on specifics to the AP, but said the federal government had relied heavily on the contractor, AECOM, to handle the allegedly fraudulent aid applications. Xavier reportedly has agreed to repay $12 million to the federal government in a settlement.

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