WASHINGTON - The Homeland Security Department wasted hundreds of thousands of dollars last year on iPods, dog booties, beer-making equipment and designer jackets, congressional investigators have concluded.

More than 100 laptop computers and a dozen boats also bought by Homeland Security employees are missing, the investigators found.

Poor training, lax oversight and rampant confusion over what employees are allowed to buy with government-issued purchase cards left Homeland Security “vulnerable to fraud, waste and abuse,” according to a draft report by the Government Accountability Office, Congress’ investigative and auditing arm.

The report was to be released Wednesday by a Senate panel that oversees the department.

Senators said more than 10,000 Homeland Security employees carry purchase cards for business-related expenses — with a spending limit that was raised to $250,000 for emergencies after Hurricane Katrina hit last Aug. 29. Aides said the audit covered expenses for a five-month period both before and after Katrina.

But investigators found that employees received scant training on how to use the cards, were given little or lax supervision and were told to follow spending guidelines that differed among the 22 agencies that make up the department.

The department spent $435 million with the purchase cards in the 2005 budget year, compared to $296 million in 2004, Homeland Security spokesman Russ Knocke said Tuesday evening. But he said only a fraction of the expenses were improper, noting that the department has disciplined about 70 employees amid 1.1 million purchases.

“Comparatively, we’re talking about a small number of bad apples,” Knocke said.

Among the expenses that investigators described as abusive or otherwise questionable:

_More than 2,000 sets of dog booties, costing $68,442, that have sat unused in storage since emergency responders decided they were not suited for canines assisting in Gulf Coast recovery efforts.

_Three portable shower units for $71,170 from a contractor who investigators said overcharged the government. Customs and Border Protection agents could have gotten similar showers for nearly a third of the price — and faster.

_12 Apple iPod Nanos and 42 iPod Shuffles, worth $7,000, for Secret Service “training and data storage.” Because the Shuffles cost less than $300, the Secret Service said they were not required to track them to ensure they were used properly.

_37 black Helly Hansen designer rain jackets, costing nearly $2,500, for use in a firing range that the Customs and Border Protection purchaser later acknowledged shuts down when it’s raining.

_Conference and hotel rooms at a golf and tennis resort at St. Simons Island in Georgia, worth $2,395, for training 32 newly hired attorneys when they could have used a nearby federal law enforcement training center.

_A beer brewing kit and ingredients for more than $1,000 for a Coast Guard official to brew alcohol while on duty as a social organizer for the U.S. Coast Guard Academy. “The estimated price for a six-pack of USCG beer was $12,” the investigators noted, adding: “Given that the six-pack cost of most beers is far less than $12, it is difficult to demonstrate that the Academy is achieving cost savings by brewing its own beer.”

Investigators also noted that Customs and Border Protection wasted up to $464,586 by buying meals-ready-to-eat over the Internet instead of contracting through the Pentagon, as is standard procedure. And they found that the Federal Emergency Management Agency cannot locate 107 laptops, 22 printers and two GPS units worth $170,000. FEMA also cannot find 12 of 20 boats the agency bought for $208,000.

Knocke, the Homeland Security spokesman, said the department will begin enforcing new spending guidelines in the next several weeks that should eliminate much of the confusion and make sure buys are strictly supervised. Violators could have their cards taken away, be forced to repay expenses and face disciplinary action, he said. “We take very seriously our responsibility to be good stewards of taxpayer dollars,” Knocke said.

The senators who ordered the investigation — Sens. Susan Collins, R-Maine, and Joe Lieberman, D-Conn. — described Homeland Security as negligent in preventing the shopaholics among its ranks. The two lead the Senate’s Homeland Security and Governmental Affairs Committee.

Homeland Security “left the door wide open for these abuses,” Collins said.

Added Lieberman: “That is hard to believe.”

FEMA hurricane cards bought jewelry, erotica
Federal audit finds $1 billion in potential fraud

WASHINGTON (CNN) — A $200 bottle of champagne from Hooters and $300 worth of “Girls Gone Wild” videos were among items bought with debit cards handed out by FEMA to help hurricane victims, auditors probing $1 billion in potential waste and fraud have found.

The cards — given to people displaced by Hurricanes Katrina and Rita — also bought diamond jewelry and a vacation in the Dominican Republic, according to the Government Accountability Office audit.

The GAO uncovered records showing that $1,000 from a FEMA debit card went to a Houston divorce lawyer; $600 was spent in a strip club and $400 was spent on “adult erotica products,” all of which auditors concluded were “not necessary to satisfy legitimate disaster needs.”

The GAO found that at least $1 billion in disaster relief payments by the Federal Emergency Management Agency were improper and potentially fraudulent because the recipients provided incomplete or incorrect information when they registered for assistance.

The GAO said the scope of the problem may be even larger, because it only looked at the validity of registration information and not at other forms of potential fraud.

FEMA acknowledged its shortcomings late Tuesday.

Spokesman Aaron Walker said FEMA has “revamped the registration process” and has a contract with a company that will verify immediately the identity and address of anyone for assistance.

“We are confident in the system we have in place at this point,” Walker said. “We are prepared for the upcoming season.”

The GAO also found that FEMA provided housing assistance to people who were not displaced, including at least 1,000 prison inmates, and also provided rental assistance to people who were simultaneously living in free hotel rooms.

Results of the GAO’s audit will be presented Wednesday to an investigative panel of the House Homeland Security Committee. FEMA is part of the Department of Homeland Security.

The GAO also found that FEMA lost track of 750 debit cards, worth a total of $1.5 million.

After inquiries from the GAO, FEMA recovered about half of that money, which had not been distributed by JPMorgan Chase, the bank hired to run the program. But the agency still cannot account for 381 cards, worth about $760,000 total, which JPMorgan Chase says it distributed, according to the GAO.

GAO investigators estimated that 16 percent of FEMA’s disaster relief payments were made to people who submitted invalid registrations, to the tune of about $1 billion. Because the figures were calculated using a statistical sample, however, the agency said the amount could range from $600 million to as much as $1.4 billion.

Among other problems found with the registrations, according to the GAO study:

# People signed up for assistance using Social Security numbers that didn’t exist or belonged to other people.

# Aid applications contained bogus addresses for damaged property, or gave addresses for damaged property where the applicants did not live when the hurricanes struck. In one case, FEMA paid nearly $2,360 to a man whose allegedly damaged property was in a cemetery.

# Payments were made to people who listed post office boxes as their damaged residences.

# People submitted duplicate registrations, which FEMA did not detect.

# More than 1,000 registrations used the names and Social Security numbers of prison inmates. According to the GAO, in one instance, FEMA paid $20,000 to a Louisiana prisoner who listed a post office box as his damaged property.

As part of its audit, the GAO used an undercover registrant who submitted a vacant lot as a damaged address.

FEMA paid the registrant $6,000 and even made payments after being notified by one its own inspectors, as well as an inspector for the Small Business Administration, that the damaged property could not be found, the GAO investigators found.

The GAO concluded that the potentially fraudulent payments were made because FEMA did not validate registrants’ identities and the locations and ownership of purportedly damaged property.

While conceding that FEMA acted out of the need to provide assistance quickly, GAO investigators said the agency’s own policies required additional verification before continuing payments.

The GAO study also found FEMA improperly provided rental assistance to people who were staying in hotels paid for by FEMA because the agency did not require hotels to collect Social Security numbers and FEMA registration information.

Without that information, FEMA could not verify if people were staying in hotels when they applied for rental assistance.

And because that information doesn’t exist, GAO auditors said they could not determine how many people might have double-dipped — or how much it cost the government.

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