Disaster Fraud, also know as FEMA Fraud, is a statute that has been in force since only January 7, 2008.  It was passed in response to the overwhelming amount of federal assistance provided in the wake of Hurricanes Katrina and Rita in late-Summer 2005.  Federal prosecutions brought under the mail and wire fraud statutes are still working their way through and into federal courts because of those storms, but this new law should provide a little more guidance.  While ex post facto should bar its applicability for Katrina and Rita, it might begin to be used in the Houston area post-Ike.  One should bear in mind, however, that there is no requirement that the federal government proceed against individuals under this statute solely; traditional fraud prosecutions under the mail and wire fraud statutes are still a distinct possibility.

Disaster fraud, as a statute unto itself, is covered by 18 U.S.C. § 1040.  The actual text of section 1040 reads:

(a) Whoever, in a circumstance described in subsection (b) of this section, knowingly---

1. falsifies, conceals, or covers up by any trick, scheme, or device any material fact; or
2. makes any materially false, fictitious, or fraudulent statement or representation, or makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or representation,

in any matter involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with a major disaster declaration under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) or an emergency declaration under section 501 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5191), or in connection with any procurement of property or services related to any emergency or major disaster declaration as a prime contractor with the United States or as a subcontractor or supplier on a contract in which there is a prime contract with the United States, shall be fined under this title, imprisoned not more than 30 years, or both.

(b) A circumstance described in this subsection is any instance where--

1. the authorization, transportation, transmission, transfer, disbursement, or payment of the benefit is in or affects interstate or foreign commerce;
2. the benefit is transported in the mail at any point in the authorization, transportation, transmission, transfer, disbursement, or payment of that benefit; or
3. the benefit is a record, voucher, payment, money, or thing of value of the United States, or of any department or agency thereof.

(c) In this section, the term "benefit" means any record, voucher, payment, money or thing of value, good, service, right, or privilege provided by the United States, a State or local government, or other entity.

It also bears noting that disaster fraud convictions, whether under section 1040 or the wire or mail fraud statutes, are subject to specialized enhancements in the United States Sentencing Guidelines Manual.

While the disaster fraud statute is relatively straight-forward, the same questions that arise under other fraud statutes are present vis-a-vis disaster fraud: what does scheme mean? what is a false statement?  does it matter where the case it brought? up to 30 years is a long time, so what am I really looking at?  That's why it is so important when dealing with a federal prosecution to have an attorney who is familiar and comfortable with federal criminal defense, and who has appeared in federal courthouses across the country.