Haley Barbour relative defrauded FEMA after Katrina, judge rules

McClatchy NewspapersAugust 31, 2011 

WASHINGTON — Six years after Hurricane Katrina, a relative of Mississippi Gov. Haley Barbour was found by a federal court to have masterminded a massive fraud against the Federal Emergency Management Agency in the inspection of the legendary trailers that housed storm refugees along the Gulf Coast.

The U.S. Court of Federal Claims found last week that Rosemary Barbour's company, Jackson, Miss.,-based Alcatec LLC, had engaged in a fraudulent billing scheme as part of a $100 million, five-year maintenance contract with FEMA.

She was ordered to pay more than $350,000 in penalties and damages. In often colorful language, the judge described the testimony of Rosemary Barbour during an eight-day trial in May in Jackson as "exasperating" and "bumble-headed."

Rosemary Barbour, the company's sole owner, is the wife of the governor's nephew, Charles Barbour, a former Hinds County supervisor who last week lost a Mississippi Senate GOP primary.

Gov. Barbour is not affiliated with the company. "The governor doesn't know anything about it," said Laura Hipp, his press secretary.

The civil court hears contract cases against the federal government; it is unclear whether last week's decision will be appealed.

Rosemary Barbour initially filed a claim against FEMA in 2008 for $3.8 million of the unpaid balance of an initial $6.1 million contract the company received in 2006 to periodically inspect the trailers. The agency had reduced the amount of the contract it said it would pay and later terminated the contract.

In response to Barbour's claim, the federal government made a counter-claim, arguing that the company had willfully double-billed FEMA and falsified inspection reports.

The government said, according to the court ruling, that FEMA did not pay because it alleged that Alcatec "defrauded the government both by knowingly submitting vouchers contrary to the contract's terms and by either duplicating or falsifying inspection reports."

Rosemary Barbour did not return a phone call left with the Alcatec office in Jackson.

Gary Wordel, the company's operations manager in Brooklyn, Miss., who testified in the trial, said in an interview that "I was told that when the inspection reports came in to leave the dates blank."

Wordel, now of Fort Worth, Texas, said that the forms would be transferred to Alcatec headquarters in Jackson, where Rosemary Barbour tightly controlled the invoice process. She and a few close associates, he said, would then fill in the dates to make it appear that inspections of such trailer items as hot-water heaters, air conditioning and electrical systems had taken place 14 days apart, even though there sometimes was only one visit.

"They were double-billing things they didn't do," Wordel said.

Barbour maintained that she had put in proper invoicing procedures and that if there was a problem, it was done by lower-level employees.

Court of Federal Claims Judge Christine Miller agreed with the government's case and dismissed Rosemary Barbour's claim, ordering her to pay $77,000 in penalties and $275,050 in damages.

In scathing terms, Miller wrote that Barbour's testimony "over two-and-one-half days, if nothing else was clearly and convincingly exasperating."

Miller also wrote, "what the court did not appreciate was Ms. Barbour's bumble-headed game of eluding defense counsel's questions." The judge also criticized FEMA for its "inexcusable mismanagement" of the contract.

FEMA defended its actions in a statement Wednesday.

"FEMA has no tolerance for any abuse or misuse of taxpayer dollars — by any entity — that are intended to help disaster survivors and communities," said Rachel Racusen, FEMA spokeswoman. "Since this contract was awarded in April 2006, FEMA has made significant changes in the way it contracts for services related to disaster housing."

Rosemary Barbour is a controversial figure in North Mississippi who received millions of dollars in often no-bid federal contracts after Katrina to provide showers, tents and laundry facilities — drawing charges of favoritism because of her connection to the governor. His office and FEMA denied any connection at the time, including in a story in the New York Times. According to fedspending.org, an independent website, Alcatec LLC won $21.8 million in 87 federal contracts from 2000 to 2009. Her company is named for her children, Allen and Camille.

The Guatemalan-born Barbour, 44, qualified for government preference programs as a woman and as a Hispanic. Her company is still operating and is listed as being "in good standing" by the Mississippi secretary of state.

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