Disaster Fraud: Financial Crime Committed Against Disaster Victims and Donators

Abstract

We all learned, saw or experienced how disasters destroy human life and property all over the world. Experts do significant efforts to reduce vulnerability and losses in the 4 main phases of the disaster management (mitigation, preparedness, response and recovery). This article outlines a specific problem that occurs mainly at disaster response and recovery while drawing attention to the importance to raise public awareness as part of disaster mitigation and preparedness programs. Just like the growing frequency and intensity of disasters, the complexity, occurrence and volume of fraud and crime committed during disaster time is increasing. This article examines the main types of financial abuse, fraud and crime committed in connection with disasters and gives examples form worldwide and why can people be victimized easier during and after disasters. Disasters may cause unforeseen physical danger, psychological trauma and losses to the people affected along with short and long term financial needs for recovery afterwards. As a result victims are more vulnerable to be abused by criminals. On the other hand people who were not directly affected by disasters, but would like to help disaster victims by making various donations can also fall victim to criminals. Moreover, disaster related matters can open ways for supporting Money Laundering and Terrorist Financing or Tax Evasion. Hurricane Kathrina, earthquakes in Haiti and Pakistan, Oil Spills at Deepwater Horizon and the Tsunami in Japan all required advanced collaboration from governments, national and local institutions to investigate fraud, waste, abuse, or mismanagement and take necessary actions. As an example, in the U.S. after Kathrina a record number of possible fraud was reported and investigated: `The command center, now known as the National Center for Disaster Fraud (NCDF), has received and screened more than 46,000 complaints of disaster fraud and referred more than 30,000 of those to law enforcement for investigation and that the Department of Justice has charged more than 1,300 defendants in 47 judicial districts throughout the country for disaster fraud related to Hurricanes Katrina, Rita, and Wilma, the Gulf Coast oil spill, and other disasters.