All three defendants were charged yesterday with fraudulently collecting funds from the Federal Emergency Management Agency (FEMA).

The Attorney General’s Office is working jointly with the DCA, the U.S. Department of Homeland Security Office of Inspector General, the HUD Office of Inspector General, and the U.S. Small Business Administration Office of Inspector General to investigate fraud in relief programs tied to Superstorm Sandy. The Small Business Administration (SBA) has a program that provides low-interest disaster loans to homeowners, renters, businesses and private nonprofits impacted by Sandy.

The three defendants represent the first round of prosecutions by the Attorney General’s Office as a result of these ongoing investigative efforts in New Jersey. In all three cases, it is alleged that the homeowners falsely claimed that storm-damaged homes at the Jersey Shore were their primary homes, which is a requirement under the relief programs. In fact, the homes were vacation homes, and in two of the cases, the homes had been left vacant and unused prior to the storm. Aid is restricted under the relief programs to homeowners with damage to their primary residences because funds are limited.

“It is shameful that in the face of a disaster of the magnitude of Superstorm Sandy, these unscrupulous individuals allegedly committed fraud and stole relief funds intended for the victims who needed help the most, including victims who were left homeless,” said Acting Attorney General Hoffman. “We’re going after these defendants to recover the money for those who truly need it.”

The Division of Criminal Justice charged the following three individuals by complaint-summons with third-degree theft by deception and fourth-degree unsworn falsification:

• Ronald MacKenzie, 62, of Highlands Ranch, Colorado, received $20,358 in FEMA grants, including a $16,685 home repair grant and smaller rental assistance and personal property grants. He filed applications claiming that a storm-damaged property on Ocean Boulevard in Little Egg Harbor was his primary residence, when in fact the home was damaged by a fire in May 2009 and had since been uninhabited with no utility service. He also is charged with third-degree attempted theft by deception in connection with applications for HUD funds that were denied by the DCA.

• Deborah J. Young, 54, of Maple Shade, N.J., received $21,128 in FEMA grants, including $18,858 for repairs and $2,270 for rental assistance. She claimed a storm-damaged house on Flamingo Road in Tuckerton was her primary home, when in fact it was owned by the family of her deceased husband, from whom she had been separated, and was vacant. As administrator of his estate, she deeded herself a 50 percent interest in the home after receiving the FEMA grants.

• Dawn Bye, 46, of Staten Island, N.Y., received $22,410 in FEMA grants, including a $16,230 home repair grant and $6,180 in rental assistance. She claimed a storm-damaged house on Fremont Avenue in Seaside Heights was her primary residence, when in fact it is a vacation rental property.

The MacKenzie case was referred to the Division of Criminal Justice by the New Jersey Department of Community Affairs, which investigated with the HUD Office of Inspector General. The Young and Bye cases were referred to the Division of Criminal Justice by the Department of Homeland Security-OIG, which was assisted by the Small Business Administration-OIG.

“We are working closely with our state and federal partners to protect Sandy relief programs against fraud,” said Director Elie Honig of the Division of Criminal Justice. “Today's charges send a message that anyone who tries to cheat these programs will face criminal penalties. Meanwhile, our Sandy Fraud Working Group continues to target other types of fraud related to the storm and the recovery efforts in New Jersey.”

“It is unconscionable that fraudsters would attempt to steal much needed RREM and Resettlement grants from eligible applicants who were impacted by Sandy and trying to rebuild their lives,” said New Jersey Department of Community Affairs Commissioner Richard E. Constable III. “Be warned. We will remain vigilant with our partners at HUD and the Attorney General’s Office in pursuit of rooting out anyone who attempts to misuse our Sandy recovery programs.”

“The charges announced today further demonstrate that, together with our law enforcement partners, HUD's Office of Inspector General will commit the necessary resources to vigorously investigate allegations involving individuals who through their fraudulent actions victimize storm survivors once again,” said Special Agent in Charge Cary Rubenstein of the Mid-Atlantic Region of HUD-OIG.

“The SBA OIG stands shoulder-to-shoulder with our law enforcement partners to combat fraud in disaster assistance programs,” said Special Agent in Charge Aaron Collins of the Eastern Region of the Small Business Administration, Office of Inspector General. “Through cooperative law enforcement efforts, we will bring those engaging in fraudulent activity to justice.”

Deputy Attorneys General Mark Kurzawa and John A. Nicodemo are prosecuting the defendants for the Division of Criminal Justice Financial & Computer Crimes Bureau. Lt. David Nolan, Sgt. Fred Weidman and Analyst Alison Callery are conducting and coordinating the investigations with them for the Division of Criminal Justice.

Third-degree charges carry a sentence of three to five years in state prison and a fine of up to $15,000, while fourth-degree charges carry a sentence of up to 18 months in prison and a fine of up to $10,000. The charges are merely accusations and the defendants are presumed innocent until proven guilty.

On Oct. 29, 2012, Superstorm Sandy hit New Jersey, resulting in an unprecedented level of damage. Almost immediately, the affected areas were declared federal disaster areas, making residents eligible for FEMA relief. FEMA grants are provided to repair damaged homes and replace personal property. In addition, rental assistance grants are available for impacted homeowners. FEMA allocates up to $31,000 per applicant for federal disasters. To qualify for FEMA relief, applicants must affirm that the damaged property was their primary residence at the time of the storm.

In addition to the FEMA relief funds, HUD allocated $16 billion in Community Development Block Grant (CDBG) funds for storm victims along the East Coast. New Jersey received $1.2 billion in CDBG funds for housing-related programs, including $215 million that was allocated for the Homeowner Resettlement Program and $710 million that was allocated for the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program. The New Jersey Department of Community Affairs, which administers the Resettlement program, is disbursing grants of $10,000 to encourage homeowners affected by Sandy to remain in the nine counties most seriously impacted by the storm: Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean and Union counties. The DCA, which also administers the RREM program, is providing grants to Sandy-impacted homeowners to cover rebuilding costs up to $150,000 that are not funded by insurance, FEMA, U.S. Small Business Administration loans, or other sources. Applicants for the HUD relief funds also were required to affirm that the damaged property was their primary residence.

The Small Business Administration provides low-interest disaster loans to homeowners, renters, businesses of all sizes, and most private nonprofit organizations. SBA disaster loans can be used to repair or replace real estate, personal property, machinery and equipment, and inventory and business assets damaged or destroyed in a declared disaster. Renters and homeowners may borrow up to $40,000 to repair or replace clothing, furniture, cars or appliances damaged or destroyed in the disaster. Homeowners may apply for a loan of up to $200,000 to replace or repair their primary residence to its pre-disaster condition. Secondary homes or vacation properties are not eligible for these loans, but qualified rental properties may be eligible for assistance under the business loan program.

####