|TRENTON – Acting Attorney General John J. Hoffman announced that five additional individuals were charged criminally today with filing fraudulent applications for federal relief funds related to Superstorm Sandy. Since March 2014, the Attorney General’s Office has filed criminal charges against 32 people for allegedly engaging in this type of fraud, including the four individuals charged today.
The Attorney General’s Office is continuing to aggressively investigate fraud in Sandy relief programs, working jointly with the New Jersey Department of Community Affairs (DCA) and the Offices of Inspector General of the U.S. Department of Homeland Security, the U.S. Department of Housing and Urban Development (HUD), and the U.S. Small Business Administration (SBA).
The individuals who have been charged are alleged, in most cases, to have filed fraudulent applications for relief funds offered by the Federal Emergency Management Agency (FEMA). In some cases, they also applied for funds from a Sandy relief program funded by HUD or low-interest disaster loans from the SBA. The HUD funds are administered in New Jersey by the Department of Community Affairs.
“All of these defendants are alleged to have selfishly lied about where they were living at the time of the storm in order to steal Sandy relief funds,” said Acting Attorney General Hoffman. “We’re sending an unmistakable message that those who fraudulently drain relief funds away from deserving recipients will be exposed and will face criminal charges. Relief administrators regrettably are being forced to police this fraud and recoup misdirected aid, when they should be free to focus entirely on speeding that aid to those who need it most.”
The following defendants were charged today by complaint-summons:
- Mark J. Spulock, 54, and Joanne M. Spulock, 57, of Delran, N.J., and Boca Raton, Fla., allegedly filed fraudulent applications following Superstorm Sandy for FEMA assistance, a low-interest SBA disaster-relief loan, and state grants under the Homeowner Resettlement Program (RSP) and the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program. They also allegedly filed fraudulent applications for Sandy relief funds under programs administered by the New Jersey Department of Human Services and the New Jersey Department of Labor. In total, the Spulocks allegedly received approximately $70,866 in relief funds by falsely claiming that a seasonal bed and breakfast, The Island Guest House, which they own and operate on 3rd Street in Beach Haven, N.J., and which was damaged in the storm, was their primary residence when Sandy struck. In reality, their primary residence was in Delran, and they spent the winter months in Boca Raton, Fla. Their application for an SBA loan was rejected, but they received a total of $38,396 in FEMA relief funds, including $30,209 for home repairs, $1,691 in rental assistance, and $6,496 in transitional shelter assistance. They received a $10,000 RSP grant and received $6,584 under the Sandy Homeowner/Renter Assistance Program (SHRAP), which is a temporary relief program administered by the State Department of Human Services designed to assist people who experienced a housing crisis as a result of Sandy. Lastly, Joanne Spulock received $15,866 in Disaster Unemployment Assistance (DUA) from Oct. 28, 2012 through May 4, 2013, by claiming she was out of work because her employer, The Island Guest House, was forced out of business by the storm. DUA is a federal program, administered in New Jersey by the State Department of Labor, which offers temporary financial assistance to people left unemployed as the result of a federal disaster declared by the President. In reality, the bed and breakfast routinely closed from the end of October until May, so her employment was not affected while she was collecting DUA. Both Spulocks are charged with third-degree theft by deception and fourth-degree unsworn falsification.
- Peter Larkin III, 59, and Judith Larkin, 57, of Yardville, N.J., allegedly filed fraudulent applications following Superstorm Sandy for FEMA assistance, a low-interest SBA disaster-relief loan, and state grants under the Homeowner Resettlement Program (RSP) and the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program. Their application for an SBA loan was rejected, but they received a total of $26,552 in relief funds under the other programs. It is alleged that the Larkins falsely claimed on the applications that a storm-damaged home they own on South Bayview Avenue in Seaside Park, N.J., was their primary residence at the time Sandy struck. In fact, their primary residence was in the Yardville section of Hamilton, Mercer County, and the home in Seaside Park was a summer/vacation home. As a result of the alleged fraudulent applications, they received $6,730 in FEMA rental assistance, which they returned after the state investigation began. They also received a $10,000 RSP grant and $9,822 from the RREM program, which was paid to a home design firm on their behalf. Both Larkins are charged with third-degree theft by deception and fourth-degree unsworn falsification. Judith Larkin was an employee of the State Department of Community Affairs; Peter Larkin was an employee of the State Department of Treasury. Both resigned their positions effective yesterday. There are no allegations that either of the Larkins utilized their state positions to further their applications for disaster grant monies.
- Manny Martinez, 33, of Barnegat, N.J., allegedly filed a fraudulent application after Superstorm Sandy for FEMA assistance. It is alleged that Martinez falsely claimed that he was displaced from an apartment on Blaine Avenue in Seaside Heights, N.J., as a result of the storm and had to relocate to a residence on Barnegat Boulevard in Barnegat. As a result, he received a total of $19,276 in FEMA relief funds, consisting of $16,571 in rental assistance and $2,705 for damaged personal property. It is alleged that, in reality, Martinez did not live at the address in Seaside Heights at the time of the storm. He had lived in Seaside Heights at one time, but had moved to Barnegat two years before Superstorm Sandy. Martinez allegedly submitted false employment earnings statements to FEMA in support of his application. He is charged with third-degree theft by deception and fourth-degree unsworn falsification.
“We’re working with our state and federal partners to pursue every lead and charge every offender in these Sandy fraud cases,” said Director Elie Honig of the Division of Criminal Justice. “We’re taking a very aggressive approach, because the Sandy recovery efforts are too important and the sums of money at stake are too great to do anything less.”
“Since the very beginning of the Sandy recovery effort, the staff has done their utmost to be good stewards of public funds and to ensure that assistance gets to Sandy survivors who legitimately qualify for aid,” said DCA Acting Commissioner Charles Richman. “We will continue to be vigilant about reporting those who seek to misuse Sandy recovery funds to the proper authorities.”
The new cases were investigated by detectives of the New Jersey Division of Criminal Justice and special agents of the U.S. Department of Homeland Security Office of Inspector General, HUD Office of Inspector General and SBA Office of Inspector General. The New Jersey Department of Human Services, New Jersey Department of Labor and New Jersey Division of Taxation assisted in the investigation of the Spulocks, and the Department of Community Affairs and the Division of Taxation assisted in the investigation of the Larkins. Deputy Attorneys General Mark C. Kurzawa, Peter Gallagher and Derek Miller are prosecuting the five defendants, under the Supervision of Deputy Attorney General Michael A. Monahan, who is Chief of the Financial & Computer Crimes Bureau, and Deputy Attorney General Kurzawa, who is Deputy Bureau Chief. They are working with Lt. David Nolan, Sgt. Fred Weidman and Analyst Alison Callery, who are conducting and coordinating the investigations for the Division of Criminal Justice, along with other detectives, including Detective Jack Campanella.
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 state prison and a fine of $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 $31,900 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 has received $2.3 billion in CDBG funds for housing-related programs, including $215 million that was allocated for the Homeowner Resettlement Program (RSP) and $1.1 billion that was allocated for the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program. Under the Resettlement Program, the New Jersey Department of Community Affairs 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 RREM Program, which is the state’s largest housing recovery program, provides 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.
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.