Disaster Profiteering.

[Trade]

The following is an article describing some of the profiteering that went on after Katrina. I would not be surprised if some of this same stuff will go on in the aftermaths of Harvey and Irma.

The collection, hauling and smashing of debris in Louisiana and Mississippi resulting from Hurricane Katrina is still a daily ritual that has already cost taxpayers almost $2.5 billion. But government investigators and those closest to the cleanup now say hundreds of millions of taxpayer dollars may have been wasted. Workers, contractors and government investigators say the large size of the contracts and the multiple tiers of subcontractors have pushed up the cost of the cleanup while slowing down the pace of the operation.

“I have not seen a better example of waste and ineptness in my lifetime,” says Troy Hebert, a part-time Louisiana state legislator and full-time owner of a debris removal company.


Hebert has worked past hurricanes and complains that this time, the Army Corps of Engineers gave debris removal contracts to four major corporations — which did little actual cleanup themselves, instead farming out much of the job to layers of local subcontractors.


The result?


“They were able to make huge, huge sums of profits off of actually other people doing work to clean up our communities, and that's not the way it should be,” says Hebert.


The four primary contractors — Ashbritt Inc., CERES Environmental Services Inc., Environmental Chemical Corp. and Phillips and Jordan Inc. — were each provided with a $500 million contract and a $500 million option by the Army Corps. The companies claim that they did not permit multiple tiers of subcontractors but admit that in some cases their subcontractors may have subcontracted to others. By contract, Environmental Services Inc. permits only two layers of subcontractors, but the company acknowledges that in a few rare instances it found as many as five layers of subcontractors. Ashbritt says it took pains to ensure that it had only one tier of subcontractors on the debris removal work it performed in Mississippi. But in one case NBC News discovered four tiers of subcontractors.

Here's an example of how it worked: The Ashbritt company was paid $23 for every cubic yard of debris it removed. It in turn hired C&B Enterprises, which was paid $9 per cubic yard. That company hired Amlee Transportation, which was paid $8 per cubic yard. Amlee hired Chris Hessler Inc, which received $7 per cubic yard. Hessler, in turn, hired Les Nirdlinger, a debris hauler from New Jersey, who was paid $3 per cubic yard.

Nirdlinger is not happy.

“It's a pyramid,” says Nirdlinger. “And everybody is taking a piece of the pie as you work your way up, and we're at the bottom. We’re doing the work!” he says.

 

[DaveA]

Wonder if any of the folks on the thread regarding looters, would also like to pump a few slugs into the owners of these trash outfits that are looting us "big time"? Both groups, the street looters and in this case, the trash outfits are involved in the same thing. using a natural disaster to enrich themselves.

 

[Don M.]

There have been some reports from Texas about price gouging...mostly stores trying to get ridiculous prices for things like bottled water. I saw one news article about a gas station that was charging $20 a gallon for gas, but I think that place got quickly shut down by the local authorities. There will probably be all sorts of reports in coming weeks/months, both in Texas and Florida about unscrupulous contractors descending on those areas to "rebuild" houses, etc. There will be numerous scams about these leeches wanting payments up front, then disappearing.

 

[Grumpy Ol' Man]

Not a new scam. 1980 I was superintendent on a construction project with Federal funds. We were required to subcontract a specified portion of the contract to MBE... Minority Business Enterprises. Our office contracted with a minority owned business to perform the earth work on the project. The owner of the subcontractor was definitely a minority. He arrived once/week in his Cadillac and three-piece suit. His lizard skin boots were something we didn't regularly see on a construction project. That owner was the ONLY minority we saw on the dirt work. The MBE had subcontracted the entire work to a white contractor with an entire white crew. I'm sure the MBE had more than one similar contract where he simply skimmed a portion of the dollars off the top.

Again, this was nothing but a scam due to the government wanting to "do right" by making certain a portion of the contracts went to assist in sustaining minority businesses. The very people the program was designed to help found a means of scamming the system and... yes, stealing... tax dollars for their own profit. The Katrina... and probably Sandy, Harvey, Irma, etc., etc., etc... reconstruction programs will see similar skimming of dollars into the hands of people "friendly" with politicians. Donate enough money to the correct politicians, get handed a large contract to perform part of the work, skim some off the top and contract the work out to another firm.

 

[jujube]

I remember when my neighbor put his company in his wife's name in order to get a "woman-owned business" toe-up on a big city job. Unfortunately, the city wanted to be shown that the business had been in his wife's name for a certain amount of time, which of course he couldn't prove.

 

[Ruthanne]

I saw examples on tv of how water and gasoline in Fl or TX is extremely high in price and they want to charge them with price gouging. This is sad that they are taking advantage of those already going through a disaster.

 

[chic]

There have been some reports from Texas about price gouging...mostly stores trying to get ridiculous prices for things like bottled water. I saw one news article about a gas station that was charging $20 a gallon for gas, but I think that place got quickly shut down by the local authorities. There will probably be all sorts of reports in coming weeks/months, both in Texas and Florida about unscrupulous contractors descending on those areas to "rebuild" houses, etc. There will be numerous scams about these leeches wanting payments up front, then disappearing.

Amazon raised the price of bottled water prior to the hurricane. Of course profiteering off another's misery is just sound business sense.

 

[Sunny]

As soon as Equifax had their data security breached, Norton started sending me emails offering a "Lifelock" app to protect my security. It too them no time to start making money off this.

 

[helenbacque]

There is a very fine line between being a good businessman and being greedy and each public example of crossing that line encourages others to do the same because of the 'everybody's doing it so that makes it OK' theory.