Scam artists take money earmarked for Hurricane victims

Scam artists have taken more than a billion dollars in taxpayer money, money that was meant for Hurricane victims.

A congressional undercover investigation found Federal aid was used at strip clubs, a $200 bottle of champagne from Hooters and $300 worth of Girls Gone Wild Videos.

Thousands of evacuees settled in Memphis - and looked to FEMA and other agencies  for relief here.

Action News 5 spoke with some who say the abuse was widespread and widely known in New Orleans in the weeks after Katrina.

Gwen Holmes doesn't mince words.  "It's depressing."

She's had a rough go.  Her New Orleans job was downsized after Katrina and for eight months, she and her two youngest kids have been renting this apartment in South Memphis.

She's taken temporary jobs and is still looking for a full-time income.

So when she sees the GAO report out of washington, it resonates.  Investigators found that FEMA wrongly paid out more than a billion and a half dollars to people abusing the system.

Holmes says she saw it happening before she left.  "The word was out.  These things were going on.  You know, you could go here, you could get money here, you can get money here."

She says the desperation in New Orleans led many people to take advantage, to exploit weaknesses in the relief system there.  But - she says - she saw none of that in Memphis.  And she is shocked by how much money was misspent.

"There are a lot of people that are there now, today, that still really need genuine help.  It's sickening to think that people would do this," she says.

FEMA official say they have identified more than 1,500 cases of potential fraud.