BATON ROUGE (CN) - A Texas consulting company overcharged FEMA by $2 million for imaginary ambulances after Hurricane Katrina, federal prosecutors say. C. Henderson Consulting and the two men who run it "had never before been in the ambulance business, and had no prior experience providing this type of service" but promised they could supply 50 ambulances and the staff to run them, according to the federal complaint.
Defendants Charles Henderson and Richard Bell acted with "reckless disregard" by submitting invoices to FEMA that knowingly and significantly inflated the number of ambulances they managed to place in service for evacuation, the complaint states. Henderson is the owner and Bell is the executive vice president.
"Prior to Hurricane Katrina, CHCI, Henderson and Bell had never before been in the ambulance business, and had no prior experience providing this type of service," the complaint states.
"Despite this lack of experience, Henderson held himself out to GSA and FEMA as the owner of an ambulance company, i.e., (CHCI) and able to provide properly equipped ambulances and qualified staff to operate them."
After Hurricane Katrina devastated the Gulf Coast in August 2005, the Department of Homeland Security, working through FEMA, requested 50 ambulances to evacuate hospitals and nursing homes.
"Bill Lokey, the Federal Coordinating Officer for the Department of Homeland Security, who was in charge of coordinating the entire federal response for Hurricane Katrina relief efforts," drew up the "Action Request Form" requesting 50 ambulances, according to the complaint.
C. Henderson Consulting told FEMA it owned an ambulance company and could fill the contract, though it had no ambulances, no ambulance staff and no ambulance experience, according to the complaint.
FEMA and DHS do not appear to be wholly blameless. According to the complaint, "Lokey did not receive any documentation, application, or proposal from Henderson, but negotiated a contract with Henderson, on behalf of CHCI, based on the ARF authorizing a 60 day contract for 50 ambulances at a cost of $5.2 million dollars. Additional contracts, and amendments to contracts, were entered extending the time of performance and altering the number of ambulances needed."
Contract in hand, Henderson subcontracted with ambulance companies, including then-bankrupt Goldstar Companies, which offered 45 ambulances and help in recruiting drivers and paramedics, for which it would get 50 percent of the net profits from the FEMA contract, according to the complaint. Henderson also signed up smaller subcontractors.
Henderson then "over-billed FEMA under the executed contracts by submitting invoices for more ambulances than they actually had in service," according to the complaint."
It contains a 2-page chart with categories "Ambulances Billed," "Ambulances Actually Provided," "Unsupported Ambulance Claims," and "Loss to FEMA."
According to the chart:
In the first invoice, for example, Henderson billed for 19 ambulances, but provided 11, overcharging by $24,800.
In the second invoice, Henderson charged for 28 ambulances, provided 21, and overcharged by $21,700.
In the third invoice, Henderson charged for 45 ambulances, provided 30, and overcharged by $46,000.
FEMA paid Henderson in full, prosecutors say, overpaying by $1,971,600 in all for 48 invoices.
Prosecutors demand treble damages under the False Claims Act.