7/17/13 The Wall Street Journal: Red Cross Program Hit by Complaint

Red Cross Program Hit by Complaint

Charity Watchdog Raises Questions About Eligibility Rules for Sandy Help

Updated July 17, 2013, 10:02 p.m. ET

The Wall Street Journal

By MELANIE GRAYCE WEST

Gloria Barre of Staten Island and Annie Mae Scruggs of Queens both saw their homes damaged by superstorm Sandy, but they had different outcomes when they applied to the American Red Cross for help.

Ms. Scruggs’s son, Anthony, who had power of attorney for her, got the maximum grant allowed by the charity’s Move-In Assistance Program, $10,000. Ms. Barre said a Red Cross worker told her she would get the money. But then she was denied in June.

Why these two Sandy victims and others had different outcomes with their Red Cross applications is part of a formal complaint being examined by New York state Attorney General Eric Schneiderman’s office.

The complaint, filed this month by the Disaster Accountability Project, a Rockville, Md., charity watchdog group, said the Red Cross changed its eligibility rules for Sandy assistance, leaving out some people who were expecting the money for rebuilding or relocating.

“I’m not asking for millions of dollars here,” said Ms. Barre, 56 years old. “Give me my $10,000 back for my roof.”

At a news conference Wednesday about a separate Red Cross review, Mr. Schneiderman said of the complaint: “We are pursuing a variety of complaints, that is one of them.”

Speaking generally, Gail DeNicola, the Red Cross’s northeast vice president, said a review of the Move-In Assistance Program at the end of April found that some caseworkers were incorrectly including people in the program who weren’t eligible.

“It is not that they were no longer eligible—they were not eligible in the first place,” said Ms. DeNicola in an email. “After that review, we provided additional training for case-work staff on eligibility requirements.”

The American Red Cross’s Move-In Assistance program was launched in late 2012 at the urging of federal officials to help those affected by Sandy to make a transition from temporary to permanent, sustainable housing. Tens of thousands of New York City area residents were displaced from their homes temporarily after the Oct. 29 storm.

The program provides grants to cover, among many things, contractor fees, first month’s rent and broker fees, furniture and temporary housing up to 30 days. Red Cross officials said 1,213 New York households had received $6.9 million in aid.

The Disaster Accountability Project said in its complaint that internal documents—reviewed by The Wall Street Journal and confirmed as authentic by the Red Cross—show that the eligibility rules for the Move-In Assistance Program changed between January and May, in effect, squeezing out some people who believed they qualified for the money.

In January, according to an eligibility document, storm victims had to show the Red Cross that one of three guidelines applied to them: their home was destroyed, they were living in a federally funded hotel room or they had received the maximum grant given out by the Federal Emergency Management Agency.

In May, eligibility rules required victims to show two guidelines applied, with one being the destruction of their home, according to records.

“The goal post changed numerous times,” said Ben Smilowitz, executive director of the Disaster Accountability Project.

Ms. DeNicola said the eligibility rules didn’t change. She said caseworkers may have misinterpreted the rules in the past.

The Disaster Accountability Project said as many as 1,000 more Sandy victims would have been eligible for Red Cross assistance if their cases had been processed faster before the requirements were changed. More than 150 Sandy victims signed onto a statement filed with the complaint, asking “for fair treatment and equal application of eligibility protocol.”

Mr. Scruggs received $10,000 from the Red Cross a few weeks after applying in late January or early February. He appears to have complied with the January guidelines: His mother’s home was destroyed, but his mother didn’t receive a maximum grant from FEMA, and his mother didn’t spend any time in a federally funded hotel.

“I just followed their instructions, gave them what they asked for and they gave me a check,” said Mr. Scruggs, 42.

A Red Cross spokeswoman said Ms. Scruggs was eligible for the program because she received $31,900 from FEMA, the maximum. But Mr. Scruggs says that his mother didn’t get the maximum grant; she got about half that and, as of June 1, he was appealing FEMA’s decision.

Ms. Barre said she asked for Red Cross help in March and said she was told verbally that she qualified. She said her home had suffered $200,000 in damage and she wanted the money for a new roof. She said her home was destroyed, she didn’t receive a FEMA maximum grant and she didn’t stay in a hotel.

A Red Cross spokeswoman said Ms. Barre was determined to be ineligible for the Move-In Assistance program because her home hadn’t suffered enough damage, based on the amount of money she received from FEMA, $5,896. The spokeswoman said Ms. Barre had been referred to Catholic Charities, which is helping her with her case.

Ms. Barre maintains that her house was pushed off its foundations and is uninhabitable. Ms. Barre said she received little money from FEMA because she received an insurance payout.

The scrutiny of the Move-In Assistance Program comes as the American Red Cross faces questions on other fronts. On Wednesday, Mr. Schneiderman said the charity is one of 50 nonprofit groups allegedly sitting on more than 40%, or about $238 million, of the money they raised after the storm.

The American Red Cross was the largest Sandy fundraiser, said Mr. Schneiderman’s office, having amassed more than half of total funds raised. Mr. Schneiderman said the report, which looked into 89 charities, “suggests serious problems” and the investigation is continuing.

Ms. DeNicola said the Red Cross is “responding to a set of questions” sent by Mr. Schneiderman’s office.

—Alison Fox contributed to this article.

A version of this article appeared July 18, 2013, on page A17 in the U.S. edition of The Wall Street Journal, with the headline: Red Cross Program Hit By Complaint.

http://online.wsj.com/article/SB10001424127887323993804578612203455137238.html