FBI agents are interviewing employees at FEMA in an investigation of unusual changes in federal flood insurance maps that benefited oceanfront condo buildings with a history of flooding, according to sources familiar with the investigation.
The investigation follows a report by NBC News
documenting more than 500 instances in which FEMA has remapped
waterfront properties from the highest-risk flood zone, saving the
owners as much as 97% on the premiums they pay into the
financially strained National Flood Insurance Program.
FBI agents have
conducted interviews in Washington over the past 10 days with employees
of the Federal Emergency Management Agency, which oversees the flood
insurance program. Others outside the government also have been
interviewed and have voluntarily provided documents, according to two
people interviewed by the FBI. Employees at contractors that evaluate
the map changes for FEMA are also being interviewed.
Sitting
in on the FBI interviews are investigators from the Office of the
Inspector General at the U.S. Department of Homeland Security, according
to the sources. FEMA, which has said it would review the flood map
changes identified by NBC, is an agency within the DHS .
Asked
about the FBI investigation, a FEMA official referred all questions to
the Office of the Inspector General, whose spokesman said, "As a matter
of policy, the Office of Inspector General does not discuss
investigative matters." The FBI also declined to comment.
Where the McDonald's used to be
NBC
News reported on February 18, 2014, that FEMA has moved the lines on its flood
maps to benefit hundreds of oceanfront condo buildings and
million-dollar homes. According to an analysis of federal records by NBC
News, the changes shift the financial burden for the next destructive
hurricane, tsunami or tropical storm onto the neighbors of these wealthy
beach-dwellers — and ultimately onto all American taxpayers.
NBC News
Examples
of map changes were found from the Gulf of Alaska to Bar Harbor, Maine.
One hotspot of map changes was on Alabama's Gulf Coast, in the twin
resort towns of Gulf Shores and Orange Beach, where 70 coastal buildings
have benefited, costing the flood insurance program at least $5 million
a year in premiums.
On a single
day – October 25, 2012, as agency officials were closely monitoring
Hurricane Sandy as it barreled toward the Atlantic Coast – FEMA
remapped more than a mile of the oceanfront in Gulf Shores, including
condos on the spot where a Holiday Inn and a McDonald's were destroyed
by Hurricane Ivan in 2004. The document that made that change,
issued by a FEMA manager, redrew the lines to exclude 25 condo
buildings from the highest-risk flood zone, and was one of just 533
cases found nationwide by NBC News.
Among
the buildings excluded was this beachfront condo, the Island Tower,
which collected $11,562 for its damage from Katrina in 2005, and more
than $250,000 from Ivan.
John Brecher / NBC News. The Island Tower condominium
building, right, and the Phoenix All Suites Hotel, left, rise above the
beach in Gulf Shores. FEMA remapped both into lower-risk flood zones.
The Island Tower's condo
association was paying $143,190 a year into the National Flood Insurance
Program. Now that it's been reclassified into a lower-risk flood zone,
its premium is $8,457 a year, a saving of 94%, according to
records examined by NBC News.
Just down the beach is
the Royal Palms, which collected $58,230 for damages during Katrina, and
$889,730 from Ivan. The Royal Palms was paying $218,484 a year, but
after being changed to a lower-risk flood zone, now pays $6,845, saving
97%.
NBC News.
Some of the condo projects have multiple buildings, making more than 60 buildings in all.
NBC
News found that FEMA has redrawn maps even for properties that have
repeatedly filed claims for flood losses from previous storms. At least
some of the properties are on the secret "repetitive loss list" that
FEMA sends to communities to alert them to problem properties. FEMA says
that it does not factor in previous losses into its decisions on
applications to redraw the flood zones.
And
FEMA has given property owners a break even when the changes are
opposed by the town hall official in charge of flood control. Although
FEMA asks the local official to sign off on the map changes, FEMA
officials told NBC that its policy is to consider the applications just
the same, even if the local expert opposes the change.
The flood map 'Robin Hood'
In a second report on February 19,
NBC News reported that many of the map changes were obtained by a South
Florida company called Flood Zone Correction. It filed successful
applications for map changes on behalf of more than 100 coastal condo
developers in Alabama, Florida, Texas, South Carolina and Georgia, the
company president said. The company, in West Palm Beach, works only for
commercial real estate companies,not private homeowners.
The
company's founder and president, Dan Freudenthal, said this week, "I
have not been contacted by the FBI, but I will gladly cooperate with
their investigation into the map change cases because all of those cases
are legitimate." In an earlier interview, Freudenthal said he was a
"Robin Hood," saving property owners money by correcting inaccurate
federal flood maps. After the NBC articles included that
self-description, Freudenthal issued a press release: "Just yesterday
NBC News started a series of investigative stories about flood
insurance, where Flood Zone Correction, Inc., (FZC) receives a
well-deserved 'Robin Hood' title." The release said NBC News had
discovered the company's "heroic achievements."
Do you have information on FEMA's changes to flood maps, or the companies that apply for or evaluate these applications? Send an email to investigative reporter Bill Dedman at NBC News.
Read part one, "Why Taxpayers Will Bail Out the Rich When the Next Storm Hits," http://www.nbcnews.com/news/investigations/why-taxpayers-will-bail-out-rich-when-next-storm-hits-n25901
Read part two, "Meet the Flood Insurance 'Robin Hood' Who Saves Condo Owners Millions," http://www.nbcnews.com/news/investigations/meet-flood-insurance-robin-hood-who-saves-condo-owners-millions-n26711
Read part three, "For Average Joes, Fighting FEMA Flood Maps Isn't Easy or Cheap," http://www.nbcnews.com/news/us-news/average-joes-fighting-fema-flood-maps-isnt-easy-or-cheap-n23871
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