Integrity Monitors Can Prevent Fraud in LA Disaster Recovery, Writes Neil Getnick
On April 18, Bloomberg Law published an Op-Ed by Managing Partner Neil V. Getnick advocating for Los Angeles to model its wildfires disaster recovery after the September 11 World Trade Center cleanup in New York City. As Getnick writes, a congressional committee lauded the 9/11 disaster recovery as an “overwhelming success.”
Independent private sector general (“IPSIG”) monitors, or integrity monitors, were a key component of New York’s recovery methodology, and recognized by congress as a “best practice.” The integrity monitors “used an integrated multidisciplinary approach that combined legal, investigative, forensic auditing, and industry-specific skills” that enabled the project “to come in ahead of time, below budget, and to specification.” Other disaster recovery efforts that failed to use IPSIG methodologies did not have the same success.
In his Op-Ed, Getnick argues that Los Angeles should look to New York’s World Trade Center cleanup – and its use of integrity monitors – to avoid “extensive fraud, massive cost overruns, and missed deadlines.”
Read Getnick’s entire Bloomberg Law Op-Ed below:
LA Should Model Disaster Recovery Efforts on Post-9/11 New York
Attorney Neil Getnick says Los Angeles can create an efficient and cost-effective disaster recovery from the devastating wildfires by looking to the cleanup of the World Trade Center site following the Sept. 11, 2001, terrorist attacks.
The Trump administration’s call to eliminate the Federal Emergency Management Agency raises vital questions about how to prevent the massive and inevitable fraud that has consumed government disaster recovery funds for decades.
Letting local governments lead such efforts could exacerbate the problem due to the limited experience and disaster recovery infrastructure at the state level. The best way to build a more efficient and cost-effective disaster recovery process is to follow the lessons learned from the cleanup of the World Trade Center site following the Sept. 11, 2001, terrorist attacks.
That cleanup was a coordinated multi-jurisdictional effort involving FEMA, the New York City Department of Investigation, private integrity monitors, and other entities—which President Donald Trump acknowledged could serve as a model for rebuilding the neighborhoods devastated in the southern California wildfires.
As one of the four integrity monitors who oversaw the World Trade Center effort, I wholeheartedly agree. But it appears that the valuable lessons learned at the World Trade Center may be ignored. And the vitally important rebuilding effort in greater Los Angeles could follow the path of most post-disaster rebuilding efforts—one mired by extensive fraud, massive cost overruns, and missed deadlines.
In the aftermath of a disaster, many criminal and non-criminal entities start to circle the wreckage like vultures, seeking to make a quick profit on the billions of dollars of federal disaster relief funding inundating the disaster zone. Along with targeting individual disaster victims, these scammers seek to abuse the contracts the government provides to private companies that drive the rebuilding process.
In a 2023 report on preventing fraudulent payments in emergency assistance programs, the US General Accounting Office concluded that there have been $2.4 trillion in improper government payments since 2003 and that “in emergencies, the risk of improper payments may be higher because the need to provide assistance quickly can hinder the implementation of effective controls.”
Why did the World Trade Center disaster recovery succeed where others before and after failed? The seeds of that success were sown nearly a decade before the terrorist attack.
When Mayor Rudolph Giuliani took office in 1992, organized crime exerted its influence over a multitude of New York City industries. This was particularly true of the commercial waste hauling industry.
By then, a group of former prosecutors, investigators, and forensic accountants were hard at work developing a multidisciplinary monitoring methodology for cleaning up infected industries. It came to be known as IPSIG—independent private sector inspector general—monitoring, promoted, and practiced by an international association.
The Giuliani administration put that methodology to work in an array of organized crime infiltrated industries, such as waste hauling, demolition, concrete production, wholesale food markets, and construction. These monitors developed a public-private partnership with the government, often working under the supervision of the New York City Department of Investigation and other agencies. The city established a Trade Waste Commission that transformed the waste hauling industry by working with and through IPSIG monitors.
By the time Sept. 11 struck, the IPSIG monitors had a successful track record preventing and detecting fraud, waste, and abuse. In the disaster’s immediate wake, there was no time to issue requests for proposal and undertake an extended due diligence period to select contractors. Instead, a crosshair was drawn over a map of the site and four of the most well-qualified general contractors were hired to oversee the recovery effort, one for each of the four quadrants.
It was essential to gather the twisted beams of the Twin Towers offsite in a Staten Island landfill for forensic examination that would reveal how the buildings collapsed. But a truckload of those beams never made it to the site and were found to have been diverted to an organized crime-controlled scrap yard to be sold for scrap metal.
While that scheme was foiled, the mayor recognized the more general threat and appointed four of the most experienced IPSIG monitors to work with each other in conjunction with the Department of Investigation to prevent and detect fraud, waste, and abuse among the contractors and sub-contractors involved in the cleanup.
The integrity monitors used an integrated, multidisciplinary approach that combined legal, investigative, forensic auditing, and industry-specific skills. That team used surveillance, interviews, informants, background checks, and other techniques to screen subcontractors and ensure they used the appropriate equipment and workers, accurately billed the government, and hauled debris efficiently to the appropriate destination.
A congressional committee later launched an in-depth investigation of the disaster recovery efforts. The committee’s report noted that private integrity monitors “had never previously been deployed on such a large scale, and, by all accounts, their deployment in the debris removal context was an overwhelming success.”
The report further stated the program “was effective in large part because it was preventive.” The committee concluded that the performance of the integrity monitors was a “best practice” that enabled the overall project to come in ahead of time, below budget, and to specification. Its report endorsed that methodology, encouraging its use in future disasters.
Future disasters showed that leaders failed to take note. The botched recovery efforts associated with Hurricane Katrina in New Orleans, and Hurricanes Irma and Maria in Puerto Rico, became emblematic of what we have come to expect. The highly successful IPSIG methodologies were forgotten.
In Los Angeles, the Department of Homeland Security, in conjunction with the Los Angeles County District Attorney’s office, the FBI, the US Attorney’s Office, and other agencies established a Joint Regional Fire Crimes Task Force to investigate and prosecute “criminal actors seeking to exploit the wildfire crisis.” It’s an important step, but it still ignores the lessons learned from the successful use of integrity monitors during the Ground Zero cleanup.
The essence of the success in New York was the creation of an environment that prevented fraud before it took place. As the Trump administration seeks a new, more cost-effective approach to recovery efforts, it’s critical to consider establishing a method to prevent fraud. IPSIG integrity monitors provide that methodology.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.