A scene from Freeport in the aftermath of superstorm Sandy...

A scene from Freeport in the aftermath of superstorm Sandy on Oct. 30, 2012. The state has begun sending 'recapture' letters to Sandy victims who may owe money. Credit: Newsday / J. Conrad Williams, Jr.

An estimated 1,500 superstorm Sandy victims could owe the state $59 million in disaster recovery money that was awarded to them to restore, repair and lift their homes.

The Governor’s Office of Storm Recovery began sending out debt notice letters this month to applicants the agency believes were ineligible for housing rehabilitation and elevation money or received duplicate payments for the same work.

About 25 to 30 letters will go out in the initial batch this month — mostly to applicants in Nassau and Suffolk counties — notifying people the state wants the money returned.

The amounts so far in question range from $4,500 to $180,000, said Barbara Brancaccio, spokeswoman for the storm recovery office and its housing program, commonly called New York Rising.

Brancaccio said the “recapture” efforts are usual in disaster recovery programs and required by federal regulations. Each case will be reviewed before repayment notices are sent and caseworkers assigned to each case, she said.

Applicants will have 60 days from the date of the letter to file a written appeal, according to the state’s recapture policy manual.

“Our goal here is to give people as much opportunity as possible to justify their award,” said Daniel Greene, general counsel for the Governor’s Office of Storm Recovery. “We recognize that these people have been through a lot. It’s really something we have to do.”

The Federal Emergency Management Agency is also working to recapture money it believes was improperly spent in the aftermath of the October 2012 storm. The agency handed out $1.4 billion in aid to residents in New York and New Jersey to cover emergency needs and said a fraction of those cases were improperly paid.

As of Jan. 7, the agency was trying to get back nearly $15.8 million from 2,361 cases in New York, FEMA said.

But the agency has come under fire for the debt collection process. Advocates say is it hard to understand, appeals are nearly impossible to get and hearing decisions are often delayed. Also, once debt ages past 120 days, it can be forwarded to the U.S. Treasury, which can assess interest between 28 percent to 30 percent in certain cases.

New York’s collection efforts are separate from the FEMA efforts but will also be a burden, said Daniel Strafer, a staff attorney at Touro Law School’s disaster relief clinic who represents about two dozen clients from whom FEMA wants money back.

“That’s going to be a hardship on a lot of people,” Strafer said. “In a lot of cases the money has been spent. This is years later now.”

Strafer had not heard from anyone who received a state recapture letter thus far.

Hardship waivers will be granted to those in need and payment plans can be worked out, though the preference is for bulk repayment. Interest and penalties have not been established and Greene said the agency does not believe it will do so.

“Every one of these cases is a story and every one of these cases is different,” Greene said. “We want to make sure people get all the grant money they were entitled to.”

The state believes about 500 applicants were ineligible for funding and 1,000 received duplicate funding, but that tally could change over time as accounts are reconciled.

The initial group of letters from the state is focused on people who were ineligible for aid. That includes people who received disaster money after Tropical Storm Irene and then did not get flood insurance, which is a requirement, and then suffered damaged again in Sandy. Other cases include people who took money to elevate or repair their homes but then left the program.

“You can’t keep money you get for a specific purpose and then withdraw from it,” Greene said.

The bigger batch of people — those with duplicate benefits — will be applicants who got small business administration loans, used private insurance, received flood insurance payouts or got some sort of charitable aid.

About 18,000 applications for housing assistance were filed with the state and 12,000 were eligible. Depending on the damage, work done, income level and other issues, applicants could receive up to $400,000 to repair and lift homes.

Of those cases, 166 allegations of fraud have been filed with the state or through a tip line. Of those, 40 were referred to federal law enforcement authorities, 67 were closed without any action and 59 are still under investigation, Brancaccio said.

Facts about the program

  • An initial batch of letters will go out in February. More will be sent later.
  • Amounts that could be owed range from $4,500 to $180,000.
  • Applicants will have 60 days from the date of the letter to file a written appeal.

Latest Videos