Two prominent disaster recovery experts appointed by Los Angeles Mayor Karen Bass face legal troubles over fraudulent activities during Hurricane Sandy relief efforts.
According to Breitbart, Walter Melnick and Mark O'Mara, former consultants at Hagerty Consulting, pleaded guilty to defrauding New York City of Hurricane Sandy relief funds in 2022 and 2023 respectively.
The consultants, who worked on New York City's post-Sandy recovery program while at Hagerty, were found to have claimed unauthorized lodging reimbursements and made false statements to investigators. Melnick managed the city's $15 billion recovery program, while O'Mara was involved in various recovery projects.
Details of fraudulent schemes and legal consequences
The fraudulent activities began in 2013 when New York City received billions in federal funding for Hurricane Sandy recovery efforts. Melnick orchestrated two schemes involving false documentation for lodging reimbursements and property-related fraud, ultimately stealing over $380,000 from the city budget.
O'Mara's fraudulent activities included submitting false information and documents, including a fabricated lease agreement, to obtain unauthorized lodging reimbursements. He also collaborated with Melnick in property-related fraud schemes, resulting in unlawful gains exceeding $250,000.
When investigations began, both consultants attempted to cover their tracks. O'Mara destroyed relevant emails and communications, while Melnick instructed an associate to lie to law enforcement.
Impact on current Los Angeles recovery efforts
Los Angeles recently awarded Hagerty Consulting a contract to lead rebuilding efforts following recent wildfires. The selection process occurred behind closed doors with two other bidders participating.
Chief Recovery Officer Steve Soboroff previously announced that the chosen firm would serve as an "owner's rep" to oversee projects. However, the contract's value remains undisclosed, raising concerns about transparency.
Hagerty Consulting was founded by Steve Hagerty, the former mayor of Evanston, Illinois. The firm's selection has drawn attention due to its connection to Evanston, which made history as the first U.S. city to implement reparations for past racial discrimination.
Legal outcomes reflect severity of fraud
The U.S. Attorney for the Southern District of New York detailed Melnick's charges. According to the court documents:
Beginning in or about 2013, in the aftermath of Hurricane Sandy, the City of New York received billions of dollars in federal money to fund Hurricane Sandy-related recovery efforts. The City used certain of these funds to hire Company-1 [Hagerty] to assist with Hurricane Sandy relief (the Sandy Project). Company-1 hired MELNICK as an independent contractor to work on the Sandy Project.
Both consultants received different sentences reflecting their roles in the fraud. Melnick was sentenced to one year of home confinement and two years of probation. O'Mara received probation, and both were ordered to repay the stolen funds.
Consulting firm faces scrutiny over past employees
The revelation of these fraudulent activities by former Hagerty consultants raises questions about Los Angeles's decision to hire the firm for wildfire recovery efforts.
While Hagerty promptly terminated O'Mara following the charges, the company's involvement in the Hurricane Sandy fraud case and its current role in Los Angeles's recovery efforts continue to draw attention. The undisclosed contract value and closed-door selection process add another layer of complexity to the ongoing situation.
