Two former disaster recovery experts at the firm Hagerty Consulting, that Los Angeles Mayor Karen Bass hired to lead rebuilding efforts after the recent wildfires in Southern California, pleaded guilty in 2022 and 2023 to defrauding New York City of Hurricane Sandy relief funds. After having endured one of the costliest natural disasters in U.S. history last month Los Angeles has been picking up the pieces of decimated communities.
For context, Walter Melnick, a contractor for Hagerty Consulting based in Illinois, was previously accused of making false statements to investigators after allegedly claiming lodging reimbursements he was not entitled to receive. Reportedly, Melnick was charged with “managed New York City’s post-Sandy $15 billion recovery program.”
Furthermore, Mark O’Mara, another Hagerty consultant at the time, faced accusations of claiming more than $250,000 in reimbursements that he was not entitled to receive alongside trying to destroy evidence. Reportedly, both have pleaded guilty after entering plea deals. Melnick was sentenced to one year of home confinement, two years of probation, and has to pay back over $380,000 in money he unlawfully obtained.
O’Mara was sentenced to probation and forced to pay back more than $250,000 he received illegally. Both men reportedly no longer work in the industry. A 2023 press release about O’Mara from the U.S. Attorney for the Southern District of New York read, “Beginning in or about 2013, in the aftermath of Hurricane Sandy, the City of New York (the “City”) received billions of dollars in federal money to fund Hurricane Sandy-related recovery efforts.”
The attorney continued, “The City used certain of these funds to hire Company-1 [Hagerty] to assist with Hurricane Sandy relief (the “Sandy Project”). Company-1 hired O’MARA to work on the Sandy Project.” The statement added, “Between in or about 2017 and in or about 2019, O’MARA also conspired with others – including another consultant at Company-1, WALTER MELNICK – to defraud the City by falsely claiming that he was residing in an apartment purchased by an individual at MELNICK’s direction. O’MARA fraudulently obtained more than approximately $250,000 from the City via Company-1 as a result of these schemes.”
A 2022 press release from the U.S. Attorney for the Southern District of New York in 2022 described the charges brought against Melnick. “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,” the report read.
It continued, “Between in or about 2013 and in or about 2019, while working on the Sandy Project for Company-1, MELNICK participated in two schemes to defraud the New York City Office of Management and Budget (“NYC-OMB”). First, between in or about January 2013 and in or about October 2017, MELNICK conspired with at least one other individual (“CC-1”) and submitted fraudulent documentation to NYC-OMB via Company-1, falsely claiming that he was renting and living in an apartment in New York in order to obtain lodging and travel reimbursements.”
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Authorities further claimed, “Upon learning that this first fraudulent scheme was under investigation, MELNICK told CC-1 to lie to law enforcement. Second, between in or about 2017 and in or about 2019, while working on the Sandy Project, MELNICK conspired with at least two individuals, including another employee of Company-1 (“CC-2”) and a family member (“CC-3”), to purchase a property that CC-2 used to submit fraudulent reimbursement requests to NYC-OMB via Company-1 for lodging expenses to which CC-2 was not entitled. CC-2 transferred the proceeds from this fraudulent scheme to CC-3, who used part of the proceeds to pay the mortgage and maintenance for the property and retained the rest. In or about March 2022, MELNICK made false statements to the Government in connection with this second fraudulent scheme.”
Featured image credit: By Karen Bass For Mayor – https://www.flickr.com/photos/194058440@N03/52034114048/, Public Domain, https://commons.wikimedia.org/w/index.php?curid=119329831