A Dallas architecture and engineering firm has agreed to pay the federal government $11.8 million to resolve allegations that the company systematically arranged inflated storm damage estimates for several New Orleans institutions to collect more federal recovery money in the wake of Hurricane Katrina.
The settlement amount is a fraction of the more than $100 million in overpayments that AECOM was accused of fraudulently securing in a 2016 whistleblower lawsuit brought by a former company manager. The money was used for repairs of facilities at Xavier University, Dillard University, the Archdiocese of New Orleans and several local public schools.
Xavier paid a $12 million settlement. The archdiocese paid a little more than $1 million. The government dismissed Dillard as a defendant in 2020. And though the suit named several Orleans and St. Bernard parish schools that received money, those school districts were never made a party to the case.
At the center of the allegations was a former project manager for AECOM, which the federal government enlisted for technical assistance in preparing requests for recovery funding after the storm.
The official routinely submitted inflated damage estimates to FEMA, the government alleged. And the suit claims that when AECOM supervisors reviewed grant applications that included "materially false" descriptions of damage, they failed to correct them.
“FEMA plays an essential role in helping communities recover from natural disasters,” said Brian Boynton, deputy assistant attorney general of the civil division of the U.S. Department of Justice. “Today’s settlement sends a strong message that FEMA contractors, as well as funding recipients, must provide truthful and accurate information so that FEMA’s resources are used to help those truly in need.”
The settlement directs roughly $2.5 million of the federal government's $11.8 million to the suit's whistleblower, Robert Romero, and his attorneys. Romero also gained a share of the earlier settlements under laws that reward those who report fraud.
A representative for AECOM said in a statement that the company maintains it did nothing wrong and defends the work it did to help rebuild New Orleans.
"We continue to disagree with any assertion by any government agency that the schools received too much money to rebuild," spokesperson Jason Marshall said.
"To avoid the expense and distraction of litigation related to events that occurred more than 15 years ago, AECOM has agreed to pay the government a small fraction of the damages it sought," he added.
Marshall stressed that, whether the cost estimates were inflated or not, all of the money went to the local institutions and not to AECOM. In the suit, the government alleged AECOM benefited from the arrangement in other ways, like billing the government for more hours.
Xavier was overpaid by approximately $16 million, the suit alleged, for claims of damage to a gymnasium slab and to the basement of the student center, which had no basement.
Dillard was overpaid by $14.3 million for inflated claims of damage to Straight Hall, Hartzell Hall and Camphor Hall, the suit alleged.
And the archdiocese — which has recently declared bankruptcy amid a flood of lawsuits over alleged child sex abuse by priests — collected about $46 million in overpayments from FEMA, the suit said. The largest chunk of that, more than $36 million, was paid out after the archdiocese claimed that the four top floors of two assisted-living centers had been catastrophically damaged when that was not true.
