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Disaster Fraud: A Sad Example from a Katrina Victim

by Barry Zalma, Esq., CFE

This story provides yet one more example of how vultures take the opportunity of someone’s misfortune to profit and cause worse damage and pain than that caused by a disaster.

John Colvin, 63, of Rainbow City, Alabama had his 60-year prison sentence reinstated by the Louisiana Supreme Court. Colvin, a former Alabama state legislator, pleaded guilty to stealing more than $250,000 from Hurricane Katrina victims in New Orleans after they paid him for modular homes he never delivered.

The total loss to the six victims came to over $250,000, much of it Road Home money distributed to homeowners to rebuild in the aftermath of the storm. The trial court ordered a presentence investigation and on February 12, 2010, conducted a sentencing hearing at which the victims on each count, or members of their family, testified about their losses. The defense called several witnesses in mitigation. At the close of the hearing, the trial court sentenced respondent on each count to consecutive terms of 10 years imprisonment at hard labor, for a total of 60 years imprisonment at hard labor. As documented in the testimony at the sentencing hearing, in the majority of the six cases, the homeowners paid tens of thousands of dollars for little or nothing.

Colvin’s six victims included elderly residents whose homes were demolished by the 2005 storm. Prosecutors said he never delivered any of the modular homes he sold. Much of the stolen money had been awarded to the victims through the state’s Road Home grant program.

Colvin pleaded guilty in November 2009 to six counts of felony theft. The judge sentenced Colvin to the maximum 10 years in prison per count and ordered them to be served consecutively.

The court reported that Colvin also had pending five additional theft charges in Jefferson Parish, further underscoring the social risk he posed.  The prosecutor emphasized the significance of those pending cases when she observed, regarding probation as a sentencing option: ‘And let’s be honest, he’s not getting out because after we deal with him in Orleans Parish, then he’s shipped to Jefferson Parish.’”

Although it’s hard to foresee such a situation, at least there is an avenue for reporting and receiving assistance:

• Should you believe you are a victim of a disaster scam report it to the National Disaster Fraud Hotline or to your state Insurance Fraud Bureau or Fraud Division or your state attorney general.

Let’s see crooks who have such lack of sympathy for the pain of others, reap what they sow. And think about those politicians who misuse their positions for personal gain, especially when it’s time to vote! The 60-year sentence, if well publicized, will deter future efforts to steal from disaster victims and their insurers.

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Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance issues including fraud. Mr. Zalma has also written a number of books and writes a free newsletter on insurance fraud. See his new program on insurance fraud, “Who Got Caught?” online at www.WRIN.tv.