CHARLESTON, W.Va. — The Federal Emergency Management Agency is declining to comment on a state investigation that revealed the City of Richwood failed to properly use up to $3.1 million in federal disaster money meant to help residents recover from a catastrophic flood three years ago.

“FEMA cannot comment on the internal audit process of a state on its own use of funds,” a spokesman for the federal agency stated Monday in response to questions posed by MetroNews. “That is a state auditor’s report.”

The report by the state Auditor, released Friday in Richwood, concludes city leaders spent precious federal flood dollars to hire themselves, friends and family for flood relief jobs. Much of the money was not spent for its stated purposes, the report concluded.

The report, which delves broadly into Richwood’s financial troubles, devotes more than 60 pages to the potential misuse of FEMA money.

“Based upon our investigation, the potential exists that a significant portion of the $3.1 million received by the City may have to be repaid back to FEMA,” the state audit concluded.

The report makes serious allegations about the city’s misuse of federal flood relief money and about the state’s lack of oversight.

Among the recommendations: “An investigation by the FEMA Inspector General should be undertaken to ascertain whether any regulations or laws were violated in the handling of the FEMA monies received by the City of Richwood.”

The federal Office of Inspector General has cited billions of dollars in questioned costs across the country over the years, regularly saying the Federal Emergency Management Agency should provide more vigorous oversight.

“We concluded these issues continue, in part, because FEMA does not adequately manage disaster funds or hold grant recipients accountable for properly managing disaster funds,” wrote the Office of Inspector General in 2017.

Findings in West Virginia by the state Auditor include:

  • Of the $2,514,715 in total FEMA public assistance grant expenditures, $518,925 were transferred to Richwood’s general fund operating bank account, where the monies then lost identity because of commingling of funds.
  • Still of the total  public assistance grant money, $562,742 could not be traced to an applicable or approved project worksheet.
  • And, again of the total public assistance grant money, the auditor found questionable expenditures and documentation in four different project worksheets. Collectively, the city received about $909,923 from FEMA for these four projects.

“If FEMA deems all of the foregoing bullet points to be justification for the de-obligation of these funds, then the City of Richwood may have to repay approximately $1,991,510 of the monies it received back to FEMA,” the state Auditor’s Office wrote.

The most glaring example of improper conduct with FEMA funding related to the city’s repair of its public water system, wrote the Auditor’s fraud unit.

Within six months of the flood, the city sought and received almost $500,000 to repair the water intake.

Rather than use money to actually repair the intake, the City instead made a temporary fix with PVC piping that cost about $400.

Richwood’s leaders then re-directed the FEMA dollars to pay certain city officials’ salaries and other general city debts, the report concluded.

“Now, more than 2 years later, the main water intake remains unrepaired and has, on at  least one occasion, caused an entire shutdown of the City’s water system necessitating potable water to be brought in for the City residents,” the Auditor’s Office wrote.

Speaking on MetroNews’ “Talkline,” state Auditor J.B. McCuskey said that despite an investigation that lasted more than a year, his office still cannot account for much of the money that Richwood drew down from the federal government.

“We are still trying to get information about what happened on the ground in Richwood,” McCuskey said. “There’s still a large amount of money that’s unaccounted for.”

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