Kentucky mistakenly sent thousands in donated money to people unaffected by 2021 tornadoes

The Kentucky Treasury has canceled thousands of dollars in checks meant to go to survivors of the December 2021 tornadoes in Western Kentucky after learning some recipients were unaffected by the storms and sent the money in error.

In early December, the Public Protection Cabinet issued more than $10 million in $1,000 increments — about 10,040 checks — from the Team Western Kentucky Tornado Relief Fund.

But “within days” the treasurer’s office and Public Protection began receiving calls from people who had gotten money even though they weren’t affected by the tornadoes, Brittany Warford, general counsel for Treasurer Allison Ball, told The Herald-Leader.

“’We have this $1,000 check. What are we supposed to do with this?’” Warford said callers told the Treasury. “’I don’t want to cash it and then have some claim against me from someone, and I also don’t want to cash money that was raised in donations for victims when I’m not a victim.’

“We’ve been getting those calls every week since the checks went out.”

Warford said the treasurer’s office has canceled payment on 184 checks.

If the Public Protection Cabinet, which administers the relief fund, knows how many checks were sent to the wrong people — and how those recipients got on the list in the first place — it’s not saying.

The Public Protection Cabinet did not participate in an interview with The Herald-Leader and instead provided written statements in response to questions from the newspaper.

”There are various reasons checks are returned, some include change of address, incorrect name on check or possible fraud,” Public Protection Cabinet Executive Director of Communications Kristin Voskuhl said via email.

The Herald-Leader repeatedly asked Voskuhl how many of the 184 checks may have been issued due to possible fraud compared to other reasons; Voskuhl did not provide that number, instead noting the returned checks amount to less than 2% of the total checks.

The treasurer’s office said that while it has the power to stop payments, the cabinet does not have to provide the reasons for canceling checks.

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Check recipients were identified as tornado victims by insurance companies or FEMA, Voskuhl wrote. The FEMA website for the tornado disaster says the agency approved 2,367 individual assistance applications, totaling $15.9 million in grants.

“By relying on those sources, the state does not have to expend donated funds to administer the program, meaning all funds go directly to survivors,” she wrote in an email. “In a call with the Public Protection Cabinet, FEMA confirmed that we received the most recent data, it was filtered appropriately and that there is some level of fraud in their system.”

FEMA spokesman Jim Homstad told The Herald-Leader that the agency flagged 27% of applications for assistance after the tornadoes as being possibly fraudulent, compared to 13% of applications nationally since January 2021. But, he said, those 27% of applications were deemed ineligible for payment and wouldn’t have been on the list of approved households turned over to the Public Protection Cabinet.

Gov. Andy Beshear, a Democrat up for re-election this year, told reporters Wednesday that using records provided by FEMA and insurers saved the state money, even if those systems weren’t perfect.

“It appears that there has been at least some mistakes within the insurance companies and within FEMA, and we’re working to address those,” Beshear said. “But by using their verification system, we didn’t have to pay millions of dollars to independently verify each and every person. And what that means is even if there’s a hundred checks that we have to pull back, it means millions of extra dollars ended up in people’s pockets.”

Warford said Public Protection Cabinet officials told her on a phone call they don’t know how much of that $10 million may have been paid incorrectly. That means the Treasury doesn’t know how many more checks may need to be canceled, she said, and getting this money back is entirely “at the mercy of honest citizens” self-reporting these payments.

Announced by Beshear in the wake of the outbreak of storms that killed dozens of Kentuckians on Dec. 10 and 11, 2021, the fund has received more than $52 million in charitable donations from across the world, according to its website.

The Republican Party of Kentucky was quick to respond to the Herald-Leader’s reporting, calling the fund “Governor Beshear’s Slush Fund.”

“Private individuals and corporations stepped up to assist Western Kentucky recover from those tornadoes, which brought tragedy and devastation to our state, and the Beshear administration has just been sending out checks willy-nilly,” Spokesman Sean Southard said in a statement. “They can’t even tell us how many checks from Beshear’s Slush Fund went to the wrong people. How did they decide who got them?”

Beshear, when asked by reporters if he’d seen the GOP response, laughed.

“You mean the opposite party, during an election year, would use words like that?” the governor said. “Well, I guess the Republican Party of Kentucky believes helping farmers who lost their granary is wrong. I guess the Republican Party of Kentucky believes rebuilding 300 homes is wrong. I guess the Republican Party no longer believes in private donations as a way to support our families. Listen, this money has done a huge amount of work and we ought to, in a bipartisan way, say thank you to the donors.

“Listen, we even paid for every funeral. That’s certainly not a slush fund, so shame on them for suggesting that.”

Warford said there’s currently about $24 million in the tornado relief fund, and about $8.6 million remaining in the Team Eastern Kentucky Flood Relief Fund, which was established after the July flooding that devastated large swaths of Eastern Kentucky. The flood fund has raised about $13 million, according to the state’s website.

WPSD Local 6, a news station in Paducah, reported on Dec. 20 that at least 10 viewers, including a Northern Kentucky woman, reached out to the station to say they received a check despite not filing a FEMA claim.

“If a check recipient feels like they are not due the money, they are welcome to return the check,” Public Protection told WPSD in a statement at the time.

How transparent is relief fund?

The state touts that it takes no administrative fees from the donations from the tornado or flood funds, and that they are “fully transparent and is subject to open records and legislative oversight.”

The treasurer’s office sees things differently.

“This has been a concern of ours from essentially October when we realized that this money was not appropriated by the General Assembly and was operating sort of outside the bounds of normal government,” Warford said. Lawmakers “have been concerned about the fact that the money is operating outside of the realm of normal governmental processes.

“This is the kind of stuff that happens because you don’t have good oversight.”

Ball, a Republican who is running for state auditor after being elected to two terms as treasurer, first expressed her concerns about the Team Western Kentucky fund in a letter to the Public Protection Cabinet in February 2022. Ball recommended requiring awards come with binding contracts and be determined by an “objective metric system” that can be an appealed. She also urged the cabinet to conduct an annual audit of the fund.

“The Cabinet also owes a duty to the Fund’s donors and those impacted by the Tornadoes to distribute these funds to those recipients and causes contemplated by the thousands of donors to the Fund,” she wrote.

In a response two days later, Cabinet Secretary Ray Perry and General Counsel Jacob Walbourn wrote they’d take some of Ball’s concerns into consideration and would weigh changes in the administrative regulation’s wording to achieve those goals.

They did, however, push back at the suggestion of an audit.

“However, requiring an audit of the Fund in the ways your comment appears to suggest would require the Fund, itself, to pay for the audit,” they wrote. “... The existing transparency of the Fund makes such a requirement unnecessary and would undermine the prohibition on no administrative fees being paid from the Fund.”

Voskuhl said the fund is “administered in accordance with the state’s accounting practices.”

“While the fund is subject to audit, PPC has not undertaken an independent audit.”

These two disaster-related funds are entirely donation-based and unrelated to the West Kentucky State Aid Funding for Emergencies and Eastern Kentucky State Aid Funding for Emergencies packages passed by the legislature last year.

Because of this, Warford sent a letter to Public Protection last week saying the treasurer is concerned the “withdrawal of monies from these Funds is in contravention” of state law and the Kentucky constitution.

Voskuhl disagreed with this assessment.

“The private funds donated to help Kentuckians impacted by the devastating and deadly tornadoes in western Kentucky and flooding in eastern Kentucky, including by paying for funerals of those we lost, and helping rebuild through construction of new homes and additional funds on top of insurance and FEMA assistance, are lawful,” she wrote. “For more than a year, the State Treasurer’s office has been assisting with, and issuing checks, to those Kentuckians eligible to receive assistance through the funds.”