FEMA reinstates manual drawdown process for Puerto Rico

Says controls needed given leadership changes, fiscal mismanagement

SAN JUAN – The recent corruption indictments related to education and healthcare disaster aid funds for Puerto Rico have led the Federal Emergency Management Agency (FEMA) to reinstate the manual drawdown process for the island as an “additional step to protect the federal investment,” the agency said. 

The Puerto Rico government must now receive approval to draw down grant funds for hurricanes Irma and Maria, FEMA said in its published announcement, calling the additional financial controls “necessary and prudent.” 

Puerto Rico’s Central Office for Recovery, Reconstruction and Resiliency (COR3) was notified of the agency’s decision via a letter Thursday to Gov. Ricardo Rosselló, whose resignation takes effect Aug. 2..

In its release, FEMA’s press secretary framed the decision by saying Puerto Rico is “on track to receive a historic level of federal disaster funding” to help rebuild after “the devastating impacts” of hurricanes Irma and Maria.

“Throughout the recovery process, the federal government will continue to be strong stewards of taxpayer dollars. Given the ongoing leadership changes within the Puerto Rican government, combined with continued concern over Puerto Rico’s history of fiscal irregularities and mismanagement, FEMA decided it is prudent to take additional steps to protect its share of the federal investment by reinstating the manual drawdown process,”  Lizzie Litzow said.  

The manual drawdown process will require the island’s government to submit funding drawdown requests on behalf of municipalities and state agencies before receiving FEMA grant funding. Additionally, the request “must be accompanied with supporting documentation to certify the amount being requested for drawdown is eligible, allowable, reasonable and in alignment with federal procurement regulations,” Litzow added.

I late July, the former secretary of the Puerto Rico Education Department, Julia Keleher; the director of the Health Insurance Administration (ASES by its Spanish acronym), Ángela Ávila; the president of accounting and auditing firm BDO Puerto Rico, Fernando Scherrer, and subcontractor Alberto Velázquez Piñol were arrested after a federal grand jury returned a 32-count indictment.

The indictment also charged Glenda E. Ponce Méndoza, who worked as Keleher’s special assistant despite not being a department employee, and her sister, Mayra Ponce Mendoza, owner of consulting firm Colón & Ponce. 

“Both Keleher and Ávila Marrero exploited their privileged positions as heads of agencies in Puerto Rico. Both defrauded the United States government and Puerto Rico in a contract scheme upwards of $15.5 million, $13 million in [the Education] Department and $2.5 million in ASES,” the district attorney said, adding that the conspiracy charges carry a sentence of up to five years, while money laundering and wire fraud charges carry a sentence of up to 20 years.

The 32 charges cover three schemes, two in the Department of Education and one in ASES, that were carried out from 2017 to 2019.

Former heads of Puerto Rico Education Dept. and Health Insurance Administration arrested along with president of BDO

Puerto Rico Gov. Rosselló resigns amid public outcry, specter of impeachment

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