Galveston Flagship Hotel News

United States Attorney Chuck Rosenberg announced a 39 count indictment charging Daniel Yeh, 52, of Sugar Land, Texas, with 22 counts of wire fraud and 17 counts of filing false claims against the Federal Emergency Management Agency (FEMA). Yeh is the principal owner of Flagship Hotel Ltd., which operates the Flagship Hotel, located at 2501 Seawall Boulevard in Galveston, Texas. Yeh is accused of wire fraud and filing false claims totaling at least $232,000 in connection with disaster relief lodging programs for hurricane evacuees funded by FEMA's Public Assistance Program. This case is the first of its kind in the nation. Eight others were previously arrested in this district on charges of fraud in connection with hurricane disaster relief programs.

The indictment was returned Thursday by a Houston grand jury, and will be prosecuted in the Galveston Division of the Southern District of Texas. A warrant will be issued for Yeh's arrest.

After Hurricane Katrina, a FEMA public assistance grant allowed hurricane evacuees from designated disaster areas to stay in hotels free of charge. The FEMA grant programs reimbursed those hotels for the evacuee's stay.

According to the indictment, the Flagship enrolled in the FEMA lodging programs after Hurricane Katrina to provide hotel rooms for evacuees and continued to participate in the programs after Hurricane Rita. The indictment alleges that between October 1, 2005, and December 15, 2005, Daniel Yeh knowingly devised a scheme to defraud the federal disaster relief programs of at least $232,000. As part of the scheme, it is alleged that Daniel Yeh took over the task of billing the federal lodging programs online after Hurricane Rita. Yeh is accused of filing fraudulent claims for reimbursement for (1) rooms in the names of hotel employees who previously stayed at the Flagship free of charge as part of their employment arrangement; (2) rooms in the names of supposed hurricane evacuees on dates when those rooms were occupied by paying hotel guests with different names; (3) rooms occupied by friends, relatives, and employees of his wife's business, who were recruited to stay at the hotel, but were not evacuees; (4) rooms in the names of supposed hurricane evacuees who never had rooms at the Flagship; (5) rooms in the name of supposed hurricane evacuees on dates when those rooms were unoccupied; (6) for multiple rooms in the names of a single guest when, in fact, the guest occupied fewer rooms than billed.

Each of the 22 wire fraud counts carries a punishment of up to 20 years imprisonment and a fine of up to $250,000. Each of the 17 false claim counts carries a punishment of up to five years imprisonment and a fine of up to $250,000.
(Copyright © 2006, KTRK-TV)