U.S. watchdog estimates $45.6 billion in pandemic unemployment fraud

A federal watchdog found Thursday that fraudsters may have stolen $45.6 billion from the country’s unemployment insurance program during the pandemic, using Social Security numbers of dead people and other tactics to defraud the US government.

The new estimate is a dramatic increase from the nearly $16 billion in potential fraud identified a year ago, and shows the vast work still ahead of Washington as it seeks to pinpoint damages, recover money and punish criminals with a felony. Holds him responsible for the theft from Vishal. Series of federal relief programs.

The report, released by the Inspector General for the Department of Labor, paints a grim picture of the country’s jobless aid program starting in 2020 under the Trump administration. The weekly benefits helped more than 57 million families in the first five months of the crisis – yet the program quickly emerged as an attractive target for criminals.

To launder the funds, scammers allegedly filed billions of dollars in unemployment claims in multiple states at once and relied on suspicious, hard-to-trace emails. In some cases, they used more than 205,000 Social Security numbers that belonged to deceased people. Other suspected criminals gained an advantage by using the identities of prisoners who were ineligible for assistance.

But officials at the Watchdog Office warned that their accounting may still be incomplete: They said they had not been able to access more updated federal prisoner data from the Justice Department, and acknowledged that they had only been at “high risk” for fraud. focused its report on the areas. These two factors raised the possibility that they could uncover billions of dollars in additional thefts in the coming months.

The government also announced on Thursday that it had reached a “milestone” of charging 1,000 individuals with crimes with jobless benefits during the pandemic. Kevin Chambers, director of coronavirus-related enforcement for the Justice Department, described the situation as “unprecedented fraud” in a statement. Meanwhile, the Inspector General’s Office said it has opened nearly 190,000 investigative cases related to unemployment insurance fraud since the start of the pandemic.

When asked about the findings, a spokesman for the Labor Department pointed to a response letter from the agency included with the inspector general’s report. The agency said it is committed to helping states combat “the constantly changing and new types of sophisticated fraud affecting UI systems.” It pointed to monetary grants and other recent guidance to help states improve their systems for awarding and monitoring claims.

covid money trail

It was the biggest explosion of emergency spending in US history: two years, six laws and more than $5 trillion aimed at breaking the deadly grip of the coronavirus pandemic. The money saved the US economy from ruin and vaccines put millions in arms, but it also invited an unprecedented level of fraud, abuse, and opportunism.

In a year-long investigation, The Washington Post is following the COVID money trail to find out what happened to all that cash.

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The new report on unemployment fraud underscores the continuing challenge facing the federal government, two years after it approved the first of nearly $5 trillion in response to the worst economic crisis since the Great Depression. That money helped keep the economy from collapsing early in the pandemic, yet it quickly became a ripe target for waste, fraud and abuse, as the Post documented tracking spending in a year-long series. What is called the Kovid Money Trail.

The scope of that theft has been enormous: Earlier this week, federal prosecutors indicted 47 defendants in an entirely different scheme targeting a program to provide free meals for children in need. The organization, Feeding Our Future, reportedly stole more than $250 million from the food program in what the Justice Department described as the largest single fraud case targeting coronavirus aid to date.

Federal investigators have similarly raised the alarm and pursued allegations involving nearly $1 trillion in loans and grants to help small businesses. But theft isn’t the only issue: In some cases, the government’s generous aid proved ineffective or helped finance pet projects that had nothing to do with addressing the coronavirus, The Post has found. For example, Republican governors used a $350 billion program to bolster their response to the crisis. A wide range of controversial political causes, including tax cuts and immigration action.

Starting in 2020, Congress expanded unemployment benefits to meet the magnitude of the crisis. Lawmakers for the first time allowed a wide range of out-of-work Americans, including contractors from gig-economy companies like Uber, to collect jobless aid. And Washington repeatedly increased the size of those checks, at one point providing an additional $600 in weekly payments.

The crush of applications quickly overwhelmed the state workforce agencies operating the program – amid historic unemployment. Many of those agencies were neglected for years, with staff relying on decades-old computers to process the historic number of requests for financial aid. As a result millions of Americans saw huge delays in receiving aid, creating chaos that was easily exploited by fraudsters, many of whom stole the identities of innocent Americans to obtain weekly checks in their names.

‘A magnet for rip-off artists’: Fraud swindled billions from pandemic unemployment benefits

“The pandemic attracted fraudsters to take advantage of the UI program — resulting in historic levels of fraud and other unfair payments,” Labor Department Inspector General Larry Turner said in a statement.

Studying the program between March and October 2020, the Inspector General initially found more than $16 billion in potential fraud in key high-risk areas. But watchdogs recently began to warn that the total is likely to rise, perhaps significantly. Testifying to Congress this March, Turner said there could be $163 billion in overpayments, a term that includes fraudulently as well as money sent wrongly to innocent Americans. The amount was a projection, relying on a sample of federal spending to calculate the total misappropriation among the roughly $900 billion in unemployment payments made during the pandemic.

On Thursday, federal watchdogs combined their latest estimate with fresh criticism from the Labor Department, raising concerns that investigators’ access to state unemployment data — to find more fraud — could be at risk after 2023. The trouble, which is an internal government controversy that The Post reported this year, previously prompted the inspector general to raise the alarm about its ability to conduct inspections.

But the Labor Department in its formal reply called the dispute “not fair,” citing the fact that it would still have to revise existing rules. Separately, a White House official said Thursday that the administration is working to address the issue with access to the data. The person spoke on condition of anonymity to describe private discussions.

The pervasiveness of the theft has already sparked a wave of federal enforcement actions, including this week, when a federal court sentenced an Illinois man to 39 months in prison for fraudulently receiving unemployment benefits. while he was in captivity. Similarly, the Biden administration has intensified its work to address the problem, including considering new government policies to crack down on identity theft in federal programs.

On Capitol Hill, Sen. Ron Wyden (D-Ore.), who chairs the Senate Finance Committee, praised the “strong effort to identify the perpetrators.” But the senator on Thursday stressed the need for a legislative overhaul of the jobless benefits system.

“I have long said that we need a national set of technology and security standards for state systems to better prevent this type of fraud, and we will continue to work to pass our reforms.” They said.

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