A federal watchdog found Thursday that scammers may have stolen $45.6 billion from the country’s unemployment insurance program during the pandemic, using dead people’s Social Security numbers and other tactics to defraud the U.S. government.
The new estimate is a dramatic increase from the nearly $16 billion in potential fraud identified a year ago and shows the tremendous work Washington has to do in trying to locate damages, recover money and to punish criminals with a crime. Blames him for stealing Vishal. series of federal assistance programs.
The report, released by the Labor Department’s inspector general, paints a bleak picture of the country’s unemployment benefit program, which begins 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 simultaneously filed billions of dollars in unemployment claims in multiple states, relying on suspicious, hard-to-trace emails. In some cases, they used more than 205,000 social security numbers belonging to deceased people. Other suspected criminals took advantage by using the identities of prisoners who were not eligible for assistance.
However, officials at the Watchdog Office warned their bookkeeping may still be incomplete: They said they had not been given access to more recent federal prisoner data from the Justice Department and acknowledged they were only at “high risk” of fraud. focused on the areas in his report. Both of those factors raised the possibility that they could uncover billions of dollars in more thefts in the coming months.
The government also announced on Thursday that it had reached a “milestone” by charging 1,000 people with unemployment benefit crimes during the pandemic. Kevin Chambers, director of coronavirus enforcement at 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 investigations related to unemployment insurance fraud since the pandemic began.
When asked about the findings, a Labor Department spokesman referred to a letter in reply from the agency that accompanied the inspector general’s report. The agency said it is committed to helping states combat “the ever-changing and emerging types of sophisticated fraud affecting UI systems.” It pointed to grants and other current guidance to help states improve their systems for awarding and monitoring entitlements.
Covid money trail
It was the largest emergency spending explosion 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 bankruptcy and vaccines put millions in guns, but it also led to unprecedented levels of fraud, abuse and opportunism.
In a year-long investigation, the Washington Post is chasing the COVID money trail to find out what happened to all that cash.
The new unemployment fraud report underscores the ongoing challenge the federal government faces, 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 prevent the economy from collapsing early in the pandemic, but quickly became a target for waste, fraud and abuse, the Post documented in its year-long spending tracking series. What is being referred to as the Covid Money Trail.
The scale of this theft was enormous: Earlier this week, federal prosecutors charged 47 defendants in an entirely different scheme aimed at a program to provide free meals to children in need. The organization Feeding Our Future has reportedly stolen more than $250 million from the food program in what the Justice Department called the largest single scam to date targeting coronavirus relief.
Federal investigators have similarly sounded the alarm, investigating allegations involving nearly $1 trillion in loans and grants to support small businesses. But theft isn’t the only problem: in some cases, generous government aid has proved ineffective or helped fund pet projects unrelated to fighting coronavirus, The Post has found. For example, Republican governors used a $350 billion program to strengthen their response to the crisis. A wide range of controversial political issues, including tax cuts and immigration measures.
Beginning in 2020, Congress expanded unemployment benefits to reflect the magnitude of the crisis. Lawmakers allowed a broad spectrum of unemployed Americans, including contractors from gig economy companies like Uber, to collect unemployment benefits for the first time. And Washington repeatedly increased the size of those checks, at one point providing an additional $600 in weekly payments.
The rush of applications quickly overwhelmed the state employment agencies running the program amid historic unemployment. Many of these agencies have been neglected for years, and staff have relied on decades-old computers to process historic numbers of financial assistance applications. As a result, millions of Americans experienced tremendous delays in getting help, causing chaos that was easily exploited by scammers, many of whom stole the identities of innocent Americans in order to receive weekly checks made out in their names.
“Magnet for rip-off artists”: Scammers stole billions from pandemic unemployment benefits
“The pandemic has lured fraudsters into using the UI program – leading to historic levels of fraud and other unfair payments,” Department of Labor Inspector General Larry Turner said in a statement.
Investigating 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 warning that the total is likely to increase, perhaps significantly. Turner testified before Congress this March that there could be $163 billion in overpayments, a term that encompasses both fraudulent funds and funds wrongly sent to innocent Americans. The amount was a projection that relied on a sample of federal spending to calculate the total misappropriation among about $900 billion in unemployment benefits paid out during the pandemic.
On Thursday, federal regulators combined their latest estimate with fresh criticism from the Labor Department, raising concerns that investigators’ access to state unemployment data — to find more scams — could be at risk after 2023. The issue, which is an internal government controversy The Post reported earlier this year that the inspector general had sounded the alarm about his ability to conduct inspections.
But the Labor Department called the dispute “not fair” in its formal response, citing the fact that it has yet to revise the existing rules. Separately, a White House official said Thursday that the administration was working to resolve the data access issue. The person spoke on condition of anonymity to describe private conversations.
The proliferation of theft has already sparked a wave of federal enforcement action, 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 ramped up work to address the issue, including considering new government policies to combat identity theft in federal programs.
On Capitol Hill, Senator Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, commended the “strong effort to identify the perpetrators.” But the senator on Thursday stressed the need for a legislative overhaul of the unemployment benefit system.
“I have long said that we need a national set of technology and security standards for government systems to better prevent this type of fraud, and we will continue to work towards passing our reforms,” they said.