Pandemic unemployment benefit fraud could exceed $ 45 billion, says the federal watchdog



CNN

About $ 45.6 billion in pandemic unemployment benefits may have been fraudulently paid to criminals between March 2020 and April 2022, the US Department of Labor Inspector General’s Office said Thursday in a memorandum. . It is the latest report to identify widespread schemes for stealing money from a variety of federal relief programs.

The updated figure is a big leap from the $ 16 billion in potentially fraudulent unemployment benefits cited by the office in a June 2021 notice, which reviewed claims from March to October 2020. Since then, there have been increases payments related to social security numbers of people who have filed applications in multiple states, who have died, and who have used suspicious email accounts in their claims, all areas deemed high-risk.

The 2021 alert also found that payments tied to federal prisoners’ social security numbers are a high-risk area. The office said in Thursday’s memorandum that it could not update that figure due to a lack of new data from the Federal Bureau of Prisons, which refused to provide it due to the burden the request would create on the office’s resources and platform. technology, the inspector said the general’s office.

Fraud within the nation’s unemployment system has skyrocketed after Congress enacted a historic expansion of the program to help Americans cope with the economic upheaval sparked by the Covid-19 pandemic in March 2020. State agencies for unemployment they were overwhelmed by a record number of claims and loosened some requirements in an effort to get money out the door quickly to those who had lost their jobs. In five months, more than 57 million people have filed for unemployment benefits, the inspector general’s office said.

“Hundreds of billions of pandemic funds have attracted scammers seeking to exploit the UI program, resulting in historical levels of fraud and other improper payments,” Inspector General Larry Turner said in a statement.

States and Congress subsequently tightened their verification requirements in an effort to fight fraud, most notably in a new temporary program that allowed freelancers, gig workers, and others to reap benefits for the first time.

A key component of the relief was a weekly federal supplement for unemployed Americans. The unemployed received a $ 600 per week raise from April through July 2020. Congress then resumed the improvement at the end of December 2020, but reduced it to $ 300 per week. That supplement expired in September 2021, although many Republican-led states and one with a Democratic governor discontinued it earlier.

Lawmakers have also created two other measures to help the unemployed. The Pandemic Unemployment Assistance Program included payments for freelancers, the self-employed, self-employed contractors and some people affected by the outbreak, while the Pandemic Emergency Unemployment Compensation Program extended payments for those who ran out their regular government subsidies. Those programs also ended by September 2021.

A total of $ 872.5 billion in unemployment benefits related to the pandemic has been paid since March 2020, according to estimates by the inspector general’s office.

Nearly one million social security numbers have been used by people applying for benefits in two or more states, resulting in benefits paid by more than one state, the inspector general’s office said. They received nearly $ 29 billion in potentially fraudulent payments.

Nearly 206,000 deceased social security numbers have been used to receive over $ 139 million in potentially fraudulent benefits. And 1.7 million social security numbers associated with suspicious email addresses were used to present $ 16.2 billion in benefits.

In its previous report, the inspector general’s office found that social security numbers of potentially ineligible federal prisoners were used to file grants of more than $ 267 million.

The inspector general’s office said it had difficulty obtaining unemployment insurance data from state labor force agencies until the subpoenas were issued. In some cases, the data sent was incomplete or unusable.

The Inspector General’s Office also challenged the Department of Labor’s Employment and Training Administration, which oversees the Unemployment Insurance Program, saying the agency has not implemented the office’s previous recommendations, including including partnering with state agencies to establish effective controls to mitigate fraud and working with Congress to require state agencies to match high-risk areas.

“The lack of sufficient action by the ETA significantly increases the risk of further payments of the UI to ineligible applicants,” the inspector general’s office wrote in the memorandum.

In response to the memorandum, the agency said it continues to “actively and aggressively address fraud” in unemployment benefit programs. He said he is committed to helping states fight “sophisticated and new types of fraud.”

The Inspector General’s Office also announced Thursday that more than 1,000 people have been charged with crimes involving unemployment benefit fraud since March 2020 and that there have been more than 400 convictions to date. It has opened more than 190,000 investigations into unemployment benefit fraud, a more than 1,000-fold increase in the workload of the Unemployment Insurance Bureau.

The unemployment insurance system is not the only pandemic program that has been the victim of fraud in the chaos caused by the pandemic.

The Small Business Administration’s salary protection program, or PPP, has been plagued with questionable loans and rampant fraud, although it has been successful in helping many companies continue to pay their employees during the pandemic.

In total, the program provided $ 813.7 billion in small business loans, which was forgiven if the company spent the money on qualifying expenses.

According to a May 2022 report, the Small Business Administration’s Office of Inspector General said more than 70,000 PPP loans totaling over $ 4.6 billion could potentially be fraudulent.

‚ÄúThese loans can only be considered potentially fraudulent because OIG has not completed a document-by-document review of the loan practices to confirm or resolve the suspicious activity; however, our investigations confirmed an unprecedented level of fraud activity. We are working to identify the full extent of PPP fraud, “the report reads.

Separately, the Department of Justice has prosecuted over 150 defendants in over 95 criminal cases and seized over $ 75 million in cash proceeds, as well as real estate and luxury assets, as of May 2022.

And just this week, the department announced charges against 47 people accused of stealing $ 250 million from a federal program designed to provide meals to children in need during the pandemic. The scheme is the largest Covid-19-related fraud discovered by investigators to date, the department said. The defendants face a variety of charges, including conspiracy, computer fraud, money laundering, paying and receiving illegal bribes.

Defendants created a network of shell companies connected to the Minnesota-based nonprofit Feeding our Future to leverage the federal child nutrition program, designed to provide meals to children of low-income families, prosecutors said. .

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