The pandemic unemployment fraud estimate reaches $ 46.5 billion

A federal watchdog discovered Thursday that scammers may have stolen $ 45.6 billion from the nation’s unemployment insurance program during the pandemic, using social security numbers of dead people and other tactics to deceive and deceive the country. United States government.

The new estimate is a dramatic increase from the roughly $ 16 billion in potential fraud identified a year ago, and illustrates the immense task still ahead of Washington as it seeks to locate losses, recover funds and hold criminals accountable for stealing. from a vast array of federal relief programs.

The report, released by the Department of Labor’s Inspector General, paints a grim portrait of the country’s unemployment relief program that began under the Trump administration in 2020. The weekly benefits have helped more than 57 million families in the first five months of the year alone. crisis – yet the program quickly emerged as an attractive target for criminals.

To steal funds, the scammers would file billions of dollars in jobless claims in multiple states at once and rely on suspicious, hard-to-track emails. In some cases, they used more than 205,000 social security numbers that belonged to dead people. Other criminal suspects obtained benefits by using the identity of prisoners who were not eligible for help.

But surveillance office officials warned that their accounting may still be incomplete: They said they were unable to access the most up-to-date federal prisoner data from the Department of Justice and acknowledged that they focused their report only on “high risk” areas of fraud. The two factors have raised the prospect of uncovering billions of dollars in further thefts in the months to come.

The government also announced Thursday that it had reached the “milestone” of accusing 1,000 people of crimes involving unemployment benefits during the pandemic. Kevin Chambers, the coronavirus enforcement director for the Department of Justice, described the situation in a statement as “unprecedented fraud.” The inspector general’s office, meanwhile, said it has opened about 190,000 investigative issues related to unemployment insurance fraud since the start of the pandemic.

When asked about the findings, a spokesperson for the Department of Labor pointed to an agency response letter included in the Inspector General’s report. The agency said it was “committed” to helping states “fight the ever-changing and new types of sophisticated fraud affecting the user interface system.” He pointed to monetary grants and other recent guidelines intended to help states improve their systems for allocating and monitoring credit.

The Covid Money Trail

It was the largest emergency spending explosion in U.S. history – two years, six laws, and over $ 5 trillion set to break the deadly grip of the coronavirus pandemic. The money spared the ruin of the US economy and put vaccines into millions of weapons, but it also invited unprecedented levels of fraud, abuse and opportunism.
In a year-long investigation, the Washington Post is following the trail of covid money to figure out what happened to all that money.

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The new report on unemployment fraud highlights the persistent challenge facing the federal government, two years after approving the first of roughly $ 5 trillion in response to the worst economic crisis since the Great Depression. That money helped save the economy from collapsing at the start of the pandemic, but it quickly became a ripe target for waste, fraud and abuse, as The Post documented in a year-long series tracking spending called Covid Money. Between.

The scope of that theft was vast: 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, allegedly stole more than $ 250 million from the food program in what the Justice Department described as the largest coronavirus fraud case to date.

Likewise, federal investigators have raised alarms and brought forward allegations involving approximately $ 1 trillion in loans and grants to help small businesses. But theft isn’t the only problem: in some cases, generous government aid proved ineffective or helped fund projects that had nothing to do with fighting the coronavirus, The Post found. Republican governors, for example, leveraged a $ 350 billion program designed to bolster their crisis response to a wide range of controversial political causes, including tax cuts and the crackdown on immigration.

Beginning in 2020, Congress expanded unemployment benefits to address the scale of the crisis. Lawmakers have allowed a wider range of unemployed Americans, including contractors from gig-economy companies like Uber, to raise unemployment aid for the first time. And Washington has repeatedly increased the size of those checks, at one point providing an extra $ 600 in weekly payments.

The rush of demand – amid historic unemployment – has quickly overwhelmed the state workforce agencies administering the program. Many of these agencies had been neglected for years, with underfunded staff relying on decades-old computers to process a historic number of requests for financial support. As a result, millions of Americans have suffered enormous delays in receiving aid, creating chaos that can easily be exploited by scammers, many of whom have stolen the identities of innocent Americans to get weekly checks in their name.

“A magnet for scammers”: fraud stole billions from pandemic unemployment benefits

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

Studying the program between March and October 2020, the inspector general initially detected over $ 16 billion in potential fraud in key high-risk areas. But more recently the watchdog has begun to warn that the total is likely to increase, perhaps considerably. Testifying to Congress last March, Turner said there may have been $ 163 billion in overpayments, a term that includes fraud and money sent unfairly to innocent Americans. The amount was a projection, based on a sample of federal spending to calculate the funds spent incorrectly among the nearly $ 900 billion in unemployment benefits made during the pandemic.

On Thursday, federal watchdogs combined their latest estimate with fresh criticism of the Department of Labor, raising concern that investigators’ access to state unemployment data – to further uncover fraud – could be in jeopardy after 2023. , which goes back to an internal government controversy The Post reported this year, had previously prompted the inspector general to sound alarms about his ability to conduct oversight.

But the Department of Labor in its formal response described the thesis as “not fair,” citing the fact that it has yet to review existing regulations. Separately, a White House official said Thursday that the administration is working to address the problem with data access. The individual spoke on condition of anonymity to describe private discussions.

The scale of the theft has already triggered a wave of federal enforcement actions, including this week when a federal court sentenced an Illinois man to 39 months in prison for fraudulently obtaining unemployment benefits while incarcerated. Likewise, the Biden administration has stepped up its work to address the problem, including through consideration of new government policies intended to crack down on identity theft in federal programs.

On Capitol Hill, Senator Ron Wyden (D-Ore.), Who chairs the Senate Finance Committee, praised the “strong effort to identify criminals.” But on Thursday, the senator 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 state systems to better prevent this type of fraud and we will continue to work to get our reforms passed,” he said.

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