Pandemic unemployment fraud estimate reaches $46.5 billion

A federal watchdog found Thursday that fraudsters may have stolen $45.6 billion from the national unemployment insurance program during the pandemic, using the social security numbers of the dead and other tactics to mislead and mock the U.S. 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 that still awaits Washington as it tries to pinpoint the losses, recover the money. and hold criminals responsible for stealing a vast array of federal emergency aid programs.

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

To siphon money, scammers allegedly filed billions of dollars in unemployment claims in multiple states at once and relied on suspicious, elusive emails. In some cases, they used more than 205,000 Social Security numbers that belonged to dead people. Other suspected criminals obtained benefits using the identities of prisoners who are not eligible for assistance.

The inspector general’s office said it had opened about 190,000 investigative cases related to unemployment insurance fraud since the start of the pandemic. But watchdog office officials warned they didn’t have access to more updated federal data on inmates and focused their report only on “high-risk” areas — two factors that raised the prospect that they could uncover billions of additional theft in the coming months.

The government also announced that it had reached the “milestone” of indicting 1,000 individuals for crimes involving unemployment benefits during the pandemic. Kevin Chambers, the director of coronavirus-related enforcement for the Justice Department, described the situation in a statement as “unprecedented fraud”.

But federal watchdogs offered fresh criticism at the Department of Labor, raising concerns that researchers’ ability to access states’ unemployment data — to further study the pandemic — could be compromised after 2023. The issue, which dates back to an internal government dispute reported by The Washington Post this year, had previously prompted the inspector general to raise the alarm about his ability to detect and prosecute the theft.

Asked about the findings, a spokesperson for the Department of Labor pointed to a letter of reply attached to the Inspector General’s report. The agency said it is “committed” to helping states “fight the ever-changing and new types of sophisticated fraud affecting the UI system.”

Anders said the department had provided grants and other guidelines designed to help states improve their claims granting and auditing systems. And it described the claim it had curbed investigations as “unfair”, citing that it has yet to review existing regulations.

Separately, a White House official said on Thursday that the administration is working to address the data access issue. The person spoke on condition of anonymity to describe private conversations.

The Covid Money Path

It was the largest burst of emergency spending in US history: two years, six laws and more than $5 trillion intended to break the deadly grip of the coronavirus pandemic. The money saved the U.S. economy and brought vaccines into millions of weapons, but it also led to unprecedented levels of fraud, abuse and expediency.

In a year-long investigation, The Washington Post follows the covid money trail to find out what happened to all that money.

read more

The new unemployment fraud report highlights the ongoing challenge facing the federal government, two years after it approved the first of about $5 trillion in response to the worst economic crisis since the Great Depression. That money helped save the economy from collapse early in the pandemic, but it quickly became a ripe target for waste, fraud and abuse, as The Post has documented in its year-long spending-tracking series called the Covid Money Trail.

The scale of that theft was staggering: Earlier this week, federal prosecutors indicted 47 defendants in an entirely different settlement that targeted a program to provide free meals to needy children. The organization, Feeding Our Future, has reportedly stolen more than $250 million from its meal program in what the Justice Department described as the largest single fraud case to date targeting coronavirus aid.

Federal investigators have similarly sounded the alarm and filed charges related to about $1 trillion in loans and grants intended to help small businesses. But the problems are more than just theft: In some cases, the government’s generous aid proved ineffective or helped fund pet projects that had nothing to do with tackling the coronavirus, The Post found. For example, Republican governors have tapped into a $350 billion program designed to bolster their response to the crisis for: a wide variety of controversial political causes, including tax cuts and immigration crackdowns.

Beginning in 2020, Congress worked to expand unemployment benefits to cope with the scale of the crisis. Lawmakers for the first time allowed a larger number of unemployed Americans, including contractors from gig economy companies like Uber, to raise jobless aid. And Washington repeatedly increased the size of those checks, at one point bringing in an additional $600 in weekly payments.

But the massive applications — amid historic unemployment — quickly overwhelmed the government agencies running the program. Many of those agencies had been neglected for years, with underfunded staff relying on decades-old computers to process requests for financial aid. The chaos immediately opened the door to fraudsters, many of whom stole the identities of innocent Americans to get weekly checks in their name.

‘A Magnet for Scammers’: Fraud Raises Billions from Pandemic Unemployment Benefits

“Hundreds of billions in pandemic funds attracted fraudsters seeking to exploit the UI program — resulting in historic levels of fraud and other improper payments,” Labor Department inspector general Larry Turner said in a statement.

Studying the program between March and October 2020, the inspector general discovered more than $16 billion in potential fraud in key risk areas last year. But the watchdog had warned in recent months that the total was likely to rise, perhaps significantly. Testing before Congress in March, Turner said there may have been $163 billion in overpayments, a term that includes both fraud and money wrongly sent to innocent Americans.

The amount was a projection, based on a sample of federal spending to calculate possible fraud on the nearly $900 billion in unemployment benefits paid during the pandemic. But the figure raises the possibility that the inspector general’s latest update, $45.6 billion, could continue to climb as it further investigates claims data.

On Capitol Hill, Senator Ron Wyden (D-Ore.), who chairs the Senate Finance Committee that oversees unemployment benefits, praised the “strong effort to identify criminals.” 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 state systems to better prevent this type of fraud, and we will continue to work to push through our reforms,” ​​he said.

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