Pandemic unemployment benefit fraud could top $45 trillion, federal watchdog says



CNN

About $45.6 billion in pandemic unemployment benefits were fraudulently paid to criminals between March 2020 and April 2022, the U.S. Department of Labor’s Office of Inspector General said in a memo Thursday. This is the latest report to identify schemes to steal money from various federal aid programs.

The updated figure is a big jump from the $16 trillion the bureau cited in a June 2021 alert. Since then, there has been an increase in payments linked to Social Security numbers. They filed in several states of people who died and who used suspicious email accounts in their claims – considered high-risk areas.

The 2021 alert also found that payments linked to federal inmates’ Social Security numbers were high-risk areas. The bureau said in a memo Thursday that it could not update that figure because of a lack of new data from the Federal Bureau of Prisons, and declined to provide it because of the burden the request would place on the bureau’s resources and technology platform, inspectors said. said the general’s office.

Fraud in the nation’s unemployment system soared after Congress in March 2020 enacted a historic expansion of the program to help Americans weather the economic upheaval caused by the Covid-19 pandemic. State unemployment agencies were overwhelmed with a record number of claims and some demands were relaxed. an effort to get money quickly from those who lost their jobs. Over a five-month period, more than 57 million people filed for unemployment benefits, the Inspector General reported.

“Hundreds of millions in pandemic funds attracted fraudsters seeking to exploit the UI program, leading to historic levels of fraud and other improper payments,” Inspector General Larry Turner said in a statement.

States and Congress tightened their verification requirements in an effort to combat fraud, especially in a new temporary program that allowed the self-employed, gig workers and others to collect benefits for the first time.

A key component of the relief effort was a weekly federal supplement for unemployed Americans. The unemployed received an increase of $600 per week from April to July 2020. Congress reinstated the enhancement in late December 2020, but reduced it to $300 per week. That supplement expired in September 2021, although many Republican-led states and one Democratic governor ended it earlier.

Lawmakers also created two other measures to help the unemployed. The Pandemic Unemployment Assistance program paid the self-employed, the self-employed, independent contractors and certain people affected by the outbreak, while the Pandemic Emergency Unemployment Compensation program extended payments to those who had exhausted their regular state benefits. Those programs also ended in September 2021.

As of March 2020, a total of $872.5 billion had been paid in pandemic-related unemployment benefits, according to the inspector general’s estimates.

Nearly 1 million Social Security numbers were used by people who applied for benefits in two or more states, resulting in benefits being paid in more than one state, the inspector general’s office said. They received nearly $29 billion in fraudulent payments.

Nearly 206,000 deceased Social Security numbers were used to receive more than $139 million in potentially fraudulent benefits. And 1.7 million Social Security numbers linked to suspicious email addresses were used to claim $16.2 billion in benefits.

In a previous report, the inspector general’s office found that ineligible federal inmates’ Social Security numbers were used to claim more than $267 million in benefits.

The inspector general said he had difficulty obtaining unemployment insurance data from state workforce agencies until the subpoenas were issued. In some cases, the data submitted was incomplete or unusable.

The inspector general also took issue with the Labor Department’s Employment and Training Administration, which oversees the unemployment insurance program, and said the agency has failed to implement the office’s previous recommendations, including cooperating with state agencies to mitigate fraud and establish effective labor controls. Work with Congress to require state agencies to cross-examine high-risk areas.

“Insufficient ETA action significantly increases the risk of further UI payments to ineligible claimants,” the Inspector General’s office wrote in the memo.

In response to the memorandum, the agency said it continues to “actively and aggressively address” fraud in unemployment compensation programs. He said he was committed to helping states deal with “ever-changing and sophisticated new types of fraud.”

The Inspector General announced Thursday that since March 2020, more than 1,000 people have been charged with felony unemployment benefits fraud, with more than 400 convictions to date. It has opened more than 190,000 investigations into unemployment benefit fraud, increasing the office’s unemployment insurance work volume by more than 1,000 times.

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

The Small Business Administration’s Paycheck Protection Program, or PPP, was plagued by questionable loans and massive fraud, though it was successful in helping many businesses keep paying their workers during the pandemic.

In total, the program provided $813.7 billion in loans to small businesses that were forgiven if the business spent the money on qualifying expenses.

The Small Business Administration’s Office of Inspector General said more than 70,000 PPP loans worth more than $4.6 billion may be fraudulent, according to a May 2022 report.

“These loans can only be considered potentially fraudulent because OIG has not conducted a document-by-document review of loan files to confirm or resolve suspicious activity; however, our investigations have demonstrated an unprecedented level of fraudulent activity. We are working to identify the extent of PPP fraud,” says the report.

Separately, the Department of Justice has indicted more than 150 defendants in more than 95 criminal cases and seized more than $75 million in cash, as well as real estate and luxury goods, as of May 2022.

And earlier this week, the department announced charges against 47 people accused of stealing $250 million from a federal program designed to provide meals to needy children during the pandemic. The scheme is the largest Covid-19-related scam investigators have uncovered to date, the department said. The defendants face a variety of charges including conspiracy, wire fraud, money laundering and paying and receiving illegal kickbacks.

The defendants created a network of shell companies linked to the Minnesota-based nonprofit Feeding our Future to exploit the federal child nutrition program, which is designed to provide meals to children from low-income families, prosecutors said.