Some $45.6 billion in pandemic unemployment benefits may have been fraudulently paid to criminals between March 2020 and April 2022, the U.S. Department of Labor’s Office of Inspector General said in a statement. memorandum Thursday. It is the latest report to identify widespread schemes to steal money from a variety of federal aid programs.
The updated figure is a big jump from the $16 billion in potentially fraudulent unemployment payments the bureau cited in a June 2021 alert, which looked at claims from March to October 2020. Since then, there have been increases in payments linked to Social Security numbers. of people who applied in multiple states, who died, and who used suspicious email accounts in their applications, all considered high-risk areas.
The 2021 alert also found that payments tied to the Social Security numbers of federal prisoners are a high-risk area. The bureau said in Thursday’s memo that it couldn’t update that figure due to a lack of new data from the Federal Bureau of Prisons, which declined to provide it because of the strain the request would create on the agency’s resources and technology platform. office, the inspector said. the general’s office said.
Fraud within the nation’s unemployment system soared after Congress enacted a historic expansion of the program to help Americans deal with the economic turmoil caused by the Covid-19 pandemic in March 2020. State agencies were overwhelmed with a record number of claims and relaxed some requirements in an effort to quickly get money out of those who had lost their jobs. In five months, more than 57 million people filed claims for unemployment benefits, the inspector general’s office said.
“Hundreds of billions in pandemic funds were targeted by fraudsters seeking to exploit the UI program, resulting in historic 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 attempt to combat fraud, particularly in a temporary new program that allowed freelancers, freelancers and others to collect benefits for the first time.
A key component of the relief effort was a weekly federal supplement for out-of-work Americans. The unemployed received a raise of $600 a week from April through July 2020. Congress then revived the boost in late December 2020, but lowered it to $300 a week. That supplement expired in September 2021, though many Republican-led states and one with a Democratic governor ended it earlier.
Lawmakers also created two other measures to help the unemployed. The Pandemic Unemployment Assistance program provided payments for independent workers, self-employed workers, independent contractors and certain individuals affected by the outbreak, while the Pandemic Emergency Unemployment Compensation program extended payments for those who exhausted your regular state benefits. Those programs also ended in September 2021.
A total of $872.5 billion in pandemic-related unemployment benefits have been paid out since March 2020, the inspector general’s office estimates.
Nearly 1 million Social Security numbers were used by people who applied 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 individuals’ Social Security numbers were used to receive more than $139 million in potentially fraudulent benefits. And 1.7 million Social Security numbers associated with suspicious email addresses were used to claim $16.2 billion in benefits.
In its previous report, the inspector general’s office found that the Social Security numbers of potentially ineligible federal prisoners were used to apply for more than $267 million in benefits.
The inspector general’s office said it had difficulty obtaining unemployment insurance data from state labor agencies until the citations were issued. In some cases, the submitted data was incomplete or unusable.
The inspector general’s office also took issue with the Labor Department’s Employment and Training Administration, which oversees the unemployment insurance program, saying the agency has not implemented the office’s previous recommendations, including working with state agencies to establish effective controls to mitigate fraud and work with Congress to require state agencies to cross-check high-risk areas.
“The lack of sufficient action by ETA significantly increases the risk of even more UI payments to ineligible claimants,” the inspector general’s office wrote in the memo.
In response to the memo, the agency said it continues to “actively and aggressively address fraud” in unemployment compensation programs. He said he is committed to helping states combat “new and continually changing types of sophisticated fraud.”
The inspector general’s office also announced Thursday that more than 1,000 people have been charged with crimes related to unemployment benefits fraud since March 2020, and there have been more than 400 convictions to date. It has opened more than 190,000 unemployment benefit fraud investigations, a more than 1,000-fold increase in the office’s unemployment insurance workload.
The unemployment insurance system is not the only pandemic program to fall victim to fraud in the chaos the pandemic has created.
The Small Business Administration’s Paycheck Protection Program, or PPP, was plagued by questionable lending and rampant fraud, even though it was successful in helping many businesses continue to pay their workers during the pandemic.
In total, the program provided $813.7 billion in loans to small businesses, which were forgiven if the business spent the money on qualified expenses.
The Small Business Administration’s Office of Inspector General has said that more than 70,000 PPP loans totaling more than $4.6 billion could be potentially fraudulent, according to a May 2022 report.
“These loans can only be considered potentially fraudulent because the OIG has not completed a document-by-document review of the loan files to confirm or resolve the suspicious activity; however, our investigations have substantiated an unprecedented level of fraudulent activity. We are working to identify the full scope of PPP fraud,” the report reads.
Separately, the Justice Department has prosecuted more than 150 defendants in more than 95 criminal cases and has seized more than $75 million in cash, as well as real and luxury property, as of May 2022.
And this week alone, 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 uncovered by investigators to date, the department said. The defendants face a variety of charges, including conspiracy, wire fraud, money laundering, and paying and receiving illegal bribes.
The defendants set up a network of shell companies connected 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.