Some $45.6 billion in pandemic unemployment benefits may have been fraudulently paid to felons between March 2020 and April 2022, the U.S. Department of Labor’s Office of Inspector General said in a statement. memorandum Thursday. This is the latest report to identify widespread schemes to steal money from a variety of federal relief 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 reviewed claims from March to October 2020. Since then, there had an increase in payments tied to social security numbers. of people who filed in multiple states, died, and used suspicious email accounts in their claims — all considered high-risk areas.
The 2021 alert also found payments related to federal prisoners’ Social Security numbers to be a high-risk area. The bureau 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 declined to provide it due to the burden the request would create on the office’s resources and technology platform, the inspector told the general’s office.
Fraud in the country’s unemployment system skyrocketed after Congress passed a historic expansion of the program to help Americans cope with the economic upheaval caused by the Covid-19 pandemic in March 2020. The agencies State unemployment benefits were swamped by record numbers of claims and relaxed some requirements in an effort to quickly distribute the money to those who had lost their jobs. In five months, more than 57 million people filed for unemployment benefits, the inspector general’s office said.
“Hundreds of billions in pandemic funds have attracted fraudsters seeking to exploit the Unemployment Insurance program – resulting in historic levels of fraud and other abusive payouts,” Inspector General Larry Turner said in a statement. communicated.
States and Congress later tightened their verification requirements in an attempt to curb fraud, particularly in a temporary new program that allowed freelancers, gig workers and others to collect benefits for the first time.
A key part of the relief effort was a federal weekly supplement for unemployed Americans. Unemployed workers received a raise of $600 per week from April to July 2020. Congress then reinitiated the enhancement at the end of December 2020 but reduced it to $300 per week. This supplement expired in September 2021, although many states with Republicans and one with a Democratic governor completed it earlier.
Lawmakers also created two other measures to help the unemployed. The Pandemic Unemployment Assistance Program provided payments to freelancers, freelancers, independent contractors and some people affected by the outbreak, while the Emergency Unemployment Compensation Program pandemic has extended payments for those who have exhausted their regular state benefits. These programs also ended in September 2021.
A total of $872.5 billion in pandemic-related unemployment benefits have been paid since March 2020, the inspector general’s office estimates.
Nearly one million Social Security numbers were used by people who applied for benefits in two or more states, resulting in benefits being paid by more than one state, the inspector general’s office said. . They received nearly $29 billion in potentially fraudulent payments.
Nearly 206,000 social security numbers of deceased individuals 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 file $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 file more than $267 million in benefits.
The inspector general’s office said it had difficulty obtaining unemployment insurance data from state labor agencies until subpoenas were issued. In some cases, the data transmitted 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 had failed to implement the recommendations. The bureau’s previous precedents, including working with state agencies to establish effective controls to mitigate fraud and working with Congress to require state agencies to benchmark high-risk areas.
“ETA’s lack of sufficient action greatly increases the risk of even larger unemployment insurance payments for ineligible claimants,” the inspector general’s office wrote in the memorandum.
In a response to the memorandum, the agency said it continues to “actively and aggressively fight fraud” in unemployment compensation programs. He said he was committed to helping states combat “the ever-evolving new and sophisticated types of fraud.”
The inspector general’s office also announced on Thursday that more than 1,000 people have been charged with unemployment benefit fraud offenses since March 2020, and there have been more than 400 convictions to date. He opened more than 190,000 unemployment benefit fraud investigations, a more than 1,000-fold increase in the bureau’s volume of unemployment insurance work.
The unemployment insurance system is not the only pandemic program that has been cheated in the chaos caused by the pandemic.
The Small Business Administration’s Paycheck Protection Program, or PPP, was plagued by bad loans and rampant fraud, even as it succeeded in helping many businesses keep paying their employees during the pandemic. .
In total, the program provided $813.7 billion in small business loans, which 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 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 OIG did not perform a document-by-document review of loan records to confirm or resolve suspicious activity; however, our investigations confirmed an unprecedented level of fraudulent activity. We are working to identify the full extent of PPP fraud,” the report read.
Separately, the justice department prosecuted over 150 defendants in over 95 criminal cases and seized over $75 million in cash, as well as real estate and luxury goods, in 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 uncovered by investigators to date, the department said. The defendants face a range of charges including conspiracy, wire fraud, money laundering and paying and receiving illegal bribes.
The defendants set up a network of shell companies linked to the Minnesota-based nonprofit Feeding our Future, to operate the federal infant nutrition program, designed to provide meals to children from low-income families, have prosecutors said.