Oversight report explains how fraudsters got billions in COVID unemployment money
WASHINGTON (SBG) — A report out this month by a federal committee on pandemic relief oversight detailed the vulnerabilities of state workforce agencies that resulted in more than $39 billion in improper unemployment payments during the first year of the pandemic.
According to the Pandemic Response Accountability Committee, state auditors from 16 states reported common factors like a surge in workloads, uncommon and varying fraud schemes, and outdated technology systems. A May audit by the U.S. Department of Labor Office of Inspector General also cited "untimely and unclear" guidance from the department's Employment and Training Administration.
Soon after former President Donald Trump signed the CARES Act, which established enhanced unemployment payment programs, state unemployment offices were overwhelmed. Claim loads doubled or tripled overnight, according to the PRAC report. Kansas saw a 1,092% increase between January and April 2020, while Louisiana saw a 3,536% jump.
To handle the surge, internal controls to verify a claim's accuracy were scaled back.
Identity theft was rampant. In Colorado, an invalid Social Security number was used 151 times. There were also sophisticated multi-state schemes; one Social Security number was used to obtain more than $222,000 from 29 states.
In an audit in Louisiana discovered between January and November 2020, the state paid out $6.2 million to 1,200 individuals using the identity of an inmate. During that time, the state's system for checking incarceration data wasn't working properly. In that same period in California, the state provided more than $800 million in unemployment benefits to 45,000 people whose information matched an inmate.
Last week the U.S. Secret Service named Assistant Special Agent in Charge Roy Dotson as the new national pandemic fraud recovery coordinator. He told CNN the ways criminals use online banking and cryptocurrency present new challenges to the agency's efforts to recover stolen funds.
“This allows fraudsters to move monies much more quickly and fast money equals fast crime," Dotson said.
The Secret Service said it has more than 900 active criminal investigations related to pandemic relief fraud. In December alone, the U.S. Department of Justice announced guilty pleas or indictment of more than 50 individuals.
