Federal watchdog says pandemic unemployment benefits fraud could exceed $45 billion

The updated number is a significant jump from the $16 billion in fraudulent unemployment payments the bureau mentioned in its June 2021 alert, which looked at claims from March to October of 2020. Since then, there have been increases in payments linked to Social Security numbers from people who filed Claims in multiple states, who have died and who used suspicious email accounts in their claims – all considered high-risk areas.

The 2021 alert also found payments linked to Social Security numbers to federal prisoners as a high-risk area. In a Thursday note, the bureau said it could not update that number due to a lack of new data from the Federal Bureau of Prisons, which it declined to provide due to the burden the demand would create on the office’s resources and technology platform, the inspector. The general’s office said.

Fraud within the country’s unemployment system escalated dramatically after Congress passed a… Historic expansion From a program to help Americans deal with the economic turmoil sparked by the Covid-19 pandemic in March 2020. Government unemployment agencies confuse With record numbers of claims and some relaxation of requirements in an effort to get money out the door quickly for those who have lost their jobs. In five months, the Office of the Inspector General said, more than 57 million people had filed claims for unemployment benefits.

“Hundreds of billions of dollars in pandemic funds have attracted fraudsters seeking to exploit user interface software – resulting in historic levels of fraud and other improper payments,” Inspector General Larry Turner said in a statement.

States and Congress later tightened Verification requirements In an effort to combat fraud, particularly in a new temporary program that allowed freelancers, temporary job workers and others to collect benefits for the first time.
One of the main components of relief efforts was a Federal Weekly Supplement For unemployed Americans. The unemployed received a payment of $600 per week from April through July of 2020. Congress then revived the boost in late December 2020 but Reduced it to $300 a week. This supplement expired in September 2021, although several states led by Republicans and others with a Democratic governor ended it earlier.

Lawmakers also put in place two other measures to help the unemployed. The Pandemic Emergency Unemployment Assistance Program provided payments to the self-employed, the self-employed, independent contractors and some people affected by the outbreak, while the Pandemic Emergency Unemployment Compensation Program extended payments to those who had exhausted regular state benefits. These programs also ended by September 2021.

The Office of the Inspector General estimates that a total of $872.5 billion in pandemic-related unemployment benefits have been paid since March 2020.

The Office of the Inspector General said nearly one million Social Security numbers were used by people who applied for benefits in two or more states, resulting in benefits payments from more than one state. They have received nearly $29 billion in potentially fraudulent payments.

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

In an earlier report, the Office of the Inspector General found that Social Security numbers for potentially ineligible federal inmates were used to provide more than $267 million in benefits.

The inspector general’s office said it had difficulty obtaining unemployment insurance data from government workforce agencies until the subpoenas were issued. In some cases, the data sent was incomplete or unusable.

The Office of the Inspector General also took issue with the Department of Labor’s Employment and Training Administration, which oversees the unemployment insurance program, saying the agency had not implemented the office’s previous recommendations including collaborating with state agencies to put in place effective controls to reduce fraud and working with Congress to require government agencies to match high-risk areas.

“ETA’s lack of adequate action significantly increases the risk of further UI payments to ineligible claimants,” OIG wrote in the memo.

In response to the memo, the agency said it continues to “actively and aggressively address fraud” in its unemployment compensation programs. She said she was committed to helping states combat “new and ever-changing types of complex fraud.”

The Office of the Inspector General also announced Thursday that more than 1,000 people have been charged with unemployment benefits fraud since March 2020, and there have been more than 400 convictions so far. It has opened more than 190,000 investigations into unemployment benefits fraud, a more than 1,000 times increase in the office’s unemployment insurance business.

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

The Small Business Administration’s Paycheck Protection Program, or PPP, has suffered from questionable lending and rampant fraud, despite its success in helping many businesses continue to pay their employees during the pandemic.

In total, the program provided $813.7 billion in loans to small businesses, which were forgiven if the company spent the money on qualification expenses.

More than 70,000 public-private partnership loans totaling more than $4.6 billion may be fraudulent, according to the Office of the Inspector General of the Small Business Administration. May 2022 Report.

“These loans can only be considered fraudulent because the IGO did not complete a document-by-document review of loan files to confirm or resolve suspicious activity; however, our investigations demonstrated an unprecedented level of fraudulent activity. We are working to identify the full extent of PPP fraud. “.

separately , Ministry of Justice He has judged more than 150 defendants in more than 95 criminal cases and has forfeited more than $75 million in cash proceeds, as well as real estate and luxury goods, as of May 2022.
And just this week, section The charges announced 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 biggest scam related to Covid-19 that investigators have discovered so far, the administration said. The defendants face a range of charges, including conspiracy, electronic 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 was designed to provide Kids Meals From low-income families, the prosecution said.

CNN’s Hana Rabinovitch and Omar Jimenez contributed to this report.

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