Watchdog: U.S. potentially paid $45B in pandemic relief UI to fraudsters - Insurance News | InsuranceNewsNet

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September 23, 2022 Newswires
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Watchdog: U.S. potentially paid $45B in pandemic relief UI to fraudsters

UPI Top News

A federal watchdog investigating the deployment of pandemic relief funds said fraudsters may have stolen tens of billions of dollars from the Department of Labor by filing claims in multiple states and using the social security numbers of dead people.

The department's inspector general, Larry Turner, announced Thursday that his office has identified $45.6 billion in potentially fraudulent unemployment insurance payments that occurred between March 2020 and April.

The figure is a significant increase from the $16 billion his office had identified in June of last year.

"Hundreds of billions in pandemic funds attracted fraudsters seeking to exploit the UI program -- resulting in historic levels of fraud and other improper payments," Turner said in a statement.

In March 2020, the Coronavirus Aid, Relief and Economic Security Act, better known as the CARES act, was signed into law, expanding states' ability to provide unemployment insurance to workers impacted by the COVID-19 pandemic, including those who were previously ineligible for the safety net.

Within five months of the program being implemented, more than 57 million people filed claims, and while states struggled to handle the increase in unemployment insurance claimants, fraudsters and organized criminal groups pounced to exploit the system's vulnerabilities.

According to an Alert Memo written by Carolyn Hantz, assistant inspector general for audit, the office attributed the fraudulently distributed funds to fraudsters filing in multiple states, on behalf of dead people, with suspicious emails and from prison.

Hantz said nearly $29 billion was potentially distributed to fraudsters who filed in multiple states with the use of almost 1 billion social security numbers while claims filed with suspicious email accounts represented the use of 1.7 million social security numbers for $16.2 billion potentially stolen funds.

The watchdog also found that the Labor Department paid out more than $267.3 million in unemployment insurance benefits to federal prisoners and $140 million to nearly 206,000 social security numbers belonging to dead people.

The inspector general's office said its 140 criminal investigators have opened more than 190,000 investigations related to unemployment insurance fraud, resulting in charges being brought against more than 1,000 people. So far, the department has secured 400 convictions, accounting for more than 7,000 combined months of incarceration, it said.

Because of its limited investigative force, the office said it is focusing its resources on areas that pose the greatest risk, specifically large-scale identify theft schemes run by organized criminal organizations that target multiple victims.

Hantz in her memo blamed at least part of the issue on the Labor Department's Employment and Training Administration for not sufficiently implementing its prior recommendations concerning readily providing the inspector general with access to its data.

"ETA's lack of sufficient action significantly increases the risk of even more UI payments to ineligible claimants," Hantz wrote. "Our identification of the additional potentially fraudulent payments emphasizes the need for increased ETA engagement and assistance to mitigate fraud and protect the UI program's integrity."

The inspector general's office said that since the CARES Act was implemented, the Labor Department has distributed an estimated 872.5 billion in pandemic-related unemployment insurance funding.

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