With so many people in need of unemployment benefits during the pandemic, it’s no surprise that the US Department of Labor, Office of the Inspector General (DOL-OIG) has discovered an unprecedented amount of fraud in the program. unemployment created by the CARES Act, according to NBC News.
The DOL-OIG estimates that at least $ 63 billion of the $ 630 billion in disbursements has been wasted by fraudsters. The agency warns that the loss of taxpayer funds could be higher, with some figures suggesting north of $ 100 billion.
Readers may recall that Paycheck Protection Program (P3) fraud exploded across the country last summer because there were virtually no checks and balances, allowing criminals to file fraudulent loans.
Scammers were buying mansions, exotic cars, luxury clothing, and even Bitcoin. Some of these people have been arrested; others remain free because the complexity of their fraud has not yet been discovered.
California has seen many unemployment frauds. A rapper raised $ 1.2 million in an unemployment benefit plan. He even made a video about the scam. He “shouted” at President Trump for the CARES law.
Orange County Attorney Todd Spitzer said “it’s not just a California problem – it is an outage of catastrophic proportions that has bankrupted the US taxpayer.”
The Justice Department has launched a task force to find pandemic aid fraudsters across the country – only now the true scale of the loss is being realized.
“Early indications in some states point to massive problems,” NBC said.
A shocking review of pandemic assistance payments last June found that Nebraska’s auditor found that two-thirds of unemployment payments were poorly spent. The Kentucky auditor concluded that its verification process was so inadequate that it violated federal law.
During the pandemic, the former executive director of the Kentucky State Workforce Agency told staff in an email:
“Keep in mind that the goal is to get money into people’s hands as soon as possible to help them survive,” according to the DOL-OIG audit.
Identity verification company ID.me told NBC that in at least 21 states there is a “real tsunami” of fraudulent claims that is swamping state unemployment systems.
“It’s like watching a fire burn inside a house, but no fire alarm goes off,” said Blake Hall, CEO of ID.me. “It really is a national crisis.”
NBC has contacted state labor agencies across the country to gather information on the amount of money lost to the fraud. Most labor agencies said there were no figures on the true extent of the losses, as they are still under investigation.
ID.me said some scammers have used the dark web to obtain social security numbers and other personal information in order to create false claims.
“It’s so widespread and indiscriminate that they even target the people who are the head of law enforcement,” Illinois Attorney General Kwame Raoul told NBC.
Being so prevalent means that “it’s going to take a while to figure out the scope of this thing,” said Mason Wilder, a senior research specialist at the Association of Certified Fraud Examiners. “But the magnitude of it overshadows everything else.”
A spokesperson for the Department of Labor told NBC:
“We are working on a comprehensive approach to partnering with states to minimize fraud, waste and abuse, while ensuring that Americans who have lost their jobs through no fault of their own can receive the benefits they deserve. and which they desperately need. ”
Some fraudsters took their PPP checks and fled the country.
The CARES Act, commonly referred to as a “helicopter drop” by some economists, was just that – and has so far proven to be a disaster in spurring long-term growth, but instead produced high sugar in the economy with a possible cliff.
Arnold & Porter Kaye Scholer LLP created the CARES Act Fraud Tracker which shows the latest fraudsters arrested by the federal government.
As lawmakers debate President Biden’s $ 1.9 trillion economic bailout, fraud cases could rise again – it could take quarters, if not years, to resolve some of these complex fraud cases. Perhaps a “helicopter dropping” billions of dollars on the economy is not an effective measure after all.
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