Fraud overwhelms state unemployment programs
Transnational criminal groups on DOJ’S radar
COLUMBUS, Ohio – With the floodgates set to open on another round of unemployment aid, states are being hammered with a new wave of fraud as they scramble to update security systems and block scammers who already have siphoned billions of dollars from pandemic-related jobless programs.
The fraud is fleecing taxpayers, delaying legitimate payments and turning thousands of Americans into unwitting identity theft victims. Many states have failed to adequately safeguard their systems, and a review by The Associated Press finds that some will not even publicly acknowledge the extent of the problem.
The massive sham springs from prior identity theft from banks, credit rating agencies, health care systems and retailers. Fraud perpetrators, sometimes in China, Nigeria or Russia, buy stolen personal identifying information on the dark web and use it to flood state unemployment systems with bogus claims.
The U.S. Justice Department is investigating unemployment fraud by “transnational criminal organizations, sophisticated domestic actors, and individuals across the United States,” said Joshua Stueve, a spokesman for the department’s criminal division.
The Labor Department inspector general’s office estimates that more than $63 billion has been paid out improperly through fraud or errors – roughly 10% of the total amount paid under coronavirus pandemic-related unemployment programs since March.
“We’re all learning that there is an epidemic of fraud,” said U.S. Rep. Kevin Brady of Texas, the ranking Republican on the House’s powerful Ways and Means Committee. Brady said the $63 billion estimate “is larger than the entire budget of the Department of
Homeland Security.”
“These are frightening levels of fraud,” he said.
California has been the biggest target, with an estimated $11 billion in fraudulent payments and an additional $19 billion in suspect accounts. Colorado has paid out nearly as much to scammers – an estimated $6.5 billion – as it has to people who filed legitimate unemployment claims.
Other estimates, according to AP reporting across the states, range from several hundred thousand dollars in smaller states such as Alaska and Wyoming to hundreds of millions in more populous states such as Massachusetts and Ohio.
The nationwide fraud has fed on twin vulnerabilities: a flood of jobless benefit applications since the pandemic began that has overwhelmed state unemployment agencies and antiquated benefit systems that are easy prey for crafty and persistent criminals.
In Ohio, weekly first-time unemployment claims have ranged from 17,000 to more than 40,000 during the pandemic. But since late January, those claims have topped more than 140,000 some weeks, with many of them believed to be fraudulent. The state has paid at least $330 million in fraudulent pandemic unemployment benefit claims.
Trying to catch so many bogus claims delays payouts to Ohioans who are legitimately in need of help. In the Columbus suburb of Upper Arlington, Cynthia Sbertoli was receiving $228 a week after she was laid off last March from her job with a nonprofit that runs high school student exchange programs.
Her benefits were put on hold in January after she informed the state that someone had tried to use her identity in a scam to claim benefits. She thought the problem was resolved but has yet to see a renewal of her benefit checks, which she and her husband use to help pay for a son’s vision and auditory therapy.
“It’s just not a good way to take care of people,” said Sbertoli, 49.
In Indiana, Kentucky and Maryland, officials have said that for certain weeks in the new year at least twothirds of the claims they received were classified as suspicious due to problems verifying identities. It’s not the first brush with serious fraud for Maryland. In July, officials said they’d discovered a massive criminal enterprise that had stolen more than $500 million in unemployment benefits.
Among states that have been hardest hit are those participating in the Pandemic Unemployment Assistance program adopted by Congress last year. It has been a lifeline for out-of-work freelancers and gig workers who normally don’t qualify for unemployment insurance, but it’s also been a boon for criminals who use stolen identities to make claims. Nearly 800,000 of the 1.4 million claims Ohio has received through this program have been tagged for potential fraud.
Scams have been so widespread that the U.S. Department of Justice is setting aside money to hire more prosecutors. In New York alone, the Department of Labor says it has referred “hundreds of thousands of fraud cases” to federal prosecutors. The state says it has blocked $5.5 billion in fraudulent claims, while New Jersey says it’s prevented $2.5 billion from flowing into the hands of criminals.
Despite those efforts, a government watchdog agency says not enough states are taking the necessary steps to prevent fraud.
In its memo this past week, the U.S. Department of Labor’s Office of Inspector General said that by the end of last year, 22 of the 54 state and territorial workforce agencies were still not following its repeated recommendation to join a data exchange run by the National Association of State Workforce Agencies.
That system is designed to check Social Security numbers used in claims to see if they are being used in multiple states, or are linked to dead people or other scam methods. The office said it had found $5.4 billion in fraudulent payments from March through October.
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ORLANDO, Fla. – Less than 40 days after leaving office – and less than two months after an insurrection mounted by some of his supporters – former President Donald Trump was to resume political life Sunday with a speech designed to claim continuing leadership of the Republican Party.
Trump was not expected to declare a 2024 presidential candidacy in his address to the Conservative Political Action Conference. But he was likely to discuss plans to inject himself into the 2022 congressional elections, backing Republicans who subscribe to his “Make America Great Again” agenda.
“The greater the challenge, and the tougher the task, the more determined we must be to pull through and win,” Trump planned to say, according to excerpts released by his office.
Trump also planned to argue that the GOP is “united,” despite lawmakers who say the party needs to move past the volatile president whose term ended with a violent insurrection.
“The only division is between a handful of Washington DC establishment political hacks, and everybody else all over the country.”
Although he only left office Jan. 20, Trump also planned to bash his successor, President Joe Biden, claiming he has had “the most disastrous first month of any president in modern history,” according to the excerpts.
Trump planned to call on Biden to support reopening schools, despite the pandemic, and stand up to China and its unfair trade practices.
Biden officials said they are cleaning up the mess left behind by Trump, from his COVID-19 response and too-restrictive immigration measures to frayed relations with international allies.
White House officials have said neither they nor Biden plan to comment much on Trump’s speech because they expect to be busy working.
“I wouldn’t say he’s thought a lot about the former president’s visit – I was going to say ‘performance,’ maybe that’s appropriate – at CPAC,” said White House press secretary Jen Psaki.
Trump’s maiden speech of his postpresidency could be a long one. Trump, who spoke frequently at CPAC before and during his presidency, talked for two hours during his appearance in 2019.
The ex-president also planned to attack Republicans who expressed support for his impeachment, or refused to help him with efforts to overturn his election loss to Biden.
Some of those Republicans are urging the party to move past Trump, citing his role in the insurrection and calling him a divisive leader who would drag down the party to more defeats.
“I don’t believe that he should be playing a role in the future of the party, or the country,” said Rep. Liz Cheney, Rwyo., one of 10 House Republicans who voted to impeach Trump over the Jan. 6 attack on the U.S. Capitol.
Beyond occasional written statements and brief phone-in interviews on cable television, Trump has laid low since leaving office, especially during this month’s Senate impeachment trial.
The Senate acquitted Trump on charges he incited the riot, but only because prosecutors could not muster the two-thirds vote needed for conviction. As it was, 57 of the 100 senators voted for Trump’s conviction, including seven Republicans – more possible targets of Trump’s CPAC speech.
The ex-president will find a friendly crowd. Speaker after speaker has lauded Trump since CPAC opened Thursday night. Many delegates have lined up to take pictures beside a golden statue of Trump, which is decked out in coat and tie, beach shorts, flip-flops, and carrying a magic wand.
K.T. Mcfarland, a former deputy national security adviser, told CPAC delegates Saturday she spoke with Trump by phone. She said he is looking forward to his address, and that supporters shouldn’t be discouraged by recent events.
“He said, ‘I’m going to talk about the future,’ ” she said. “‘I’m going to talk about how we win (Congress) in 2022, how we take the White House back in 2024.’ ”
It’s not known whether Trump will again blame unproven allegations of voter fraud for his loss to Biden. He does plan to call for changes to the system, according to the excerpts, supporting “steps we must take to have an election system in this country that is honest, fair and accurate.”
The expected attacks on Biden are unique in the modern era. Other expresidents have criticized their successors, but none have done it as early in the new president’s first term as Trump.
Rather than fade from the political scene, as have many previous ex-presidents, Trump plans to stay in the spotlight, for better or for worse as far as the Republicans are concerned.
Trump and his allies are even planning to get involved in Republican primaries next month. They have vowed to back primary challengers to Republicans he views as disloyal, particularly the House Republicans who voted for impeachment.
On Friday, Trump endorsed former White House aide Max Miller in his challenge to Rep. Anthony Gonzalez, Rohio, an impeachment supporter.
Denver Riggleman, a former Republican congressman from Virginia who now opposes Trump, said he expected him on Sunday to aggressively attack critics while building a “cult of personality” within a Republican Party on the brink of civil war.
Said Riggleman: “You’ve got people who are loyal to Trump against people who are loyal to the Constitution.”
Sen. Rob Portman, R-ohio, speaking on ABC News’ “This Week,” said he hopes Trump talks about “policies” like taxes and regulation, rather than “personalities” that include Republican opponents.
“There are a number of things we can talk about from a policy perspective that I think will help to move the party forward,” Portman said. “And that’s where we ought to focus.”