State and federal governments likely paid out at least $191 billion to ineligible unemployment claimants during the pandemic — around $28 billion more than previously estimated, officials acknowledged Wednesday.
A “significant portion” of the funny money was “attributable to fraud,” Department of Labor Inspector General Larry Turner said in prepared testimony before the House Ways and Means Committee.
According to Turner, at least one out of every five unemployment benefit dollars paid out since early 2020 were either improperly given to the same people in multiple states, dead people, prisoners or those with suspicious email accounts.
Last year, Turner estimated that at least $163 billion could have been improperly distributed since the onset of coronavirus in the US.
Criminals were able to game the system because many states were not prepared for the “extraordinary volume” of new claims and governments prioritized getting cash quickly to newly unemployed applicants over making sure safeguards to protect against fraud were in place, he told lawmakers.
In one egregious case, officials found that a claim filed from a 3-bedroom house shared the same physical address as 90 other claims and the same email address as 145 additional applications. The fraudsters behind that scam netted $1.5 million in stolen benefits, the IG said.
In another 2021 case, eight Brooklyn men stole $2 million in COVID cash, and were busted only after they took to social media to flaunt stacks of greenbacks.
An Albany audit last November found that scam artists had stolen $11 billion worth of benefits in New York alone under the $2 trillion CARES Act, signed into law by former President Trump in March 2020.
“The unprecedented infusion of federal funds into the UI program gave individuals and organized criminal groups a high-value target to exploit,” Turner testified.
“That, combined with easily attainable stolen personally identifiable information and continuing UI program weaknesses … allowed criminals to defraud the system.”
The unemployment system was particularly vulnerable to abuse because it is administered by both the feds and state governments and contains multiple levels of bureaucracy and outdated technology, the watchdog said.
Some 1,200 alleged fraudsters have already been charged in connection with the malfeasance, and 500 of them have been convicted and sentenced to 11,000 months in prison, Turner said.
In his Tuesday State of the Union address, President Biden called on lawmakers to “double the statute of limitations” for identity fraud crimes so prosecutors could nail the “criminal syndicates” responsible for ripping off taxpayers.
Two new bills enacted in Albany in December would allow officials to recover three times the amount of money stolen by unemployment scam artists and reward tipsters who flipped on them with a portion of the recovered funds.