According to the U.S. Labor Department Inspector General’s semi-annual report to congress, approximately $872 billion dollars of tax payer money was paid out in unemployment benefits to scam artists in the last year. That’s approximately 10% of all unemployment benefits paid during the height of the pandemic, and more then triple the total benefits paid out 1n 2019.
The inspector general also reported that the substantial loss due to outright fraud was “significant.”
Perhaps the biggest concern regarding the report was the “unprecedented” levels of federal funding through the Coronavirus Aid, Relief and Economic Security (CARES) Act, and other legislation. The funding to these different legislations actually overlapped one another, making it extremely easy for the individuals intent on committing fraud to do so. “The UI program gave individuals and organized criminal groups a high-value target to exploit,” according to the report.
Michigan paid up to $8.5 billion in fraudulent jobless assistance claims during the pandemic, a new audit found. The governor ordered an advisory body to be set up to investigate unemployment insurance fraud.https://t.co/OwRfmNmnU5— NPR (@NPR) December 30, 2021
Both factors have also made it difficult for the Labor Department to efficiently distribute benefits “while ensuring integrity and adequate oversight,” according to the report.
Currently, about 27,000 complaints and investigations concerning alleged unemployment benefit fraud have been opened by the inspector general’s office, with an additional 132,000 complaints from the National Center for Disaster Fraud. Before COVID, only 12% of government watchdog cases involved unemployment fraud. These investigations now account for 92% of these cases.
The report also warned that the department thus far “has not done enough to formally assess the various strategies available to combat improper payments.”
For example, a California woman “fraudulently obtained more than $500,000 in COVID-19-related unemployment benefits by using the stolen personal information of dozens of individuals obtained from the ‘darknet‘” in 2020. She was sentenced to 37 months in federal prison.
In another case, an Arizona man was convicted of “possessing multiple unemployment benefits debit cards, all in different names, and intending to fraudulently obtain nearly $239,000 in benefits” just in October 2020.
According to a report prepared by Deloitte for the state, Michigan paid out between $8.4 to $8.51 billion dollars to crooks from March 1st, 2020, to September 30th, 2021. Michigan did, however, avoid paying about $43.7 billion in fraudulent claims during that same period of time.
In light of the report, Governor Gretchen Whitmer established a permanent Unemployment Insurance Fraud Response Team.
Governor Gretchen Whitmer has signed an executive order that'll permanently establish an Unemployment Insurance Fraud Response Team. https://t.co/leZZUBqoSr— FOX 17 (@FOX17) December 30, 2021
Unemployment Insurance Agency Director, Julie Dale, stated in a recent press release, “Our diligence in identifying fraudulent claims proves that we now have effective processes to identify criminals who steal benefits from unemployed workers and Michigan taxpayers.”
Dale continued, “It’s extremely disheartening that bad actors have defrauded the much-needed benefits intended for hard-working Michiganders and the scale of their actions is stunning. We have been successful over the past year in limiting the percentage of cases that are fraudulent to less than 1 percent, but we will never stop fighting for our workers.”
Michigan alone accounts for nearly 10% of all fraudulent claims paid nationwide during the height of the COVID pandemic. 97% of the fraudulent claims paid in Michigan came out of federal funds.