Chat with us, powered by LiveChat
Menu

Unemployment Fraud: Billions Lost In Pandemic Aid

Personal Income
Print Friendly, PDF & Email

EDITOR NOTE: As a taxpayer, it may be a bit discouraging to learn that around $100 billion of funds disbursed during the CARES Act ended up in the pockets of people intentionally committing fraud. The problems vary from state to state. For instance, in the state of Nebraska, it’s estimated that two-thirds of its unemployment benefits were “misspent.” In California, some people made off with millions. To be fair, amid this unprecedented pandemic event, the urgency to provide aid to households in need exceeded the implementation of protocols to ensure the security of those funds--namely, that the right amount was delivered to the right households. And although most households received the right funds, some people made away with enough to buy yachts, bitcoin, and other “non-essential” items. President Biden’s $1.9 trillion stimulus package is about to find its way to the American people. We can almost guarantee that another $100 billion, more or less, will once again be erroneously distributed. And that’s money that will impact all of us, as the debasement of currency that will follow will certainly make a few people very rich at the expense of everyone else’s future wealth.

With so many people needing unemployment benefits during the pandemic, it comes as no surprise that the U.S. Department of Labor, Office of Inspector General (DOL-OIG) has found an unprecedented amount of fraud in the unemployment program created by the CARES Act, according to NBC News

The DOL-OIG estimates at least $63 billion of the $630 billion in disbursements were squandered by fraudsters. The agency warns that taxpayer funds loss could be higher, with some figures suggest north of $100 billion.  

Readers may recall Paycheck Protection Program (PPP) fraud exploded across the country last summer because there were virtually no checks and balances, allowing criminals to file fraudulent loans. 

Fraudsters were buying mansions, exotic cars, fancy clothing, and even Bitcoin. Some of these folks were caught; others remain on the loose as their fraud's complexity has yet to be uncovered. 

California observed a great deal of unemployment fraud. One rapper netted $1.2 million in an unemployment benefits scheme. He even made a video about the scam. He gave a "shoutout" to President Trump for the CARES Act. 

Orange County District Attorney Todd Spitzer said this "isn't just a California problem - it's a breakdown of catastrophic proportions that has failed the American taxpayer."

The Justice Department has launched a task force to find pandemic aid fraudsters across the country - it's only now that the true extent of the loss is being realized. 

"Early indications in some states point to massive problems," said NBC.

A shocking review of pandemic aid payments last June revealed Nebraska's auditor found two-thirds of unemployment payouts were misspent. Kentucky's auditor found that its vetting process was so inadequate that it breached federal law. 

During the pandemic, the former executive director of Kentucky's state workforce agency told staff in an email: 

"Keep in mind, the goal is to put money in people's hands ASAP to help them survive," according to the DOL-OIG audit. 

Identity verification company, ID.me, told NBC that in at least 21 states, there's a "veritable tsunami" of fraudulent claims overwhelming state unemployment systems. 

"It's like looking at fire burning inside of a house, but no fire alarm is going off," said Blake Hall, the chief executive officer of ID.me. "It really is a national crisis."

NBC reached out to state workforce agencies across the country to gather some intel on how much money they have lost to fraud. Most labor agencies said there are no figures on the true extent of the losses as they're still being investigated. 

ID.me said some fraudsters resorted to the dark web to obtain Social Security numbers and other personal information to create false claims. 

"It's so widespread and indiscriminate that they even target people who are heads of law enforcement agencies," Illinois Attorney General Kwame Raoul told NBC.

Being so widespread means "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 scale of it just dwarfs anything else."

A Labor Department spokesperson told NBC:

"We are working on a comprehensive approach to partnering with states to minimize fraud, waste and abuse, while making sure Americans who have lost their jobs through no fault of their own are able to receive the benefits they deserve and 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 proven so far to be a disaster in stimulating long-term growth but instead produced a sugar high in the economy with an eventual cliff.

Arnold & Porter Kaye Scholer LLP created the CARES Act Fraud Tracker that shows the latest fraudsters busted by the Feds. 

While lawmakers debate President Biden's $1.9 trillion economic rescue package, fraud cases could surge once more - it could take quarters, if not years, to figure out some of these complex fraud cases. Maybe "helicopter dropping" trillions of dollars on the economy is not an effective measure after all. 

Originally posted on ZeroHedge

Bank Failure Scenario Kit - sm2

GET YOUR FREE

BANK FAILURE SCENARIO KIT

  • This field is for validation purposes and should be left unchanged.

All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

Precious Metals and Currency Data Powered by nFusion Solutions