Half of COVID-19 Unemployment Funds May Have Been Stolen via Fraudulent Claims: Experts

Blank checks are run through a printer at the U.S. Treasury printing facility in Philadelphia, Pennsylvania, on Feb. 11, 2005. (William Thomas Cain/Getty Images)

Several experts, including the CEO of a fraud prevention service, estimated that criminals have stolen as much as half of all the expanded unemployment insurance funds that were authorized starting in March of last year.

Blake Hall, the CEO of fraud prevention service ID.me, told Axios this week that the United States has lost approximately $400 billion via fraudulent unemployment insurance claims, or as much as 50 percent. The Epoch Times has reached out to ID.me for comment.

Haywood Talcove, the CEO of global data analytics firm LexisNexis Risk Solutions, estimated that at least 70 percent of the funds stolen by fraudsters have already left the United States, although he did not elaborate on a possible sum. That money, he added to Axios, ended up in criminal syndicates in China, Russia, and Nigeria, among other places.

“These groups are definitely backed by the state,” Talcove told Axios, referring to those countries’ respective governments. Some of the other unemployment claims, he added, were fraudulently obtained by domestic street gangs.

The claims come just days after the U.S. Secret Service sent out an alert that a well-organized Nigerian crime ring has committed large-scale unemployment insurance fraud in several states.

The potential losses, the agency warned, are in the hundreds of millions of dollars.

“It is assumed the fraud ring behind this possesses a substantial PII database to submit the volume of applications observed thus far,” the Secret Service warned in a memo. “The primary state targeted so far is Washington, although there is also evidence of attacks in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming, and Florida.”

The Secret Service bulletin suggested the fraud network involves hundreds of so-called “mules,” or an individual who is recruited to unwittingly conduct money laundering schemes for criminal syndicates.

In response to the claims in the Axios report, White House economic adviser Gene Sperling attempted to tie the fraud to the Trump administration and suggested that the Biden administration is working to handle the problem.

“Widespread fraud at the state level in pandemic unemployment insurance during the previous Administration is one of the most serious challenges we inherited,” Sperling stated.

“President Biden has been clear that this type of activity from criminal syndicates is despicable and unacceptable,” he added. “It is why we passed $2 billion for [unemployment insurance] modernizations in the American Rescue Plan, instituted a Department of Justice Anti-Fraud Task Force and an all-of-government Identity Theft and Public Benefits Initiative.”

The expanded pandemic unemployment funds were first passed by Congress under the $2 trillion CARES Act COVID-19 stimulus bill. The unemployment benefits measure has been extended several more times in congressional votes.

Earlier this year, several House Republicans introduced a bill designed to combat COVID-19 unemployment fraud, while GOP lawmakers have long argued that the enhanced federal benefits would stifle economic recovery in the U.S.

“Rampant unemployment fraud has cost taxpayers as much as $200 billion and exposed countless workers and families to identity theft and financial harm. Yet Democrats refuse to hold even a single hearing on how to stop it,” said Rep. Jackie Warlorksi (R-Ind.) in introducing the bill.