Up to $400 billion in COVID unemployment aid was stolen — and more than half of that money was funneled to criminals in Russia, China and Nigeria, it was alleged.
The United States lost as much as 50% of all unemployment benefits, a whopping $400 billion, through fraudulent claims, Blake Hall told axios. Hall is the CEO of ID.me CEO, a company that provides fraud prevention services.
Some experts consider the theft a matter of national security, with cash falling into the hands of criminal groups in Russia, China and Nigeria.
More than 70% of the $400 billion feared to be stolen was stolen by state-backed foreign criminal groups, Haywood Talcove told Axios.
“These groups are definitely backed by the state,” said Talcove, the CEO of LexisNexis Risk Solutions.
American street gangs reportedly stole much of the rest of the money.
Fraud prevention experts have claimed that up to half of unemployment money handed out in the United States during the COVID-19 pandemic may have been stolen
Blake Hall, left, said the US has lost as much as 50% of all unemployment benefits, a staggering $400 billion, to fraudulent claims. Haywood Talcove, right, said over 70% of stolen money was stolen by state-backed foreign criminal groups
A chart shows the decline in the number of new jobless claims in the US since the start of the COVID-19 pandemic
White House economist Gene Sperling noted to Axios that much of the fraud took place during the administration of former President Donald Trump.
“Widespread state-level fraud in pandemic unemployment insurance during the previous administration is one of the most serious challenges we have inherited,” Sperling told Axios.
“President Biden has made it clear that this kind of activity by criminal syndicates is despicable and unacceptable. That’s why, in the US bailout plan, we committed $2 billion for UI modernizations, established a Justice Department anti-fraud task force, and a government initiative on identity theft and public benefits.”
Experts and politicians had assumed some money would be stolen through fraud as unemployment systems in states across the country were unwilling to meet the demands of the pandemic.
However, Hall and Talcove’s estimates show the incredible magnitude of potential unemployment insurance fraud over the past year.
Axios explained that some thieves were likely able to defraud the government by stealing people’s personal information to impersonate them and claim the money, while others tricked real claimants into giving them their information.
Once the information was stolen, lower-level criminals called “mules” would take the money from ATMs and convert it into Bitcoin — which can be sent in an impossible-to-trace way — to transfer it abroad.
The US Department of Labor notes about his website that most victims of unemployment identity theft “don’t know that claims have been made” and collected using their identities.
“Many people don’t discover identity theft in unemployment until they receive something in the mail, such as a payment or a state-issued 1099-G tax form that is incorrect or for benefits that have not been received,” the website reads.
The Labor Department maintains a database of individual states’ contact information for those who believe they have been victims of unemployment identity theft.
Activists take part in a protest outside the Old Ebbitt Grill to call for a full minimum wage with tips for restaurant workers in Washington DC.
On June 4, 2021 in New York City, people walk past a ‘Help Wanted’ sign in the Queens borough of New York City
In April, the Tax and Customs Administration noted that it had documented an “increase in fraudulent unemployment claims filed by organized crime gangs using stolen identities.”
“The Department of Justice recently warned that fraudsters are creating websites that mimic unemployment benefit websites, including government employment services (SWA) websites, for the purpose of unlawfully recording consumer personal information,” the IRS website reads.
“To lure consumers to these bogus websites, fraudsters send spam text messages and emails that supposedly come from an SWA and contain a link.”
The memo continues: “The fake websites are designed to trick consumers into thinking they are applying for unemployment benefits and to divulge personally identifiable information and other sensitive data. That information can then be used by fraudsters to commit identity theft.’
The US economy added 559,000 jobs last month and the unemployment rate fell to 5.8 percent, the Labor Department said on June 4.