Feds charge 1,000 defendants in pandemic unemployment fraud investigation

WASHINGTON (TND) — This week, the Office of Inspector General at the Department of Labor marked a milestone as 1,000 individuals have been charged with pandemic unemployment fraud as a result of their investigations.

The total scope of fraud is expected to take years to detect and prosecute, though it may never be fully realized.

Estimates from the DOL-OIG and the Pandemic Response Accountability Committee indicate about $46 billion in supplemental pandemic unemployment benefits were fraudulently obtained. That may be just the tip of the iceberg.

“I would expect that number to go up more. I don’t know where it will end up at but we, it may take not only months, it may take years to learn about the scope of the fraud," PRAC chair Michael Horowitz said.

Horowitz points to how Congress crafted the three unemployment programs, which disbursed nearly $655 billion in benefits, allowing states to let applicants self-certify their claims.

"It means you came in and you just signed a statement saying ‘I’m entitled to this money.’” No bank does that. No business does that and a government program can’t do that. That’s what happened here," Horowitz said.

Horowitz pushed back on the theory some elected officials held in the early days of the pandemic, that they had to choose between distributing benefits either quickly or accurately.

While state unemployment systems were not set up to catch every fraudulent claim, there were some basic steps that could have been implemented without significantly delaying the process, Horowitz said. It would have been possible, for instance, to check if the same social security number was being used multiple times, if a social security number on an application belonged to a child or if an application had been filed from an international IP address.

Though unemployment benefits were one of the most widely utilized programs, Horowitz notes there were 450 pandemic relief programs across more the 40 federal agencies. To date, there's no estimate of the total funds fraudulently obtained from the more than $5 trillion in total pandemic aid.

One specific case in Minnesota caught the nation's attention this week. Forty-seven people were charged in a $250 million scheme exploiting a child nutrition program. It's the largest COVID-19 fraud case so far, one U.S. Attorney Andrew M. Luger called "a brazen scheme of staggering proportions."

Last month President Joe Biden signed legislation extending the statute of limitations for Paycheck Protection Program and COVID-19 Economic Injury Disaster Loan fraud from five years to 10, which is consistent with charges of bank fraud. Horowitz said they're in this "for the long haul."

"We are digging. We have data analytics programs running," Horowitz said. "We are looking at thousands of cases still and we’re gonna investigate those cases and so the people that got money improperly, we’re gonna track it down.”