In what should come as no surprise to economic watchdogs, as much as half of all unemployment benefits that were released by the U.S. government in response to the COVID-19 pandemic may have gone to scammers.
Axios reports that up to $400 billion that was doled out to those in need may have landed in the hands of criminals. The publication reported that unemployment fraud peaked during the period, and nearly 50 per cent of the funds earmarked for individuals to help them deal with lockdowns, which forced businesses to close and lay off employees, may have gone to fraudsters, many of whom funnelled the country out of the United States.
“Unemployment fraud during the pandemic could easily reach $400 billion, according to some estimates, and the bulk of the money likely ended in the hands of foreign crime syndicates — making this not just theft, but a matter of national security,” Axios reported.
“Blake Hall, CEO of ID.me, a service that tries to prevent this kind of fraud, tells Axios that America has lost more than $400 billion to fraudulent claims,” the outlet added. “As much as 50% of all unemployment monies might have been stolen, he says.”
Experts who spoke to Axios said that the money likely flowed to criminal syndicates in China, Russia, Nigeria and elsewhere. The rest, they said, likely found their way into the hands of domestic street gangs who made up a greater share of scammers in recent months.
The Justice Department has since assigned a task force to root out frauds and scams across the United States, but the effort may prove fruitless after so many months have passed.
In California alone, investigations last year found that more than $400 million went to inmates in California’s 38 prisons, according to Sacramento County Dist. Atty. Anne Marie Schubert, who led a local task force that helped to uncover some extent of stolen funds. The Associated Press reported in January that the state’s benefits fraud could total $9.8 billion.
In April, Sacramento County deputies arrested a woman suspected in a $250,000 employment fraud scheme. “The circumstances of this investigation and arrest are unfortunately another example of what has become one of the most lucrative criminal enterprises in California’s history, EDD fraud,” Schubert said.