‘A magnet for rip-off artists’: Fraud siphoned billions from pandemic unemployment benefits

‘A magnet for rip-off artists’: Fraud siphoned billions from pandemic unemployment benefits

Identity theft and other sophisticated criminal schemes contributed to potentially $163 billion in twaste, while inflicting harm on unwitting victims

Sareena Brown-Thomas had just arrived home from her shift as a custodian when she noticed an envelope in the mail from the D.C. government. Bearing her name, address and the last four digits of her Social Security number, the letter inside said she had been awarded unemployment benefits — a problem, she later recalled, since she had never applied for them.

The 32-year-old soon notified her bosses, believing last summer that she had put the matter to rest. But the real trouble wouldn’t start until September: When Brown-Thomas did actually find herself out of a job, she couldn’t get the financial support she needed. Mired in bureaucratic battles, she said she faced a months-long struggle just to prove her identity to the city.

“I’m still trying to figure out how to get a lot of stuff paid,” Brown-Thomas, who warred at one point with D.C. over her eligibility, said in an interview this spring. “It was so easy for them to use my Social Security number to get unemployment.”

Brown-Thomasis part of a sprawling community of victims caught up in a massive series of attacks targeting the nation’s generous coronavirus aid programs. The more than $5 trillion approved since the start of the pandemic has become a wellspring for criminal activity, allowing fraudsters to siphon money away from hard-hit American workers and businesses who needed the help most.

The exact scope of the fraud targeting federal aid initiatives is unknown, even two years later. With unemployment benefits, however, the theft could be significant. Testifying at a little-noticed congressional hearing this spring, a top watchdog for the Labor Department estimated there could have been “at least” $163 billion in unemployment-related “overpayments,” a projection that includes wrongly paid sums as well as “significant” benefits obtained by malicious actors.

So far, the United States has recaptured just over $4 billion of that, according to state workforce data furnished by the Labor Department this March. That amounts to roughly 2.4 percent of the wrongful payments, if the government’s best estimate is accurate, raising the specter that Washington may never get most of the money back. Contact

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