Watchdog finds up to $45B spent on fake COVID unemployment claims: ‘Substantial levels of fraud’

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As a lot as $45 billion was spent on fraudulent claims for unemployment insurance coverage in the course of the COVID pandemic, in line with a brand new report from the Authorities Accountability Workplace (GAO).

The report launched Monday mentioned that whereas the Division of Labor has taken steps to cut back Unemployment Insurance coverage (UI) fraud, it has but to develop a broad technique primarily based on prior suggestions from GAO. That left the billions of {dollars} accessible for COVID-related unemployment reduction vulnerable to fraud over the previous few years.

“With out an antifraud technique, DOL is just not in a position to make sure that it’s addressing essentially the most vital fraud dangers dealing with the UI system in alignment with the Fraud Threat Framework,” GAO mentioned.

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A brand new report says the Unemployment Insurance coverage program run by the Labor Division, presently led by Secretary Marty Walsh, paid out billions in faux claims in the course of the COVID pandemic.
(Reuters/Erin Scott/File Photograph)

In line with the report, the federal government spent $878 billion on UI measures between April 2020 and September 2022 to deal with staggering job losses in the course of the pandemic. The estimates of how a lot cash went towards fraudulent claims relies on an evaluation of the UI system roughly within the first two years of the pandemic.

The report mentioned $4.3 billion has been confirmed by state workforce businesses as fraudulent UI funds, however mentioned that doesn’t replicate ongoing investigations into all fraudulent funds that complete $45 billion.

Home Methods & Means Committee Chairman Jason Smith, R-Mo., mentioned the report is one other instance of why Republicans want to spice up oversight of the Biden administration.

“Congressional Democrats walked away from their oversight tasks of attending to the underside of how this occurred, what they might do to forestall it, and even how a lot has absolutely been misplaced, leaving criminals to revenue off the backs of taxpayers,” Smith mentioned. “Republicans are dedicated to investigating fraud and conducting rigorous oversight on behalf of working households.”

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GAO mentioned the “unprecedented demand” for UI advantages elevated the chance of improper funds and revealed weaknesses within the system aimed toward stopping these funds earlier than they exit.

Greater than 300 folks have pleaded responsible to fraud-related prices aimed toward bilking the UI program as of final summer time, GAO mentioned. In a single case, a former state worker makes use of different folks’s identities to submit practically 200 fraudulent purposes for UI advantages, which let that worker gather greater than $4 million in advantages.

Thousands of retail shops across the country were closed down during COVID, which drove up demand for federal unemployment benefits.

Hundreds of retail retailers throughout the nation had been closed down throughout COVID, which drove up demand for federal unemployment advantages.
(iStock)

One other individual took $1.6 million by submitting on-line purposes for UI advantages in 17 states.

The estimate of as much as $45 billion in fraudulent funds exhibits that there’s a “substantial quantity of potential fraud in UI packages,” the report mentioned.

GAO added that it’s troublesome to measure the extent of fraud throughout the system. For instance, it famous that the Labor Division estimates as a lot as $8.5 billion went to fraudulent UI claims in 2021.

GAO mentioned if that stage of fraud had been extrapolated out to the complete pandemic interval, that means greater than $60 billion in fraudulent funds had been made, though it recommended warning in utilizing that estimate.

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The Labor Department was told to boost its anti-fraud effort to reduce payouts to fraudulent claims for unemployment benefits.

The Labor Division was advised to spice up its anti-fraud effort to cut back payouts to fraudulent claims for unemployment advantages.
(Tom Williams/CQ-Roll Name, Inc through Getty Photographs)

The report concluded that the secretary of Labor ought to implement an anti fraud technique for UI funds. In response to that suggestion, the Division of Labor mentioned this work is already underway.

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The GAO report was requested final 12 months by Republican Sen. Mike Crapo of Idaho and former GOP Sen. Rob Portman of Ohio; Rep. James Comer, R-Ky., who now chairs the Home Oversight and Accountability Committee; and former Rep. Kevin Brady, R-Texas.

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