The 2021 warning also found payments tied to federal inmates’ Social Security numbers to be a high-risk area. The bureau said in a memo Thursday that it could not update that amount because of a lack of new data from the Federal Bureau of Prisons, which declined to provide it because of the burden the request would place on the bureau’s resources and technology platform, the inspector general the general’s office said. Fraud in the nation’s unemployment system skyrocketed after Congress enacted a historic expansion of the program to help Americans deal with the economic turmoil sparked by the Covid-19 pandemic in March 2020. State unemployment agencies were overwhelmed by record numbers of applications. and relaxed some requirements in an attempt to get money out quickly to those who had lost their jobs. In five months, more than 57 million people filed for unemployment benefits, the inspector general’s office said. “Hundreds of billions in pandemic funds attracted fraudsters trying to exploit the UI program — resulting in historic levels of fraud and other improper payments,” Inspector General Larry Turner said in a statement. States and Congress then increased verification requirements in an effort to combat fraud, particularly in a new temporary program that allowed freelancers, gig workers and others to collect benefits for the first time. A key element of the relief effort was a federal weekly supplement for Americans out of work. The unemployed received a $600 per week boost from April to July 2020. Congress then revived the boost in late December 2020, but reduced it to $300 per week. That supplement expired in September 2021, though several Republican-led states and one with a Democratic governor ended it sooner. Lawmakers also created two other measures to help the unemployed. The Pandemic Unemployment Assistance program provided payments to the self-employed, self-employed, independent contractors and certain people affected by the epidemic, while the Pandemic Emergency Unemployment Compensation program extended payments to those who exhausted their regular government benefits. These programs also expired by September 2021. A total of $872.5 billion in pandemic-related unemployment benefits have been paid since March 2020, the inspector general’s office estimates. Nearly one million Social Security numbers were used by people who applied for benefits in two or more states, resulting in benefits being paid by more than one state, the inspector general’s office said. They received nearly $29 billion in potentially fraudulent payments. Nearly 206,000 deceased Social Security numbers were used to receive more than $139 million in potentially fraudulent benefits. And 1.7 million Social Security numbers associated with suspicious email addresses were used to apply for $16.2 billion in benefits. In its previous report, the inspector general’s office found that the Social Security numbers of potentially ineligible federal prisoners were used to file more than $267 million in benefits. The inspector general’s office said it had difficulty obtaining unemployment insurance information from state workforce agencies until subpoenas were issued. In some cases, the data sent was incomplete or unused. The inspector general’s office also took issue with the Labor Department’s Employment and Training Administration, which oversees the unemployment insurance program, saying the agency has failed to implement the agency’s previous recommendations, including working with state agencies to establish effective controls for mitigating fraud and working with Congress to require government agencies to cross-check high-risk areas. “ETA’s lack of adequate action significantly increases the risk of even more UI payments to ineligible claimants,” the inspector general’s office wrote in the memo. In response to the memo, the agency said it continues to “actively and aggressively address fraud” in unemployment compensation programs. It said it is committed to helping states fight “ever-changing and new types of sophisticated fraud”. The inspector general’s office also announced Thursday that more than 1,000 people have been charged with crimes related to unemployment benefits fraud since March 2020 and more than 400 have been convicted to date. It has opened more than 190,000 unemployment benefit fraud investigations, a more than 1,000-fold increase in the bureau’s unemployment insurance caseload. The unemployment insurance system is not the only pandemic program that has fallen victim to fraud in the chaos caused by the pandemic. The Small Business Administration’s Payroll Protection Program, or PPP, has been plagued by questionable lending and rampant fraud, even as it has helped many companies keep paying their workers during the pandemic. In total, the program provided $813.7 billion in loans to small businesses, which were forgiven if the company spent the money on qualifying expenses.
The Small Business Administration’s Office of Inspector General said more than 70,000 PPP loans totaling more than $4.6 billion could be potentially fraudulent, according to a May 2022 report. “These loans can only be considered potentially fraudulent because OIG has not completed a document-by-document review of loan records to confirm or resolve suspicious activity. However, our investigations have documented an unprecedented level of fraudulent activity. We are working to detect the full extent of PPP fraud,” the report said. Separately, the Justice Department has prosecuted more than 150 defendants in more than 95 criminal cases and seized more than $75 million in cash, as well as real estate and luxury goods, since May 2022. And just this week, the department announced charges against 47 people accused of stealing $250 million from a federal program designed to provide meals to needy children during the pandemic. The scheme is the largest fraud related to Covid-19 uncovered by investigators to date, the department said. The defendants face a number of charges, including conspiracy, wire fraud, money laundering and paying and receiving illegal kickbacks. The defendants created a network of shell companies linked to the Minnesota-based nonprofit Feeding our Future to take advantage of the federal child nutrition program, which is designed to provide meals to children from low-income families, prosecutors said. CNN’s Hannah Rabinowitz and Omar Jimenez contributed to this report.