Fraudulent Lockdown-Era Unemployment Payments May Amount To $60 Billion, Government Watchdog Says

Fraudsters may have stolen as much as $60 billion from the various unemployment insurance programs enacted by lockdown-era stimulus bills, according to a report from the Government Accountability Office.

State workforce agencies, which are responsible for administering unemployment programs, have officially reported $4.3 billion of fraud between April 2020 and June 2022. Another fraud measure, cases flagged by the Labor Department as potential fraud, could imply some $45 billion in fraudulent payments between March 2020 and April 2022. Extrapolating another lower-bound estimate from the agency, which said at least 7.6% of regular unemployment insurance payments were fraudulent, would imply a conservative estimate of $60 billion.

“Current measures and estimates do not reflect the full extent of fraud, but they do provide important insights on fraud risks,” according to a post from the Government Accountability Office. “And while fraud risks increased as a result of the pandemic, some will remain long after if not addressed.”

Some $878 billion was paid across all unemployment insurance programs between April 2020 and September 2022. “The unprecedented demand for benefits and the need to implement the new programs quickly increased the risk of financial fraud,” the agency continued.

Officials in the Department of Justice have been attempting to claw back the fraudulently obtained taxpayer funds. One example cited by the report noted a former state workforce agency employee who used others’ identities to submit nearly 200 fraudulent applications; the individual was ordered to pay $4.3 million in restitution and will spend over five years in prison. In another instance, an individual used stolen identities to submit at least 300 applications across the country and will spend more than 3 years in prison after paying $1.6 million.

Other brazen examples of unemployment insurance fraud include a rapper who boasted about his scheme in a music video, as well as multiple current and former IRS employees who abused their positions to gain access to the funds.

Broader tallies of misappropriated economic stimulus funds imply a much higher amount of lost resources. The Labor Department estimates that $163 billion in unemployment insurance benefits “could be improper, with a significant portion being attributed to fraud.” ID.me CEO Blake Hall predicted that $400 billion, or half of the unemployment monies, were ultimately stolen.

House Republicans on the Ways and Means Committee issued multiple requests for hearings about the fraud over the past two years; Democrats have consistently blocked the requests to examine the extent of fraudulent activity, the lawmakers say.

“American families, whose wages have eroded under President Biden’s inflation crisis, have watched as hundreds of billions of their hard-earned tax dollars were lost to criminal activity and fraud because Democrats refused to acknowledge the problem and repeatedly rejected Republican efforts to put basic safeguards in place to protect against this activity,” House Ways and Means Committee Chairman Jason Smith (R-MO) said in a statement provided to The Daily Wire. “Congressional Democrats walked away from their oversight responsibilities of getting to the bottom of how this happened, what they could do to prevent it, and even how much has fully been lost, leaving criminals to profit off the backs of taxpayers.”

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