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Pandemic relief fraud estimates triple, at $45.6 billion

Federal watchdog investigations continue to uncover pandemic fraud, fighting with state agencies for data access

SHARE Pandemic relief fraud estimates triple, at $45.6 billion

House Speaker Nancy Pelosi, D-Calif., finishes the vote to approve the Inflation Reduction Act in the House chamber at the Capitol in Washington, Friday, Aug. 12, 2022. A divided Congress gave final approval Friday to Democrats’ flagship climate and health care bill.

Patrick Semansky, Associated Press

A government watchdog announced Thursday that it has identified $45.6 billion in potential fraudulent unemployment insurance claims since the COVID-19 pandemic began in March 2020, according to a press release.

The Department of Labor’s Inspector General Larry Turner said “Hundreds of billions in pandemic funds attracted fraudsters seeking to exploit the UI program — resulting in historic levels of fraud and other improper payments.”

Turner said the department has reached a “milestone” of 1,000 people being charged with unemployment insurance fraud.

The Labor Department issued an alert to the Employment and Training Administration, warning of fraudulent activities such as filing for unemployment insurance funds in multiple states, using the Social Security numbers of deceased persons or those of federal prisoners. The alert states that the “ETA’s lack of sufficient action significantly increases the risk of even more UI payments to ineligible claimants.”

Since June 2021, the Office of Inspector General has almost tripled its estimate of fraudulent payments. Even still, its focus has been on high-risk areas. The watchdog made clear the difficulties in obtaining current data from government organizations.

The alert states that the Federal Bureau of Prisons declined to provide current prisoner data, due to the burden on its resources. Additionally, the inspector general claims that state workforce agencies did not provide data until after subpoenas were issued. It then took months for these agencies to send the requested data, though the provided data was sometimes unusable or incomplete.

Trillions in relief money went to businesses and individuals during the pandemic, and now investigators including the FBI, the Secret Service, the Postal Inspection Service and the Internal Revenue Service, as well as the offices of 21 inspectors general are working to make a dent in the widespread fraud, according to The New York Times.

To provide more time for investigators to identify fraud, President Joe Biden extended the statute of limitations from five years to 10 years for Paycheck Protection Program and COVID-19 Economic Injury Disaster Loan fraud.