How Unemployment Insurance Fraud Exploded During the Pandemic

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2021-07-27 00:30:04

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A Bronx man allegedly received $1.5 million in just ten months. A California real estate broker raked in more than $500,000 within half a year. A Nigerian government official is accused of pocketing over $350,000 in less than six weeks.

What they all had in common, according to federal prosecutors, was participation in what may turn out to be the biggest fraud wave in U.S. history: filing bogus claims for unemployment insurance benefits during the COVID-19 pandemic. (The broker has pleaded guilty, while the Bronx man and Nigerian official have pleaded not guilty.)

Fraudsters have filed in high volumes, sometimes obtaining payments from multiple states, despite the fact that a jobless person is barred from getting assistance in more than one state. One person, according to the U.S. Department of Labor, used a single Social Security number to file unemployment insurance claims in 40 states. Twenty-nine states paid up, sending $222,532.

But the problem extends far beyond a plague of solo scammers. A ProPublica investigation reveals that much of the fraud has been organized — both in the U.S. and abroad. Fraudsters have used bots to file online claims in bulk. And others, located as far away as China and West Africa, have organized low-wage teams to file phony claims.