According to a security firm hired to investigate the fraud, California may have paid nearly $ 10 billion in false unemployment claims about the coronavirus – more than double the previous estimate – with some of that money going to organized crime in Russia, China. and other countries went.
At least 10% of claims filed with the State Employment Development Department before the controls were installed in October were potentially fraudulent, Blake Hall, founder and CEO of ID.me told the Los Angeles Times.
The Times said this would amount to $ 9.8 billion of benefits paid from March to September.
The money went to people who lost their jobs when the state began to shut down businesses in an effort to curb the COVID-19 pandemic that is currently overwhelming hospitals and causing hundreds of deaths a day.
California, the nation's most populous state, has processed more than 16 million claims for unemployment benefits and disbursed $ 113 billion since March. The Employment Development Department is struggling to keep up with demand and is under great pressure to resolve a backlog that once numbered more than 1.6 million people.
The payout includes $ 43 billion from a federally accelerated assistance program for independent contractors, handymen and less secure self-employed workers, according to the Times.
The state has acknowledged that the department has made hundreds of millions of dollars in COVID-19 unemployment funds that went to fraudsters, including some in the name of US Senator Dianne Feinstein. Others were sent to prison and prison inmates, including some on death row in California.
Hall's company was hired by the Employment Development Department, and as of October his company had blocked nearly 470,000 false claims.
Typically, 10% of jobless claims across the country are fraudulent, Hall told the Times.
Much of the COVID-19 fraud in California and other states has been committed by criminals in some 20 countries, he said.
Hall said criminal gangs make claims using stolen identity information and then send "money mules" to retrieve debit cards issued by the Department of Labor Development, often to vacant homes.
"If the Russians and the Nigerians and the Chinese are the players on the field, they're going to collect some points," Hall said. "This is a very sophisticated cyber attack that is being carried out on a large scale."
The Office of the Inspector General of the United States Department of Labor warned in November that as many as $ 36 billion of the $ 360 billion in federal COVID-19 support payments could be inappropriate or fraudulent.
Rita Saenz, who became the new director of the Employment Development Department this month, called it an unprecedented criminal attack on the benefits system.
Saenz told the Times she could not comment on the possibility that $ 9.8 billion in fraud has been committed, as the department is still trying to determine how much fraud has been committed.
“My intention is to do everything we can, in conjunction with our law enforcement partners, to catch and bring whoever is doing it,” she said.
Last month, the Employment Development department suspended payment of 1.4 million claims until they could be verified.
Copyright 2021 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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