By now you’ve heard about the L.A. rapper who bragged about his alleged unemployment scams on YouTube, the 1-year-old getting paid for lost acting wages and the estimated $1 billion paid out to incarcerated people ineligible for benefits. But the full scale of fraud that appears to have happened during the pandemic is more extreme. “This will be the largest fraud investigation in the history of America,” said Blake Hall, CEO of state identity verification contractor ID.me, “and it won’t even be close.”
So far, the state has confirmed around $11 billion in unemployment fraud — the vast majority involving the less-rigorous federal Pandemic Unemployment Assistance program — with another $19 billion under investigation. That brings the potential total to around $31 billion, or more than the state spends each year on housing, transportation, higher education and environmental protection.
Fraud investigations are ongoing, but cases detailed so far involve a mix of old-school tactics like fraudulently filing for benefits in someone else’s name, the state’s own failure to cross-check unemployment applications with prison rolls, fraudulent charges on unemployment debit cards, and global hacking rings that flooded states across the country with forged applications.
Law enforcement officials emphasize connections to organized crime, drug trafficking and weapons offenses, but recent state audits and cybersecurity experts stress that much of the fraud could have been relatively easily prevented by better vetting applications.