Department of Labor inspector general Larry Turner testified in March that the federal government may have paid at least $163 billion in bogus unemployment claims — either due to errors or fraud — and has thus far recovered only about $4 billion of that, some 2.4 percent. This was double the earlier estimates by the Biden White House, and it is still just a ballpark figure extrapolating a typical fraud-and-error rate of 18.71 percent — nearly one dollar in every five — to the estimated $872.5 billion in pandemic unemployment payments. Senator Rob Portman (R., Ohio) described the shocking figure as “one of the largest frauds committed against the American people in our history.” Turner cited a “lack of basic anti-fraud measures” and noted that the actual figure was likely much higher than $163 billion. Outside experts say the number could be as high as $400 billion. California alone acknowledged in October 2021 that it had paid out over $20 billion to criminals. A sprawling Washington Post investigative report explains:
In many cases, the criminals stole the unemployment funds using real Americans’ personal information. They bombarded states with applications filed in the names of actual workers or people in prison — sometimes to such a degree that, in the case of Maryland, fraudulent claims came to outnumber real requests for help, according to state correspondence reviewed by The Washington Post. Criminals employed tools known as botnets to fire off thousands of applications, federal officials say, often with a single computer click. And they openly swapped tips for defrauding the government on popular websites and apps, including the messaging service Telegram. That has continued this year, as research showed at least two dozen groups with nearly 200,000 members openly discussed ways to avert states’ defenses and siphon funds just over an eight-week period in March and April.
The tactics are laid bare in a wide array of federal documents, congressional testimonies, technical reports and court filings, as well as interviews with roughly two dozen government officials and outside experts. Some of the malicious actors potentially even avoided detection, at least for a time, after the Labor Department refused to supply information needed to assist federal fraud investigations — a hurdle the White House intervened to resolve last year…In recent months, a wide array of state and federal law-enforcement agencies have sprung into action, training their sights on domestic criminals and gangs, as well as sophisticated networks based in Nigeria, Russia and Eastern Europe.
Did you have a bogus unemployment claim filed in your name? Quite possibly you did — I did, and so did my wife — and if you’re lucky, you got notified about it. How much money is $163 billion? It’s 45 percent larger than the entire state budget of Florida. It’s the size of the federal-budget deficit in 2007 or the annual revenue of Microsoft in 2021. One of the big fights in Washington right now is over $40 billion in aid to Ukraine, and this is four times that. This caught the federal and state governments by surprise, but it was completely predictable and widely predicted by anyone familiar with federal spending programs. If you just start shoveling big gobs of money out the door in a hurry, a lot of it will go to people who are gaming the system or outright robbing it. That’s not an unexpected problem with big government; it’s what big government is.