This is Dominic Pino, filling in for Jim Geraghty.
On the menu today: lots of fraud. The Covid pandemic resulted in the creation of new unemployment benefits with eligibility requirements that were not enforced. Now, law enforcement is trying to clean up lawmakers’ mess — still, and could keep doing so for years to come.
A Multi-Trillion-Dollar Game of 52-Card Pickup
When you were little, if you were ever around an older sibling or cousin with a deck of cards, you were probably asked at some point to play a game called “52-card pickup.” Of course, there is no such game: Your older sibling or cousin proceeded to scatter the 52 cards in the deck on the floor and told you to pick them up.
This is sort of like what Congress did to law enforcement with Covid-relief programs. It disbursed about $5 trillion in the economy with little to no safeguards against fraud. Now, law enforcement has to try to sort through all that money and charge criminals who took advantage of it. And unlike 52-card pickup, which takes at most a few minutes and costs little more than your pride, this process will take years and never be completed. There is simply no possible way to remedy the sheer volume of benefits fraud that was committed during the pandemic.
The Department of Labor’s inspector general estimated in February 2023 that at least $191 billion in pandemic unemployment benefits were improper payments. “Improper payments” is an official government category that includes honest mistakes and fraud, but the inspector general acknowledged at the time that much of it was fraud. The Government Accountability Office estimated in September 2023 that one-seventh of all pandemic unemployment aid was taken by fraudsters. An Associated Press investigation from June 2023 estimated the total Covid-relief fraud and waste could be closer to half a trillion dollars.
DOL inspector general Larry Turner told Congress last year that his office typically opens about 100 unemployment-insurance-fraud cases in a year. From April 2020 to February 2023, his office opened 198,000 such cases. Unemployment-insurance fraud represents 96 percent of the total caseload. In a world of finite resources (that’s the one we live in), that means lots of other types of labor-related crime are likely being underinvestigated.
Unemployment-insurance programs were known to be susceptible to fraud before the pandemic. The GAO had been making recommendations to the DOL to fix those problems since 2018, and the DOL did not act on all of them.
Then, during the pandemic, the federal government created four new unemployment-insurance programs that were even more susceptible to fraud than the existing ones. Emphasis from policy-makers was on getting benefits out quickly, rather than accurately, and especially in the first year of the programs, certifying eligibility was not prioritized. Now, it’s law enforcement’s job to make up for the errors of lawmakers.
Good Luck Catching Everyone
Here’s a list of the Covid-fraud cases the Department of Labor inspector general’s office has made announcements about in the past month:
- June 20: Julio Roncaly Morais of Haverhill, Mass., was charged with filing an unemployment-insurance claim in 2020 for someone who was living in Brazil. Massachusetts paid $5,202 in benefits before realizing the error.
- June 18: Antawn Davis of Boston pleaded guilty to fraud after stealing $50,000 from the Paycheck Protection Program. He faked business records and tax documents for his purported business and was arrested along with over 40 other gang members who were charged with racketeering, drug and firearm offenses, and other forms of financial and Covid fraud.
- June 17: Abdul-Malik McClain, a former college-football player at USC and Jackson State, pleaded guilty to stealing more than $280,000 in unemployment benefits. He tried to obtain over $1 million. He assisted other college-football players in filling out their own fraudulent applications.
- June 14: George Leguen of Paramus, N.J., pleaded guilty to money laundering after faking information on a Covid-relief application to the Small Business Administration and then taking for himself the $149,900 in business aid he received.
- June 11: Frank Sherman of Garland, Texas, was sentenced to two years in prison after having pleaded guilty to theft of government funds. He helped people he met on social media to funnel over $2 million in Nevada Covid benefits to people in Canada. He was also ordered to pay $2.3 million in restitution.
- June 10: La’Kyera and Brandon Thurmond of Georgia were sentenced to 21 months in prison each and ordered to pay $140,228 in restitution for their unemployment-fraud scheme. They filled out applications for Thurmond in multiple states, despite his having been imprisoned for another crime at the time of the applications.
- June 3: David Godin of Florida was indicted for allegedly trying to defraud the unemployment-insurance programs in California and Maryland using the stolen identities of individuals from Maryland, California, Florida, Illinois, Mississippi, and Washington, D.C.
- June 3: Ferris Brooks of Plymouth, Mass., was sentenced to three years of supervised release after having pleaded guilty to theft of government funds for submitting false applications for Covid relief in his own name and in the names of others. He directed over $150,000 to bank accounts he controlled and then split the funds with friends and family.
- May 30: Christopher Niebel of Allen Park, Mich., was sentenced to 63 months in prison after having pleaded guilty to fraud and identity theft and stealing $512,000 from Michigan’s unemployment-insurance system. Niebel was a tax preparer who also worked seasonally for a party-supply store. He used store employees’ information to file fake unemployment-insurance applications, opened several bank accounts to receive the fraudulently obtained funds, and spent them on food, lodging, lottery tickets, casino gambling, and transportation.
- May 30: Tommy Hawkins, a former bank manager from Philadelphia, pleaded guilty to organizing a conspiracy that involved 38 fraudulent PPP loans worth a total of $5 million. He and two other bank employees conspired to fake PPP applications for small businesses by encouraging them to open new accounts, which earned them incentive compensation from the bank on top of an agreement to pay Hawkins $5,000 of the loan proceeds for each loan. Sieff Sargeant of Island Park, N.Y., pleaded guilty to having laundered the money from one of the PPP loans Hawkins helped him fraudulently obtained.
- May 29: Dondre Morgan of Houma, La., pleaded guilty to making false statements to agents from the Department of Veterans Affairs about his involvement in a PPP-fraud scheme.
- May 29: Jaliyl McMillan of Troy, N.Y., was indicted for fraud after allegedly using stolen identities to steal money from the New York State unemployment-insurance system. He used names, dates of birth, and Social Security numbers to obtain electronic funds and debit cards through the mail.
- May 24: Prayshana Washington of Houston pleaded guilty to faking applications through Missouri’s unemployment-insurance system to steal between $550,000 and $1.5 million over a span of a year. She used her own name and the names of others, inside and outside Missouri.
These are just the ones that were related to federal crimes and that the inspector general decided to publicize. There are countless more that weren’t publicized or that were only state crimes.
As you can see, there is a wide variety of fact patterns in these cases. There are several different programs people could have stolen from, each involving different applications and eligibility standards. There is hardly any geographic concentration, leaving investigators to sweep the entire country for fraud. In many cases, fraud is a group effort, involving several people in different cities or states. Sometimes it is a poor individual faking applications; sometimes the fraud is a white-collar crime. Sometimes it’s businesses; sometimes it’s individuals.
And we’re now four years post-pandemic, and it’s still a constant deluge of fraud cases from all around the country. Expect this to continue, as long as there is political will to catch fraudsters.
But sustaining the political will required will be difficult as the crimes go further into the rear-view mirror. It is also in neither political party’s direct self-interest to clean up fraud, since these programs were started under the Trump administration and continued under the Biden administration. Biden clearly doesn’t think much of it, having ignored the Senate and kept Julie Su as acting secretary of labor despite her record overseeing billions in unemployment fraud as California’s labor secretary.
We’re used to hearing about government programs that don’t work, or that create bad incentives, or that replace something the private sector could do just fine on its own. Those more conventional complaints are often points of disagreement between conservatives and progressives because they involve differing views of political philosophy and the role of government in a free society.
These pandemic programs, though, are full of billions upon billions of dollars of straight-up theft. This is pure incompetence to administer the programs. It’s just one more government failure during Covid that will never be fully rectified.