About one-third of unemployment benefits owed to the millions of people out of work because of the coronavirus epidemic still hasn't been paid—some $67 billion owed. Jay Shambaugh, an economist at Brookings Institution who has been tracking the funds, says there is "a huge hole. […] There's a lot more money that should have gone out that has not gone out." Some of the money that has gone out has allegedly gone to criminals, the Trump administration says.
Democratic Sens. Patty Murray and Ron Wyden are trying to find out more after the administration circulated a memo last month saying that scammers might have stolen Social Security numbers and other personal information in order to get the benefits. The administration says at least seven states have been targeted, including Washington State, which appears to have been most vulnerable, along with Michigan, Massachusetts, Rhode Island, and Florida. However, the administration hasn't provided more information about what it discovered. Murray and Wyden are demanding that the government do more to help states secure their systems against these kinds of criminal operations. The Labor Department also didn't respond to The Washington Post's questions about the allegations.
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"We all share a common goal of ensuring the integrity of the unemployment insurance (UI) program," Murray and Wyden wrote to Labor Secretary Eugene Scalia, adding: "Safeguarding state UI systems against unscrupulous actors who seek to exploit the current public health crisis for economic gain requires a holistic response by the federal government in partnership with states."
They want more information on what appears to be an organized crime ring, possibly based in Nigeria, that has somehow tapped into a database that includes the personal information of public employees, including first responders and school employees.
Washington says as much as $650 million was paid in fraudulent claims, though about half of that has been recovered. Last week Michigan halted payments on some 340,000 claims, about 20% of the total it’s been paying out. Other states, including Oklahoma and Pennsylvania, have ceased payment on suspicious claims.
Many states have been overburdened by a combination of the masses of claims that have come in and old, inefficient state-level systems. Paying out the millions in valid claims on top of trying to combat fraud has stretched many states to the limits.
That's just one reason that the federal government should be granting states a lot of money right now to deal with this crisis, in addition to being forthcoming with Congress as to what exactly is going on with this alleged international, organized fraud ring.