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ANGELS – California may have paid nearly $ 10 billion in bogus coronavirus unemployment claims – more than double the previous estimate – with some of that money going to organized crime in Russia, China and other countries , according to a security company hired to investigate the fraud.
At least 10% of claims submitted to the state’s Department of Employment Development before the checks were installed in October could have been fraudulent, Blake Hall, founder and CEO of ID.me told the Los Angeles Times.
The Times said on Friday that would represent $ 9.8 billion in benefits paid from March to September.
The money has gone to people who lost their jobs when the state began shutting down businesses in an attempt to curb the COVID-19 pandemic that is now overwhelming hospitals and causing hundreds of deaths a day.
A woman wearing a face mask walks into a building where the Employment Development Department is headquartered in Los Angeles, Calif., May 4, 2020 (Photo by Frederic J. BROWN / AFP via Getty Images)
California, the most populous state in the country, has processed more than 16 million unemployment benefit claims since March and paid out $ 113 billion. The Employment Development Department has struggled to keep up with demand, facing intense pressure to work with a backlog that at one point numbered over 1.6 million people.
The payment includes $ 43 billion from a federal fast-track assistance program for independent contractors, on-demand workers and the self-employed, which is less secure, the Times said.
The state admitted that the department had been swindled out of hundreds of millions of dollars in COVID-19 unemployment funds that went to scammers, some on behalf of US Senator Dianne Feinstein. Others were sent to inmates of jails and jails, including some on California death row.
Hall’s company was hired by the Employment Development Department and since October his company had blocked nearly 470,000 bogus claims.
RELATED: California EDD suspends unemployment checks it considers high risk
Typically, 10% of jobless claims nationwide are fraudulent, Hall told The Times.
Much of the COVID-19 fraud in California and other states has been perpetrated by criminals in around 20 countries, he said.
Hall said criminal networks submit claims using stolen identity information and then send “money mules” to search for Debit Cards issued by the Department of Employment Development, often from vacant homes.
“When the Russians, Nigerians and Chinese are the players on the pitch, they are going to score points,” Hall said. “This is a very sophisticated cyber attack that is carried out on a large scale.”
RELATED: EDD needs months and years to better protect social security numbers
The Office of the Inspector General of the US Department of Labor warned in November that as much as $ 36 billion of the $ 360 billion in federal payments to support COVID-19 could be inappropriate or fraudulent.
Rita Saenz, who this month became the new director of the employment development department, called the attack an unprecedented criminal attack on the benefit system.
Saenz told The Times she could not comment on the possibility of a $ 9.8 billion fraud because the department was still trying to determine the amount of the fraud.
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“My intention is to do whatever we can, working with our law enforcement partners, to catch those who do and bring them to justice,” she said.
Last month, the Employment Development Department suspended payment of 1.4 million claims until they could be verified.
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This story has been corrected to show that the Los Angeles Times reported that a 10% fraud rate for California unemployment benefits paid from March to September could total $ 9.8 billion, not $ 98.8 billion. of dollars.
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