[ad_1]
As army of investigators try to pin down scope of unemployment benefit fraud in California, head of state-based security firm warns fraudulent claims payments could more than double $ 4 billion previously estimated dollars, and that a flood of these allegations concern criminal networks abroad.
According to Blake Hall, founder and CEO of ID.me., which was hired by the state’s employment development department to eliminate fraud, at least 10% of unemployment claims may have been fraudulent. before the controls are installed in October. A 10% fraud rate could add up to $ 9.8 billion in benefits paid from March to September.
Much of the fraud in California and other states comes from organized criminal gangs operating in around 20 foreign countries, including Russia, China, Nigeria, Ghana, Turkey and Bulgaria, Hall said.
“When the Russians, Nigerians and Chinese are the players on the pitch, they are going to score points,” Hall told The Times. “This is a very sophisticated cyber attack that is carried out on a large scale.”
Hall’s company was hired by EDD to start checking unemployment claims in October, and since then 30% of the claims it reviewed have been found to be fraudulent. Between Oct. 1 and Jan. 11, Hall said his company blocked 463,724 fraudulent claims, which he said would amount to more than $ 9 billion if EDD paid $ 20,000 on each claim.
EDD has so far paid out $ 113 billion in unemployment benefits during the 10 months of the COVID-19 pandemic, including $ 43 billion under an accelerated – and less secure – program of Unemployment assistance in the event of a pandemic for independent contractors, on-demand workers and the self-employed. employee.
State officials were recently warned by Bank of America, which is under contract with EDD to issue debit cards to distribute benefits, that there is evidence the fraud could total more than $ 4 billion. of dollars in California. A task force made up of police officers and prosecutors from counties, states and the federal government is investigating to identify all frauds, which also involved claims on behalf of inmates.
Hall said typically 10% of unemployment claims nationwide are fraudulent.
A similar warning was issued nationwide in November by the Office of the Inspector General of the US Department of Labor.
“Cautiously, assuming irregular payments continue at 10%, at least $ 36 billion of the $ 360 billion spent under the CARES Act as of November 7, 2020, could be paid incorrectly, with a significant portion attributable to fraud, ”the bureau said in a report.
Hall, whose company provides security to unemployment agencies in 14 states, estimated that about 40% of claims under the Pandemic Unemployment Assistance Program could be fraudulent.
“It would be consistent with what we’re seeing all over the country,” Hall said.
California has paid out $ 35.7 billion in PUA benefits through October 3; 40 p. 100 of this amount would total $ 14 billion.
EDD director Rita Saenz, who took over the agency on January 1, said she was concerned about the level of fraud she had heard from ID.Me and others.
“This type of criminal assault on the benefit system is unprecedented,” Saenz said in an interview. “My intention is to do whatever we can, together with our law enforcement partners, to catch those who do and bring them to justice.”
Saenz said she could not comment on the possibility of fraud reaching $ 9.8 billion or more.
“We are still looking for the number of frauds that have been committed, so I cannot give you a firm number. We’re still looking, ”she says.
Lawmakers are concerned because law enforcement efforts have harmed people with legitimate unemployment claims. Last month, EDD suspended payment for 1.4 million claims as it investigated potential fraud.
Stan George, a Carlsbad database administrator whose company was laid off en masse in April, is one of those whose requests have been suspended.
“I think it’s criminal,” said George, 62 of ESD actions. He said he called an EDD phone line during office hours and only received a message saying he needed to call back during office hours.
Bank of America has also frozen tens of thousands of benefit debit cards as it investigates potential fraud, leaving unemployed Californians unable to access their money. On Thursday, a federal complaint was filed by a woman in San Francisco alleging that the bank failed to properly protect EDD debit cardholder accounts and then processed fraud requests once made.
“My account was emptied by unauthorized transactions on my Bank of America EDD debit card,” said complainant Jennifer Yick, who lost her real estate job. “When I tried to report the fraud to the bank, I was repeatedly logged out, told to call back later, endlessly transferred to various departments.”
A representative for the bank responded on Friday saying that Bank of America had added thousands of agents to answer phones and help customers with issues involving their claims.
“As California’s unemployment program faces billions of dollars in fraud, Bank of America works with the state every day to prevent criminals from getting money and to ensure legitimate beneficiaries receive their benefits, ”said Bill Halldin, spokesperson for the bank.
California has been particularly affected by fraud because it has the largest population and pays the most benefits of any state, Hall said.
“It is better to target a large state like California or New York, because it is not entirely obvious that there is a fraud as it would be if you were targeting a state with a more rural population,” Hall said.
Among the factors that contributed to the fraud, Congress approved billions of dollars in additional unemployment benefits and allowed the filing of claims retroactive to February. As a result, many paid claims total $ 20,000.
“You have billions of dollars in federal aid and this backdating feature that makes those flows the most valuable target organized crime has ever focused on,” Hall said. “It’s just a classic supply and demand.”
Part of the fraud was blocked after it was determined that the person in whose name a complaint was filed did not match the name of the owner of the cell phone used to file the complaint, and by the requirement that the Applicants appear live on camera with ID. .me to verify their identity.
Some fraudsters were caught holding up paper or digital photos of the alleged applicant during the live chats. In one case, a caregiver of a severely disabled man took him to the toilet to put him in front of the camera with ID.me, but this attempt was foiled when the security guard asked the disabled man for information on social security, Hall said.
He said foreign fraud networks use stolen identity information to file fraudulent claims and then use “money mules” in the United States to retrieve debit cards sent by EDD, often in vacant houses.
Hall cited evidence of foreign involvement, including looking for phone numbers on fraudulent requests in other countries and discussions on the dark web in which foreign scammers talk about their schemes.
After ID.me began filtering claims in some states, the Virginia-based company was hit with cyber attacks from Hong Kong, Moscow and countries including Nigeria that aimed to knock out its computer system, although that the attacks were foiled, Hall said.
He estimated that foreign criminal networks have filed hundreds of thousands of fraudulent unemployment claims in the United States.
Saenz said she believes her agency is halting the bleeding of fraud benefits since hiring security companies including ID.me and Thomson Reuters.
“I think EDD is getting this under control,” Saenz said.
[ad_2]
Source link