The U.S. Department of Labor's Office of Inspector General (OIG) has said that criminals stole billions of dollars in unemployment money that was issued during the COVID-19 pandemic, and used some of it to purchase drugs and weapons.
Congress in March 2020 launched an unemployment aid program for Americans who were unable to work as a result of lockdowns, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
However, the OIG has found that multiple states failed to protect some of the funds from improper payments, including fraud, and that Pandemic Unemployment Assistance was granted to individuals who were not actually eligible.
An estimated $9.9 billion was likely paid to fraudsters in those states, including "criminal enterprises" that discovered that unemployment insurance fraud is a "low-risk, high-reward crime," according to the report.
"They have invested fraudulent UI [Unemployment Insurance] proceeds to further other criminal activity, such as purchasing guns and drugs. Individuals who we find are central to this conduct have been indicted on charges including racketeering conspiracy," the report states.
The report focused on unemployment benefit payments made between March 28, 2020 and March 14, 2021.
'Significant Portion Attributable to Fraud'The OIG blamed the fraudulent payments on a number of issues, including that states failed to perform eligibility testing, initially allowed claimants to self-certify their eligibility, and that the Employment and Training Administration had been slow in providing oversight with regard to the payments.
Amid mounting reports of fraud, Attorney General Merrick Garland established the COVID-19 Fraud Enforcement Task Force in 2021 to help identify, investigate, and prosecute COVID-19 pandemic stimulus fraud.
However, thousands more criminals are yet to face any repercussions for the billions of dollars in stolen funds.
Last month, the Justice Department announced the creation of three strike force teams to bolster the ongoing efforts to combat COVID-19-related fraud and prevent it from happening in the future.