Scammer filed unemployment claim in name of feds’ top investigator

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The government’s top investigator was testifying to Congress when he made a startling revelation: Someone had used his identity to apply for pandemic unemployment benefits.

Comptroller General Gene Dodaro runs the Government Accountability Office, the investigative agency of Congress. GAO said it got an inquiry in May 2021 from the D.C. Department of Employment Services, which wanted to know whether Mr. Dodaro still had a job.

It quickly became clear someone had filed under his name.

“That’s pretty telling when the guy who is at the very tip of the agency to advise Congress on ways to make programs accountable has his identity ripped off,” said Matt Weidinger, a senior fellow at the American Enterprise Institute who studies the unemployment insurance system.

Given the sheer size of the fraud, it’s not surprising that some of those victimized were high-profile individuals.

Authorities have been reluctant to guess at the total size of the fraud in the unemployment program’s expanded benefits during the pandemic, but say it’s “at least” in the tens of billions of dollars. Outside estimates put the figure at between $200 billion and $400 billion.

Mr. Dodaro revealed his situation during a congressional hearing last month.

Rep. Linda Sanchez, California Democrat, was prodding him and other witnesses on whether they had collected pandemic benefits, as she tried to make the point that they weren’t qualified to talk about the experience of millions of Americans who were assisted by the program.

“No, although I would note for the record someone filed a claim in my name, and the GAO…” he said, at which point Ms. Sanchez cut him off and moved on.

She’d wanted to talk about all the people helped by the vast sums of money the government pumped into unemployment. Mr. Dodaro’s story was a reminder that much of it was wasted.

Ms. Sanchez’s office didn’t respond to a request for comment for this story.

Another member of the committee detailed his own brush with fraud.

Rep. Kevin Hern, Oklahoma Republican, hefted a banker’s box onto the committee dais. It landed with a heavy thud. The box held records of hundreds of bogus unemployment claims that fraudsters had filed listing his family company as their former employer.

“These 789 fraudulent claims were of people that never worked for me, ever, in 25 years of business had never worked for me. And had we not done due diligence on every single claim they would have been paid out,” Mr. Hern said.

He owns KTAK Corporation, which runs a series of McDonald’s restaurants in Oklahoma. Mr. Hern’s office said none of the claimants appealed their denials, which seems to confirm that they were attempts at fraud.

In Mr. Dodaro’s case, he reported the attempted fraud to the Metropolitan Police Department. Reached by The Washington Times, the department referred questions to the city’s inspector general, which did not respond to a reporter’s inquiry.

In California, investigators were tipped off to one fraud ring after it submitted the name of Sen. Dianne Feinstein, California Democrat, among a list of unemployment applications. Bank of America’s fraud investigators thought that seemed odd and alerted the Labor Department, which traced payments to a California address that was eventually linked to more than 100 unemployment benefit claims.

Twelve of those claims were accepted — including the one under Mrs. Feinstein’s name and Social Security number — and more than $215,000 was paid out. The Feinstein claim specifically netted $21,000, according to court documents.

Prosecutors charged Andrea M. Gervais, who pleaded guilty and was sentenced to probation. She argued she was just a money mule, duped through a romance scheme by international fraudsters to withdraw the money at ATMs and then send it to scammers outside the U.S.

“She was not involved in obtaining or using the identity theft information or applying for unemployment benefit payments in the name of others. She also received no monetary benefit for her participation in the offense,” her lawyer told the judge in asking for leniency.

Fraudsters also hit then-Arkansas Gov. Asa Hutchinson and Ohio Gov. Mike DeWine, his wife Fran, and Lt. Gov. Jon Husted.

While unemployment fraud was a problem before COVID, the pandemic brought fraudsters running to cash in.

For one thing, the added federal benefits made it valuable. Benefits as high as $1,000 a week were being paid out at the height of the economic downturn.

And states, which ran the program with additional federal money, cut corners to speed the benefits out the door. Along the way, they stopped doing some identity checks and allowed claims to self-certify that applicants were out of work.

Mr. Weidinger said one odd outcome is that it had the effect of spreading identity fraud. Before the pandemic, those on higher income levels were more likely targets because that’s where the money was.

But when any name could qualify for the same level of benefit, and a single claim could pay tens of thousands of dollars if it ran its full course, there was no longer an incentive to find a high-income identity.

“It sort of democratized fraud victims in a weird way,” Mr. Weidinger said.

Cleaning up after a fraud attempt can be messy.

Those whose identities have been pilfered usually don’t know about it until it’s flagged by a government agency. Sometimes it’s a notice that benefits were approved, but other times the first notice will be a form that arrives in the mail saying you owe taxes on your unemployment income.

It can take months of phone calls to try to sort it all out, Mr. Weidinger said.

House Republicans are moving new legislation aimed at prodding states to do more to recover the money lost to fraud.

States right now have little incentive to collect the overspending because it was largely funded by the feds and didn’t hit their own bottom line. The new bill would give them a 25% cut of any fraudulent payments of federal money that they recover.

The bill also extends the statute of limitations on going after fraudsters from 5 to 10 years, giving investigators a crucial extension on their ability to build cases, particularly against complex international syndicates that stole tens of billions of dollars.

Top government watchdogs suggested both steps.

The bill cleared the House Ways and Means Committee on Tuesday on a 20-17 vote.

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