A new federal watchdog report claims hundreds of thousands of dollars in pandemic unemployment benefits were fraudulently paid using the Social Security numbers of deceased people, raising fresh concerns over systemic oversight failures.
The U.S. Department of Labor’s Office of Inspector General (OIG) released a 41-page report on August 19 indicating that the Employment and Training Administration (ETA) “took limited action” to ensure states properly investigated fraudulent unemployment insurance claims filed under the CARES Act.
The report found that 52% of tested claims across 10 state workforce agencies were confirmed fraudulent.
The audit, conducted by OIG contractor Key & Associates, determined that 185 potentially fraudulent claims produced $586,782 in payments, with $302,686 confirmed as fraud. The report said ETA distributed claimant data and instructions to states but failed to monitor follow-ups, require reporting of investigative results, or assess whether fraud-detection tools were effective.
“These deficiencies occurred because ETA considered its oversight responsibilities to be limited,” the OIG report said, adding that without outcome-based tracking, the agency “was unable to determine” whether the national anti-fraud system, Integrity Data Hub, actually helped states prevent fraud.
The OIG has estimated at least $45.6 billion in improper unemployment payments across four high-risk categories as of September 2022, including $139.5 million linked to deceased claimants’ Social Security numbers.
The COVID-19 aid programs that fueled these payouts spanned both the Trump and Biden administrations. Critics of the federal response have argued that inadequate safeguards allowed fraudulent actors to siphon billions of taxpayer dollars, while many legitimate claimants struggled to receive timely aid.
Fraud has surfaced in other pandemic relief programs as well.
In July, The Dallas Express reported that a Chicago tax preparer was sentenced to 42 months in prison for orchestrating a $3.6 million loan fraud scheme, personally pocketing $1.2 million.
Earlier that same month, nearly 50 people in Texas, including 18 medical professionals, were charged in what prosecutors alleged was a $360 million Medicare fraud conspiracy that included fraudulent COVID-19 testing reimbursements, DX reported.
The extent of COVID-era unemployment fraud has been known in Texas for some time. Texas itself cited $411 million in fraudulent unemployment claims from March 2020 to August 2021, FOX 26 Houston reported in 2022. State officials said those payments represented less than 1% of claims but acknowledged thousands of Texans endured months-long waits as investigators sorted legitimate claims from fake ones.
The OIG’s latest report reiterated earlier calls for ETA to tighten its oversight and measure fraud-prevention outcomes more effectively.