LOS ANGELES – California may have paid nearly $ 10 billion in false coronavirus claims – more than double the previous estimate – with part of that money going to organized crime in Russia, China and other countries, according to a law firm. security contracted to investigate fraud.
At least 10% of complaints sent to the state’s Department of Employment Development before the controls were installed in October may have been fraudulent, Blake Hall, founder and CEO of ID.me, told the Los Angeles Times.
The Times said on Friday that it would generate $ 9.8 billion in benefits paid from March to September.
The money went to people who lost their jobs when the state began closing deals in an effort to contain the pandemic COVID-19 that is currently overwhelming hospitals and causing hundreds of deaths a day.
A woman wearing a mask enters a building where the Employment Development Department has its offices in Los Angeles, California, on May 4, 2020. (Photo by Frederic J. BROWN / AFP via Getty Images)
California, the nation’s most populous state, has processed more than 16 million unemployment claims since March and paid $ 113 billion. The Employment Development Department has struggled to keep up with demand, facing intense pressure to work amid an order backlog that reached more than 1.6 million people.
The payment includes $ 43 billion from a federal accelerated assistance program for independent contractors, self-employed workers and self-employed workers who are less secure, the Times said.
The state acknowledged that the department was stolen from hundreds of millions of dollars in COVID-19 unemployment funds that went to fraudsters, including some on behalf of US Senator Dianne Feinstein. Others were sent to inmates in jail and prison, including some on death row in California.
Hall’s company was hired by the Employment Development Department and, since October, his company has blocked nearly 470,000 false claims.
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Typically, 10% of unemployment claims across the country are fraudulent, Hall told the Times.
Many of the COVID-19 frauds in California and other states have been perpetrated by criminals in about 20 countries, he said.
Hall said criminal gangs submit claims using stolen identity information and then send “money mules” to withdraw debit cards issued by the Employment Development Department, often to empty houses.
“When the Russians, Nigerians and Chinese are the players on the pitch, they will score points,” Hall said. “This is a very sophisticated cyber attack that is being carried out on a large scale.”
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The United States Department of Labor’s inspector general’s office warned in November that up to $ 36 billion of COVID-19’s $ 360 billion in federal aid payments could be improper or fraudulent.
Rita Saenz, who became the new director of the Employment Development Department this month, called the action an unprecedented criminal attack on the benefit system.
Saenz told the Times that he could not comment on the possibility of $ 9.8 billion in fraud because the department is still trying to determine how much fraud has been committed.
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“My intention is to do everything we can, working with our law enforcement partners, to catch whoever is doing this and bring them to justice,” she said.
Last month, the Employment Development Department suspended payment of 1.4 million compensation claims until they could be verified.
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This story was 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.