Russian mobsters, Chinese hackers, and Nigerian scammers have used stolen identities to plunder tens of billions of dollars in Covid benefits, then distributing the money overseas in a massive transfer of wealth from U.S. taxpayers, officials and experts say.
And they say it is still happening.
Among the ripest targets for the cybertheft have been jobless programs. The federal government cannot say for sure how much of the more than $900 billion in pandemic-related unemployment relief has been stolen, but credible estimates range from $87 million to $400 billion — at least half of which went to foreign criminals, law enforcement officials say.
If you get a COVID email from FTC chief Khan, it's a scam. https://t.co/J4e0zOxba3 It's the IRS, not FTC, that's distributing various coronavirus relief #tax payments. And neither agency will email you about the money.
— Kay Bell (@taxtweet) August 21, 2021
While the enormous scope of Covid relief fraud has been clear for some time, scant attention has been paid to the role of organized foreign criminal groups, who move taxpayer money overseas via laundering schemes involving payment apps and “money mules,” law enforcement officials said. Officials and analysts say both domestic and foreign fraudsters took advantage of an already weak system of unemployment verification maintained by the states, which has been flagged for years by federal watchdogs. Adding to the vulnerability, states made it easier to apply for Covid benefits online during the pandemic, and officials felt pressure to expedite processing. The federal government also rolled out new benefits for contractors and gig workers that required no employer verification.
Can you spot a scam?
The @FTC has a list of ways to notice and prevent potential COVID-19 relief scams.
Learn about the new scams and what you can do to protect yourself. https://t.co/zPRdtD2p0M
— USAGov (@USAGov) August 21, 2021
Under the Pandemic Unemployment Assistance program for gig workers and contractors, people could apply for retroactive relief, claiming months of joblessness with no employment verification possible. In some cases, that meant checks or debit cards worth $20,000.
In some cases, overseas organized crime groups flooded state unemployment systems with bogus online claims, overwhelming antiquated computer software benefits in blunt-force attacks that siphoned out millions of dollars. On several occasions, states have had to suspend benefit payments while they tried to figure out what was real and what was not.
DO NOT respond to a scam email impersonating FTC Chair Lina Khan that offers Covid relief in exchange for personal info, the agency warns.
— Brian Fung (@b_fung) August 19, 2021
The Biden administration has acknowledged the problem and blamed it on the Trump administration. “There is perhaps no oversight issue inherited by my Administration that is as serious as the exploitation of relief programs by criminal syndicates using stolen identities to steal government benefits,” President Biden said in a statement in May as the government announced a Justice Department Covid fraud task force.
NBC News covered the Covid fraud. Watch the full segment, below.