EDITORIAL: Billions in pandemic fraud

It was bad enough that unemployment offices in many states — including Nevada — failed miserably during the pandemic while facing an avalanche of claims. But the fact that they stiffed many struggling Americans while doling out billions to fraudsters makes the fiasco worse.

On Thursday, a federal report put a price tag on the rip-offs. The inspector general for the Labor Department now estimates that $45.6 billion was stolen over two years by criminals using false identities to file for unemployment claims. That’s triple the estimate of a year ago. The damage may be even more severe. The Washington Post reported that investigators said they lacked complete data and focused on only “high-risk” areas.

“The two factors raised the prospect that they could uncover billions of dollars in additional theft in the months to come,” the Post reported this week. In addition, the inspector general told Congress in March that overpayments of jobless benefits in addition to fraud could total more than $160 billion.

The types of scams varied widely. The Post found that fraudsters filed multiple claims in numerous states simultaneously and sometimes used Social Security numbers of the deceased. In California, criminals posed as prison inmates — including some on death row — to pocket checks.

To make matters worse, state agencies weren’t eager to provide information on this calamity. Reuters reported that the inspector general’s office said it had “difficulty getting unemployment insurance data from state workforce agencies until subpoenas were issued. In some cases, the data sent was incomplete or unusable.”

Chalk that up to bureaucratic hubris and the insular nature of government agencies. Accountability is an afterthought when there are no repercussions for incompetence. State agencies understandably buckled under the weight of an unprecedented situation and many have been rewarded with increased budgets and equipment upgrades. Yet the problems persist. Nevada continues to have a backlog of jobless cases, some dating back a year.

The inspector general found a similar inertia at the federal level. The report concluded that the Labor Department has failed to implement previous recommendations to “collaborate with state agencies to establish effective controls to mitigate fraud and to work with Congress to require state agencies to cross-match high-risk areas,” Reuters reported.

State law enforcement agencies and the Justice Department have brought a number of cases to court involving defendants accused of fraudulently obtaining unemployment and other pandemic benefits. Last week, the DOJ announced it had reached the “milestone” of charging 1,000 people with bilking the jobless system during the pandemic. When they add a few zeros to that number, perhaps they’ll have something to crow about.