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"At least $63 billion of the $630 billion in disbursements" from CARES Act funds "has been misspent" in the state of California, with the full scope of the loss of taxpayer funds likely to be more than $100 billion, according to state officials.
According to a new report from NBC News, "The scale of the fraud in the unemployment program created by the CARES Act has reached a staggering level." The Justice Department has assembled a task force research and prosecute the fraud in all 50 states and US territories.
NBC said that Nguyen Social Services was charging up to $700 a person to file fraudulent unemployment claims for people who did not qualify to receive coronavirus relief money. The report revealed a massive fraud scheme which "cost taxpayers an estimated $11 million," according to Orange County prosecutors. However, the fraud did not stop there.
Orange County District Attorney Todd Spitzer told NBC, "This isn’t just an Orange County problem. It isn’t just a California problem. This is a breakdown of catastrophic proportions that has failed the American taxpayer."
The Coronavirus Aid, Relief and Economic Security (CARES) Act was passed by Congress in March and totaled $2.2 trillion including $360 billion in unemployment funding. According to the report, "A rush to release the funds put enormous strain on state workforce agencies, creating a bonanza for individual scam artists and international cybercrime rings."
The Department of Labor’s Office of the Inspector General specified the Pandemic Unemployment Assistance program as "high-risk." The program was "aimed at helping gig workers, caregivers and people who are self-employed, all of whom are not typically eligible for unemployment insurance." However, they had "no former employer to verify this category of claims," and states relied on work histories self reported by the applicant.
According to the report, "many states also relaxed internal controls" in order to increase speed of the approval rate of claims.
The Department of Labor’s Office of the Inspector General estimated "that at least $36 billion worth of unemployment payments expended as of Nov. 7 may have been invalid," according to Fox Business.
The relaxing of controls and the rush to disburse funds is what caused a massive fraud in Washington State in May, which cost the state unemployment fund over $650 million dollars. The audit found that the, Commissioner of Washington State's Employment Security Department (ESD) Suzie LeVine and ESD had deliberately bypassed the waiting period for benefits in order to send out unemployment checks faster. That action was taken by LeVine at the urging of Democrat Governor Jay Inslee. LeVine has since been promoted by the Biden Administration to a position in the Department of Labor.
California officials "said they have tallied $11 billion stolen from taxpayers so far, but the total figure could be as high as $30 billion, or 27 percent."
According to the report, in Nebraska, two thirds of unemployment funds were misspent through June.
In November, other states also reported losses: $242 million in Massachusetts, $200 million in Michigan, $18 million in Rhode Island, $8 million in Arizona and $6 million in Wisconsin.
In September, the US Labor Department gave $100 million to the states to be used to combat fraud.
President of the California District Attorneys Association, Vern Pierson said, "In California, this is unquestionably the largest fraud against public agencies in our history. Increasingly we are learning there could be fraud of historic proportions nationwide. While we don’t know the exact price tag, we know the amount of the loss of taxpayers is staggering."
According to the Department of Justice, over 100 defendants have been charged across 71 cases in connection with CARES Act unemployment fraud. $65 million has been seized or frozen by Federal authorities.