KEY POINTS

  • More than $400 billion in unemployment money lost to fraud
  • State-backed foreign crime syndicates, local street gangs involved in fraud
  • Federal authorities previously arrested a group of Venezuelans for stealing more than $800,000 in stimulus checks

As much as half of the hundreds of billions of dollars that the U.S. government distributed as unemployment benefits over the past year may have been stolen by foreign crime groups — some of them state-backed — and taken out of the country, a report revealed Thursday. 

Blake Hall, the CEO of fraud-prevention service ID.me, told Axios that more than $400 billion of unemployment money may have been lost of fraud, and as much as half of all unemployment monies might have been stolen.

Although states have started cracking down on fraud, it may be too late, the report said.

Haywood Talcove, the CEO of LexisNexis Risk Solutions, told Axios that at least 70% of the money that was stolen ended up with criminal syndicates in China, Nigeria, and Russia. 

"These groups are definitely backed by the state,” Talcove said. He added that local street gangs also played a role in the unemployment benefits fraud scheme. 

The scammers operate by impersonating claimants using stolen personal information, or by tricking people into handing over their personal information. The money is then withdrawn from ATMs and transferred abroad.

The report said unemployment fraud is now being offered on the dark web as a software-as-a-service.

On June 3, federal authorities arrested a group of Venezuelans living in South Florida and Mexico for using “fraudulent” documents to steal and cash in stimulus checks. 

Prosecutors have since charged Jesus Felipe Linares Andrade, 34, with conspiring to steal the government’s money and identity theft. It is still unclear whether his four other co-conspirators would face charges. 

“During the meeting, Linares placed an envelope in the vehicle containing over $150,000 in stolen U.S. Treasury checks and over 30 identification documents,” according to a criminal affidavit filed by Assistant U.S. Attorney Michael Berger. "The identification documents consisted of copies of driver's licenses, including Florida driver's licenses. Some of the names on the driver's license matched the names on the checks."

On May 28, the Office of the Inspector General released a report that indicated that billions of dollars stolen by criminals may not be recovered. The money was part of the Coronavirus Aid, Relief and Economic Security (CARES) Act passed in March 2020.

"As of Jan. 2, 2021, we estimated at least $39.2 billion in improper payments, including fraud, were at risk of not being detected and recovered, and could have been put to better use," the report read.  

The report also found that the Labor Department failed to ensure that states implemented the programs, which resulted in delayed payments to unemployed Americans qualified to receive the benefit. 

The best defences against cybercrime are simple: deleting suspect emails, updating software regularly, changing passwords, and keeping saved back-ups The best defences against cybercrime are simple: deleting suspect emails, updating software regularly, changing passwords, and keeping saved back-ups Photo: AFP / SAUL LOEB