Until federal agencies and corporate America get a better handle on unemployment assistance fraud, identity theft will continue to run rampant. It is a call to action for greater ethical screening and greater oversite.
As of September 17, 2020, the State of California had arrested 44 people connected with unemployment assistance identity fraud of California’s system. The arrests came about as the 44 fictitious individuals received (according to the California Employment Development Department or “EDD”), “unsolicited letters, some with debit cards.” Many more arrests are expected.
The EDD has determined that “Scammers are using a complex profile of stolen personal identifying information most likely obtained from national and global data breaches.”
The government investigators working with the EDD believe scammers are able to “intercept” the fake cards when they were mailed to the “fake recipients” so they could cash in on the unemployment insurance.
Apparently, 129 EDD debit cards were reported to have been recovered. The valuation of those cards is in excess of $2.5 million. Allegedly, the police have reported that at the time of the arrests, the suspects had more than $289,000 in cash and several handguns.
The Opportunity
The opportunity in this case focused on the “cracks in the wall” created by the pandemic. The Pandemic Unemployment Assistance program (PUA) was set up to help those who legitimately needed unemployment benefits. Included in the mix are small businesses and independent contractors.
Apparently, some officials within the PUA began backdating claims to rush them through the system. This caused a vulnerability that came about because of limited due diligence. When the guard was dropped, fraudsters using fake identification were able to jump in on those payments.
The EDD has come out and admitted “The EDD took action to shut down automatic backdating in the PUA program. Following that, PUA applications dropped sharply to 145,790 last week, a decline of more than 72%.”
In not rushing the process, it is apparent that fraudsters are shrinking in the face of scrutiny. Indeed, the suspects who were caught had several EDD cards they secured under fake identities and used them to lease luxury automobiles, buy merchandise and dine at fine restaurants. Each card represented the “goose that laid the golden eggs.” The cards were worth up to $20,000 a piece, and it was possible to withdraw up to $1,000 per day per card.
The Need for Cash
The Pandemic Unemployment Assistance program was set up to offer assistance for those who needed it most, but in this world of the give-away, the PUA should have realized it was ripe for fraud. If nothing else, the PUA might have required an ethical awareness program for its workers, and an online, virtual ethics podcast required of all potential recipients.
The podcast or virtual presentation should have outlined what might constitute fraud and the penalties for committing that fraud. It might have prevented at least some of the abuse. It might have further prevented rationalization. When fraudsters heard of the immensity of a stimulus package, they naturally felt it was a prize where nearly everyone could cash in on a government give-away. The 44 individuals arrested received no ethical training. They created false identities and stole millions.
At this point, my guess is that many more fraudsters will be uncovered as part of the investigation. Unless some type of ethical screen is in place, it will continue. The crime is not victimless. The same businesses who lack funds now, may well lack funds in the future due to the greed of the unethical.
