Scammer filed unemployment claim in name of feds’ top investigator

The government’s top investigator was testifying to Congress when he made a startling revelation: Someone had used his identity to apply for pandemic unemployment benefits.

Comptroller General Gene Dodaro runs the Government Accountability Office, the investigative agency of Congress. GAO said it received an inquiry in May 2021 from the D.C. Department of Employment Services, which wanted to know whether Mr. Dodaro still had a job.

It quickly became clear that someone had filed under his name.

“That’s pretty telling when the guy who is at the very tip of the agency to advise Congress on ways to make programs accountable has his identity ripped off,” said Matt Weidinger, a senior fellow at the American Enterprise Institute who studies the unemployment insurance system.

Given the sheer size of the fraud, it’s not surprising that some of the people targeted were high-profile.

Authorities have been reluctant to guess the total size of the fraud in the unemployment program’s expanded benefits during the pandemic, but they say it’s “at least” in the tens of billions of dollars. Outside estimates put the figure at $200 billion to $400 billion.

Mr. Dodaro revealed his situation during a congressional hearing last month.

Rep. Linda Sanchez, California Democrat, was prodding him and other witnesses about whether they had collected pandemic benefits. She was trying to make the point that they weren’t qualified to talk about the experiences of millions of Americans assisted by the program.

“No, although I would note for the record someone filed a claim in my name, and the GAO,” he said.

At that point, Ms. Sanchez cut him off and moved on.

She wanted to talk about all the people helped by the vast sums of money that the government pumped into the unemployment program. Mr. Dodaro’s story was a reminder that much of it was wasted.

Ms. Sanchez’s office didn’t respond to a request for comment for this article.

Another member of the committee detailed his own brush with fraud.

Rep. Kevin Hern, Oklahoma Republican, hefted a banker’s box onto the committee dais. It landed with a heavy thud. The box held records of hundreds of bogus unemployment claims that fraudsters had filed listing his family company as their former employer.

“These 789 fraudulent claims were of people that never worked for me, ever, in 25 years of business had never worked for me. And had we not done due diligence on every single claim, they would have been paid out,” Mr. Hern said.

He owns KTAK Corp., which runs a series of McDonald’s restaurants in Oklahoma. Mr. Hern’s office said no claimants appealed their denials, which seems to confirm that they were attempts at fraud.

In Mr. Dodaro’s case, he reported the attempted fraud to the Metropolitan Police Department. Reached by The Washington Times, the department referred questions to the city’s inspector general, which did not respond to a reporter’s inquiry.

In California, investigators were tipped off to one fraud ring after it submitted the name of Sen. Dianne Feinstein, California Democrat, among a list of unemployment applications. Bank of America’s fraud investigators thought that seemed odd and alerted the Labor Department, which traced payments to a California address that was eventually linked to more than 100 unemployment benefit claims.

Twelve of those claims were accepted — including the one under Mrs. Feinstein’s name and Social Security number — and more than $215,000 was paid out. The Feinstein claim specifically netted $21,000, according to court documents.

Prosecutors charged Andrea M. Gervais, who pleaded guilty and was sentenced to probation. She argued that she was just a money mule, duped through a romance scheme by international fraudsters to withdraw the money at ATMs and then send it to scammers outside the U.S.

“She was not involved in obtaining or using the identity theft information or applying for unemployment benefit payments in the name of others. She also received no monetary benefit for her participation in the offense,” her attorney told the judge in asking for leniency.

Fraudsters also hit then-Arkansas Gov. Asa Hutchinson and Ohio Gov. Mike DeWine, his wife, Fran, and Lt. Gov. Jon Husted.

Although unemployment fraud was a problem before COVID-19, scammers rushed to cash in on pandemic programs.

The added federal benefits made fraud a valuable enterprise. Benefits as high as $1,000 a week were paid out at the height of the economic downturn.

States, which ran the program with additional federal money, cut corners to speed benefits out the door. Along the way, they stopped doing some identity checks and allowed claims to self-certify that applicants were out of work.

Mr. Weidinger said one odd outcome was that it had the effect of spreading identity fraud. Before the pandemic, those at higher income levels were more likely targets because that was where the money was.

When any name could qualify for the same level of benefit and a single claim could pay tens of thousands of dollars if it ran its full course, fraudsters no longer had the incentive to find high-income identities.

“It sort of democratized fraud victims in a weird way,” Mr. Weidinger said.

Cleaning up after a fraud attempt can be messy.

Those whose identities have been pilfered usually don’t know about it until a government agency flags it. Sometimes it’s a notice that benefits have been approved. Other times, the first notice is a mailed form saying taxes are owed on unemployment income.

It can take months of phone calls to try to sort it all out, Mr. Weidinger said.

House Republicans are moving legislation aimed at prodding states to recover money lost to fraud.

States right now have little incentive to collect the overspending because it was largely funded by the federal government and didn’t hit their own bottom lines. The bill would give them a 25% cut of any fraudulent payments of federal money that they recover.

The bill also extends the statute of limitations for pursuing fraudsters from five to 10 years. That crucial extension allows investigators to build cases, particularly against complex international syndicates that have stolen tens of billions of dollars.

Top government watchdogs suggested both steps.