- The Washington Times - Tuesday, December 21, 2021

The government has sent nearly $100 billion to fraudsters who filed bogus claims for COVID-19 pandemic benefits, the Secret Service said Tuesday, as it belatedly announced a national coordinator to oversee its investigative efforts.

Nearly two years after the coronavirus first slammed the U.S., the agency said its early focus on policing protective equipment fraud is giving way to investigations into the trillions of dollars Congress has allocated for relief — and the fraudsters who have scooped up much of it.

The Secret Service also acknowledged the role of criminal syndicates outside the U.S. that have been particularly active in trying to steal money. The Washington Times highlighted the issue in a report last month.

“Every state has been hit, some harder than others. The Secret Service is hitting the ground running, trying to recover everything we can, including funds stolen from both federal and state programs,” said Roy Dotson, the assistant special agent in charge who was tapped to be the coordinator of the agency’s anti-fraud effort.

The agency said more than 900 criminal investigations are active. So far, it has seized more than $1.2 billion in fraudulent payments and reversed more than $2.3 billion in automatic payments.

That is a small fraction of the agency’s estimate of the nearly $100 billion in total fraud, which is well below other estimates.

SEE ALSO: Feds pay billions to fraudsters tied to China and Russia in COVID-19 schemes

Haywood Talcove, CEO of LexisNexis Risk Solutions’ government division, figures that of more than $700 billion spent on federal enhanced unemployment benefits during the pandemic, perhaps 40% was fraudulent and $175 billion went to overseas scammers. Of that, $140 billion likely went to syndicates with state backing.

Mr. Talcove called the fraud “a stain on this nation.”

“If a single country were behind this, and somehow managed to plunder $100BN to $250BN from a federal program, we’d likely have boots on the ground. But because this record-breaking fraud was perpetrated by so many different actors, it never really was approached like a national security issue,” he told The Times in an email.

“The reality is that our country was attacked by foreign criminal syndicates, many of whom were state-sponsored,” he said. “A global effort to steal taxpayer dollars from our pandemic assistance programs is unacceptable — and we shouldn’t ‘let it slide.’”

He said more than pandemic money is at risk. U.S. benefit programs are now seen as easy targets for fraudsters.

Mr. Talcove said putting Mr. Dotson — “an incredibly talented agent” — in charge is a good first step. He said cross-agency coordination to track down the money, even overseas, is the only way to send the message that the U.S. won’t be victimized in the future.

“And the work the National Pandemic Fraud Recovery Coordinator will be doing will be what ultimately prevents a heist of this magnitude from ever happening again,” Mr. Talcove said.

The idea that Uncle Sam shipped tens of billions of dollars to syndicates connected with Russia, China and other adversaries — which deploy the same kinds of cyberscammers in U.S. elections — has grabbed the attention of Republicans on the House Oversight and Reform Committee.

Congress created the pandemic benefits when the national economy appeared to be on the brink of collapse, with mandated shutdown orders drying up customer revenue and closing businesses.

Lawmakers figured the need to get money out the door trumped the need for identity screenings, making it relatively easy for bogus applications to be filed and approved.

The chief targets for fraudsters were the unemployment benefits program and two business-focused programs, the Paycheck Protection Program and a set of emergency loans to help companies stay afloat.

In the unemployment sphere, the standard fraud involved pilfering names and personal information and then applying for benefits under those stolen identities.

States run the unemployment program, and some proved more vulnerable than others.

California estimates that at least $20 billion in payments from its Employment Development Department was fraudulent.

Sometimes the state’s employees took part in scams. An Economic Development Department contract employee was sentenced last week to more than two years in prison after pleading guilty to submitting bogus unemployment claims for prisoners.

She had the money, paid on debit cards, sent to her address. Authorities say she collected nearly $100,000.

That is a tiny fraction of what international syndicates are collecting, and money laundered or shipped outside the U.S. is difficult to track down or recover.

Mr. Dotson said Tuesday that money-moving is a primary concern for the Secret Service. In many cases, fraudsters prey on people looking for companionship and get them to open accounts that they use to funnel money.

“As a result, people are becoming unwitting mules for stolen money,” Mr. Dotson said.

For more information, visit The Washington Times COVID-19 resource page.

• Stephen Dinan can be reached at sdinan@washingtontimes.com.

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