Pursuing pandemic fraud, a daunting task for the United States and North Carolina

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Charlotte resident faces federal indictment for fraudulently receiving over $ 200,000 in COVID-19 unemployment benefits by filing claims in North Carolina and six other states using more than 35 stolen identities.

Keon I. Taylor faces additional fees for applying for economic disaster loans using false information, including a stolen identity.

Taylor’s indictment results from one of hundreds of federal investigations across the country related to suspected fraud and criminal schemes linked to pandemic relief under the Aid Act, the coronavirus relief and economic security, or CARES. The US Department of Justice announced in March that it had indicted 474 accused of pandemic-related fraud.

In May, the United States Attorney General Merrick B. Garland established the COVID-19 Fraud Enforcement Task Force, made up of more than a dozen federal agencies, including the Department of Justice, the Office of the Inspector General of the Department of Labor, the Office of the Inspector General of the Small Business Administration and the Pandemic Response Accountability Committee.

An overwhelmed agency

From March 2020 to April 2021, the Office of the Inspector General of Small Business Administration’s hotline reported receiving a record 150,000 complaints related to loan fraud.

The office serves as the oversight organization for the SBA. On the other hand, the hot line received 742 complaints in 2019.

Since April, the organization has received around 10,000 additional complaints, a spokesperson for SBAOIG said.

Fraud detection began at the start of the first rounds of loans, the spokesperson said. In May 2020, the organization had already started filing a complaint for suspected fraud. Typically, fraud does not appear until a year after a loan is granted, but recipients have started to default on PPP and EIDL loans within a month, suggesting potential fraud. .

The House selection subcommittee on the coronavirus crisis released a memo in March 2021 with key findings on the fraud: The US Treasury Department distributed about $ 79 billion in potentially fraudulent EIDL loans and advances. Paycheck Protection Program lenders provided an additional potentially fraudulent $ 4 billion.

As of March, the Department of Justice had recovered $ 626 million, or less than 1%, of the total of $ 84 billion in potentially fraudulent loans.

In an October 2020 report, the OIG found indicators of “widespread potential abuse and fraud in the PPP.” Since the start of the PPP, the OIG has seen a significant increase in reports of suspected fraud. ”

Some of the indicators included accounts established using stolen identities, payroll inflation, businesses created after the PPP took effect, and fraudulent supporting documents, such as payroll forms and taxes. .

The CARES law requires that businesses have been in business before February 15, 2020 to be eligible for a PPP loan. Thousands of businesses have obtained PPP loans even though they were created after the deadline, making them ineligible.

NC seizes over $ 3 million

Across North Carolina, federal grand juries have charged 19 people with P3s, EIDL and unemployment claims fraud. Thirteen of those indictments come from the Western District, which includes cities like Asheville and Charlotte, five from the Central District and one from the Eastern District.

So far, the Western District has seized $ 3.8 million from bank accounts or confiscated by the federal government – the seizure of a person’s property. The Middle District recovered $ 402,000 from the PPP fraud and $ 414,000 from the EIDL fraud. The Eastern District had recovered “a certain” amount but did not provide an exact figure.

Identity theft presents a distinct set of problems for victims, said Jenny Sugar, Assistant United States Attorney for the Western District of North Carolina. After a victim’s personal information is stolen, very little can be done to recover that information.

“Unfortunately, with the way the internet works and the way people’s data is stored, someone could use stolen data today, and they could use it again, a year later for something else,” he said. said Sugar.

Sugar has seen a trend of already established identity thieves turn into unemployment fraud. In one case, Jamel johnson pleaded guilty to federal charges for his role in two separate schemes involving identity theft.

In 2019, he stole the identities of victims on the internet and used them to obtain more than $ 1 million in fraudulent bank loans. Shortly after the announcement of unemployment benefits in 2020, these stolen identities were then used to receive nearly $ 200,000 in unemployment benefits.

The NC job security division, which oversees unemployment benefits, is taking action to strengthen its security measures, DES spokesman said. Kerry McComber.

Multi-factor authentication, reCAPTCHA, and a verification service, ID.me, are being implemented, she said.

To detect out-of-state fraud targeting North Carolina, DES staff participate in a multi-state data center with information on known and potentially fraudulent unemployment claims.

In addition, the National Directory of New Hires and the Wage Crossmatch program will provide information on jobless claims in order to detect duplicate filings and potential fraud.

DES has more than tripled its workforce to prevent and detect fraudulent claims.

“I think we will be investigating these cases in the years to come,” Sugar said.

“But we’re probably only scratching the surface. I think there will be a lot more fraud discovered than before.

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