Fraudsters Exploit Pandemic Relief Funds: Up to $135 Billion Stolen in Federal Unemployment Aid

A staggering amount of federal unemployment aid intended to assist Americans struggling during the COVID-19 pandemic has fallen into the hands of fraudsters, according to a report. The stolen funds could reach up to $135 billion, representing a significant loss to the nation's safety net programs.

The COVID-19 pandemic has led to widespread economic hardship, prompting the federal government to implement various relief measures, including expanded unemployment benefits. However, unscrupulous individuals have taken advantage of these programs, leading to billions of dollars in fraudulent claims.

A recent report estimates that fraudsters stole between $130 billion and $135 billion in federal unemployment aid during the pandemic. This staggering figure underscores the vulnerabilities of these programs to fraud and abuse.

One of the most common schemes involves identity theft. Fraudsters obtain personal information from vulnerable individuals or purchase it on the dark web. They then use this information to file fraudulent unemployment claims in the victims' names.

In a recent case, a New York City Department of Homeless Services fraud investigator, Olabanji Otufale, was charged with fraudulently claiming unemployment benefits. Authorities allege that Otufale accessed the personal information of several homeless people and sold it to an identity theft scammer who used the data to file false unemployment claims.

Federal prosecutors also indicted Mark Lazarre, an individual with a history of identity theft convictions. Lazarre allegedly used the victims' identities to file fraudulent unemployment claims, abusing the federal CARES Act economic stimulus package.

The internal audit of the Department of Homeless Services revealed that Otufale accessed the information of 13 households in shelter without authorization. Despite his fraudulent actions, Otufale had been employed by the city of New York since 2008 and had a salary of $69,000 in 2020.

The indictment against Otufale and Lazarre includes charges of aggravated identity theft and conspiracy to commit wire fraud. Otufale is awaiting arraignment in Brooklyn Federal Court, while Lazarre is currently in jail for a federal bank fraud case in New Jersey.

These cases highlight the need for stronger measures to combat unemployment fraud. The government must implement stricter identity verification procedures and enhance its oversight of these programs. Additionally, law enforcement agencies must actively pursue individuals involved in fraudulent activities.

The pandemic has placed an unprecedented strain on the nation's unemployment systems. It is essential that these systems are safeguarded against fraud and abuse to ensure that those who truly need assistance receive the support they deserve.