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MINDS BEHIND THE CRIMES: Tracking down criminals in Indiana committing unemployment fraud

New IdentityTheft Scam

INDIANAPOLIS – More than one year after the start of the pandemic, and state systems have experienced a massive surge in fraudulent unemployment claims.

According to a staff report of the Federal Trade Commission (FTC), released in April, unemployment benefits fraud jumped nearly 3,000% from 2019 to 2020.

The United States Department of Labor Office of the Inspector General (DOL-OIG), in a report released in March, said at least $89 billion of the estimated $896 billion in unemployment program funding could be paid improperly and said a ‘significant’ portion of that may be attributable to fraud.

“Following the passage of the CARES Act, fraud against the UI program exploded,” the report stated.

The Indiana Attorney General’s Office has received reports of unemployment fraud both directly, and indirectly from other state agencies and sources. In total, it has received more than 14,196 reports since the pandemic began. That number is representative through May 7 and is likely much higher.

“We started getting reports really in the summer and they steadily grew,” Douglas Swetnam, section chief for the Data Privacy and Identity Theft Unit, said.

He said, in March, the Attorney General’s Office in Indiana saw a spike about four times as much as the previous two months when it came to the number of claims related to unemployment fraud.

“We think it’s most likely related to the people doing their taxes and finding out with 1099s that someone got money in their name,” said Swetnam.

Since March of 2020, the State of Indiana has paid more than $8.3 billion in unemployment insurance benefits. The Indiana Department of Workforce Development (DWD) has not been able to provide an estimate on how much money has been fraudulently claimed.

According to the DWD, as of about mid-April, more than 90% of unresolved claims since the beginning of the pandemic, have fraud indicators.

“Indiana, like all other states, is constantly under attack by fraudsters. Identity theft has been a significant threat, as fraudsters can easily purchase previously stolen personally identifiable information to file unemployment insurance claims,” said a spokesperson for the DWD.

The DWD said as fraudsters develop new schemes and tools, the degree of attempts varies. The state has several measures in place to try and stop fraudsters from receiving payment, including identity verification through ID.me, ‘sophisticated’ bot detection software, data analytics and by sharing data with other states through the national integrity hub.

INVESTIGATING UNEMPLOYMENT FRAUD

As local, state and federal investigators continue receiving claims regarding fraudulent unemployment insurance benefits, they are starting to learn many are being filed by organized crime rings using stolen identities, many which are being used to claim benefits across multiple states.

The Federal Bureau of Investigation (FBI) in Indiana is working with local and state authorities to track down who is responsible for this, but with a major focus on organized groups.

Supervisory Special Agent Spencer Brooks, who works on the FBI’s Financial Crimes Squad said, “It’s an enormous problem and the way our cases work we’re going to be able to go back in time and investigate them.”

Brooks said the agency typically did not investigate fraudulent unemployment claims pre-pandemic, but overnight the problem seemed to explode.

He explained that it isn’t much different than investigating financial crimes their team is used to, but that it gets a bit more complicated when debit cards are mailed to the person(s) fraudulently claiming the benefits in someone else’s name.

“We have to employ a lot of the same tactics in terms of tracing IP addresses and just following the money,” shared Brooks. “That can be multiple hops or multiple jumps and a lot of the unemployment fraud is done with debit cards being mailed out to addresses.”

Brooks said some of the criminals will pull money off the debit cards, buy money orders, or make cash withdrawals. He explained, “and then keeping some of the money and sending up the chain or the hierarchy to whoever was directing them.”

He said it is difficult to trace organized groups, but through partnerships with the Department of Labor and Postal Service, as well as Indiana State Police, they have learned it is possible.

“We’ve arrested a couple of people recently and hopefully we’ll be charging some more folks in the near future,” said Brooks.

The work is complex, and Brooks said many of the groups are loosely organized, making it difficult to track down. “They’ve got somebody that we would call maybe a money mule or money launderer here, withdrawing money out of ATMs or going and buying money orders and then they package it up and mail it someplace else.”

“You’ve got different roles, different jobs, right, and then you’ve got a separate part of that group who’s setting up the accounts, the fraudulent accounts,” Brooks explained.

“The cases that we have really focused on have been folks here that have hit multiple states outside of Indiana.”

Brooks said, “The amount of money flowing from other states to people in Indiana for UI insurance in other states has kind of been surprising and I think that flow is being stemmed.”

He explained, to continue stemming this problem, information is being provided to local Indiana police departments to let them know what some of the state’s unemployment insurance debit cards look like, numbers to keep an eye out for on them, and more.

“Then maybe we can learn from them, ‘hey we just pulled somebody over and we have this full stash in their car,’ and we’re interested if it’s on the unemployment fraud side,” he explained.

“There have been a couple instances I can think of when we have gone and picked up 150 debit cards off of somebody when we were in search of a car, in search of a house, that probably wouldn’t have — maybe wouldn’t have led to a financial crimes investigation before but we’re gonna prioritize those things because we want to try to jump on this problem,” Brooks shared.

In March, reporter Courtney Spinelli reported for our sister station, FOX59 News, on the scope of the problem in Indiana. At that time, investigators were just beginning to learn more about the potential criminals likely committing unemployment fraud.

Their suspicions were backed by the DOL-OIG, which released a report in February, estimating that state agencies have lost tens of billions of dollars, as well as looking at four major areas where potential fraudulent benefits were paid:

  1. Multi-state claimants: total of $3.5 billion in unemployment insurance benefits paid

According to the CARES Act, a person who works in more than one state and became unemployed due to COVID-related reasons, can only apply for benefits in one state. However, in one instance, investigators revealed a claimant used a social security number to file a claim in 40 states and received a total of more than $222,000 in unemployment insurance benefits from 29 states.

There have also been cases where fraudsters have stolen identities and used them to fraudulently file claims in multiple states.

The FBI said it has cases in Indiana it is working, with possible charges in the near future regarding multi-state claimants. Although the agency cannot speak on specifics regarding cases, Brooks said there are individuals in the state they are focusing in on.

“We’re talking about hundreds, if not thousands, of identities tied back to claims out of state and some multi-state claims for those individuals,” he explained.

Brooks said it is difficult to keep track of the data and where claims are filed, including what state they are filed in, what bank it was processed by, was it a debit card or direct deposit, and a laundry list of questions that comes with these investigations.

“We have what we believe to be significant cases here and we’ve made it a priority on our financial crimes squad because it is such a massive amount of fraud,” he said.

Swetnam said the issue involving multi-state claims makes life enormously difficult for victims impacted, because they have to contact each state individually where they’ve had that happen to them.

“Only that state can correct the records, which if you’ve had 40 different states receive your information, that’s a lot of work,” Swetnam said. “If they get information for one person, they’ll make claims as many places they can, hoping to get some of them to actually pay out.”

Richmond resident, Romell Skinner contacted CBS4 News after he received a tax document saying the State of Pennsylvania paid him $17,856 in unemployment benefits.

Skinner said he immediately filed a claim with the FTC and submitted that paperwork to the Pennsylvania Department of Labor and Industry, the DWD-equivalent, saying he did not receive the benefits and reporting it as a fraudulent claim.

“My initial reaction was, one, I don’t even live in the State of Pennsylvania, never been to the State of Pennsylvania,” he said. “You would think that there would be some type of checks and balances in place for something like that.”

Skinner said he has worked throughout the entire pandemic, in Indiana.

“It’s just frustrating because again, like I said, no one’s even contacted me or acknowledged the fact that I filed a fraud report and I did that twice,” he said.

Skinner said he worried as the tax deadline approached, not having a problem resolved, where it appeared he was paid almost $18,000 in unemployment insurance.

“It’s very concerning to me. I’ve already flagged my credit report for any new applications or anything that comes through and amazingly with all of this going on, I haven’t had any type of fraud occur even before I placed the freeze on my credit report,” he said.

CBS4 News contacted several agencies, including the Pennsylvania Attorney General’s Office, who helped escalate Skinner’s claim to the Pennsylvania Dept. of Labor and Industry.

The department could not confirm how long it would take to process Skinner’s report, but Skinner said he is just grateful he knows it made it into the right hands. He hopes he will get the chance to file his tax return for 2020, eventually.

“The tax money is a great addition for the year to be able to have a little bit of extra they give us, just to have that to put into the savings, but everything that’s been going on we already kind of cut back a lot of the things that we’d want to do because of the uncertainty,” he said.

3. Federal prisoners: total of $98.3 million in unemployment insurance benefits paid

The DOL-OIG report in Feb. revealed that social security numbers of 13,446 potentially ineligible federal prisoners were used to file for unemployment claims, totaling more than $98 million in unemployment insurance benefits. Officials say the problem is still occurring at state prisoner level as well.

“We also have organized crime in the U.S. and then we have petty criminals,” said Swetnam.

“We’ve had prisoners who are in prison working with their friends on the outside, working on an angle to get in on the fraud,” he explained, noting that what many are doing isn’t very smart.

“They are using their friends and former convicts who have been paroled on the outside and who have used the phone to talk about how to make the claims, which is how they’re also being caught.”

Swetnam said the phone calls are monitored and it’s part of how some prison officials knew inmates were engaged in the criminal activity. “They’re very brazen about it,” he said.

When asked where the money likely goes after someone successfully claims unemployment insurance from inside the walls of state and federal prisons, Swetnam said, “We’ve had reports about money showing up in commissary accounts but in other situations it’s being held by family or friends or prisoners on the outside.”

It is not clear how many reports of prisoners committing unemployment fraud in Indiana have been received. For the FBI, their focus remains on larger, more organized groups at this time.

“We have seen that happen here, we have reporting about that happening in multiple prisons in Indiana,” said Brooks.

2. Social security numbers of deceased individual: total of $58.7 million in unemployment insurance benefits paid

The official report determined more than 91,000 social security numbers of deceased people were used to file claims for unemployment benefits.

Swetnam said often times, they find out of this when a family member is notified and tells the AG’s Office that their loved one has been deceased for a significant period of time.

“It’s intrusive and it opens a wound for the family members that they really don’t want to have to deal with,” he explained. “Here in Indiana we’ve fared much better than our neighboring states, so our neighbor Illinois has one of the highest rates of fraud in the nation.”

4. Suspicious email accounts: total of $2 billion in unemployment insurance benefits paid

The Office of the Inspector General’s report said email service providers that provided accounts offering anonymity were used to extensively file unemployment insurance claims.

“These particular account types enable users to establish email addresses that can hide personal information, such as the user’s identity,” read the report. “The suspicious email addresses can also be used to apply for multiple UI benefits.”

Swetnam said these refer more to emails with names and letters jumbled up, which don’t necessarily make sense. Many of these, he shared, are used overseas among fraud and criminal groups.

STOLEN DATA ON THE DARK WEB

Investigators say many fraudulent claims are filed using outdated information like older addresses or maiden names, which is a sign an identity may have been purchased on the dark web.

“The marketplaces on the dark web are like the Amazon of crime,” said Swetnam.

“They make almost every illegal thing that you could imagine available, including information for individuals and that information because of all of the data breaches has become really cheap,” he explained.

You can buy a person’s complete identity on the dark web for just pennies and experts say scammers buy them in the hundreds of thousands, since some are from data breaches.

“I can buy someone’s – an Indiana resident’s full information off the dark web now for a quarter, ten cents, it’s really inexpensive,” he explained.

Swetnam walked CBS4 News through a website taken down by federal and international authorities, but said even with that, once your information is on the dark web, there’s a chance it will always be out there, since it may have already been purchased.

“If you’re using those for fraud to get a hundred different identities for $10 off the internet and go make claims with them, it’s pretty easy,” he said. “When they buy it off the dark web using cryptocurrency they receive it immediately.”

Swetnam said it takes time, but many won’t escape accountability.

“It takes a while for us to investigate them, but more often than they think, we’re able to track them down,” he shared.

HOW TO PROTECT YOUR IDENTITY

Government officials have provided a resource on how you can take steps to protect yourself against identity theft and what you should do, should it happen to you.

Some of the tips include securing your social security number (SSN), collecting your mail every day, not sharing personal information just because someone may ask for it, and reviewing bank account and credit card information to monitor for any unauthorized transactions.

Experts also share that people should create complex passwords that identity thieves cannot guess and recommend you change those passwords, should a company you do business with have a breach of its databases.

It’s also recommended people review their credit reports once a year and be certain those don’t include any accounts you did not open yourself.

Additionally, you can freeze your credit to prevent someone from applying for, or getting approval for a credit account or service in your name.

Consumers should also take steps to protect their identities is by being vigilant of phishing schemes. Do not click on certain links or text messages that say they’re from PayPal or a similar company, alleging there’s a payment ready.

Experts said, scammers tend to succeed in their criminal efforts with both younger and older individuals because they’re not as well-versed in safeguarding their identities, but that it can happen to anyone.

If you do find out that a fraudulent claim has been opened in your name in Indiana, you can visit the DWD’s resource page on identity theft, which provides a list of resources.

Source: on 2021-05-18 23:15:24

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