Quote:“The scale of the fraud in the unemployment program created by the CARES Act has reached a staggering level,” according to a damning report from NBC News.

The report begins by discussing a fraud scheme which “cost taxpayers an estimated $11 million,” according to Orange County prosecutors. Nguyen Social Services are claimed to have been charging “up to $700 a pop to file false unemployment claims for people who did not qualify to receive Covid-19 relief money.”

“This isn’t just an Orange County problem. It isn’t just a California problem,” said Orange County District Attorney Todd Spitzer. “This is a breakdown of catastrophic proportions that has failed the American taxpayer.”

While the Labor Department inspector general has not completed their full investigation, the NBC News report suggested that they estimated “at least $63 billion of the $630 billion in disbursements has been misspent,” with the “full scope of the loss in taxpayer funds” likely to be well beyond $100 billion, according to experts and officials.

“A rush to release the funds put enormous strain on state workforce agencies, creating a bonanza for individual scam artists and international cybercrime rings,” the report continued.

“It’s a little bit of a high wire act,” said Bill McCamley, Cabinet secretary of the New Mexico Department of Workforce Solutions, as reported by CNBC in early January. “Because there’s so much pressure to get money out.”

The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act passed in March, with $360 billion in total unemployment funding provided. Fox Business reported on January 7 that the Department of Labor’s Office of the Inspector General estimated “that at least $36 billion worth of unemployment payments expended as of Nov. 7 may have been invalid.”

One specific element of the CARES Act “flagged as high-risk by the Labor Department’s inspector general” is the Pandemic Unemployment Assistance program, which was “aimed at helping gig workers, caregivers and people who are self-employed, all of whom are not typically eligible for unemployment insurance.” With “no former employer to verify this category of claims,” states had to rely on self-reported work histories. As a further negative outcome fueled by pressure to move quickly, “many states also relaxed internal controls” in order to increase the approval rate of incoming claims.

California is reportedly one of the few states to launch a review and investigation of Covid-19 relief programs. According to NBC News, officials in California “said they have tallied $11 billion stolen from taxpayers so far, but the total figure could be as high as $30 billion, or 27 percent.” In Nebraska, matters are even worse, with early reviews which looked at statewide payments through June finding “roughly 66 percent of unemployment money was misspent.”

“In California, this is unquestionably the largest fraud against public agencies in our history,” said president of the California District Attorneys Association, Vern Pierson. “Increasingly we are learning there could be fraud of historic proportions nationwide. While we don’t know the exact price tag, we know the amount of the loss of taxpayers is staggering.”