Street Thugs and Transnational Criminals Stole Billions from Americans During Pandemic

Pandemic fraud,  according to the Oversight Subcommittee on Pandemic Fraud, costs Americans billions of dollars. Select Subcommittee on the Coronavirus Chairman Brad Wenstrup (R-OH) said in August that "at least half of all stolen COVID-19 relief funds went to Russian, Chinese and Nigerian criminals." Unemployment insurance fraud alone may have cost "as much as $135 billion," according to the U.S. Government Accountability Office. However, according to the Oversight Subcommittee, "outside experts have estimated up to $400 billion" in improper payments. Several important issues emerged from the Ways and Means Oversight Subcommittee chaired by Rep. Jason Smith (MO-08) on October 19, 2023.

Smith said in his opening statement that "transnational, organized criminal enterprises" were involved in defrauding Americans of pandemic funds. He said these are not "homegrown fraudsters." Smith believes violent criminals in some cities were also committing COVID fraud. Whistleblowers explained that when cities like Baltimore began prosecuting COVID fraud, "homicides fell 20 percent." In Baltimore, 60 percent of violent criminals also allegedly committed COVID fraud. 

One witness told the Oversight Subcommittee that crime syndicates are stealing personal information to commit fraud, alleging that criminals "can buy Social Security numbers for as little as a quarter and then use artificial intelligence" to claim pandemic benefits. Apparently, criminals can outpace federal fraud fighters because the government has "outdated" tools that are outpaced by the more "dynamic international crime rings with constantly evolving techniques to steal identities and taxpayer money." 

Linda Miller, a fraud prevention expert, said the following about the "unprecedented identity theft" during the pandemic "and going forward."

"Every single American's information is available for sale on the dark web today. You can buy Social Security numbers for about 25 cents apiece now. They've gone down. They were about $1 apiece about a year ago…Most of these tools to effectively use stolen identities can be circumvented, especially in the age of generative AI. So now they've even got much more sophisticated tools than we did at the beginning of the pandemic that they're using and exploiting right now. And so as a result… we've got a dynamic adversary, and we have very, very static processes that address them."

Rep. Brian Fitzpatrick (PA-01) says the scale of the fraud seen during the pandemic "hurts American's national security." International crime rings stole millions, and some of them were "affiliated with" unfriendly governments. Chinese hackers have breached the U.S. Office of Personnel Management (OPM), Anthem Health, and Equifax. Miller estimated that roughly "half of the pandemic unemployment assistance fund fraud went to adversarial nations."

Criminal organizations also allegedly used the fraud to fund violent crime. "A Nigerian group stole funds meant to help small businesses and unemployment insurance to fund human trafficking and drug smuggling," according to one witness. Other groups used the money to "fund murder for hire."

Attorney General Merrick Garland announced in August that "hundreds of people were charged with more than $830 million in COVID-19 emergency aid." Garland added, "More than 60 of the defendants have alleged connections to organized crime, including members of a criminal gang accused of using stolen pandemic aid to pay for a murder." The individuals were allegedly members of "a Milwaukee gang known as the Wild 100s."

In Michigan, "Tauheed Salik Wilder, 39, of Detroit, MI, and Shuqueni Renee Franklin, 30, of Shelby Township, MI [were] charged in separate complaints with mail fraud, wire fraud, aggravated identity theft, and money laundering." The pair was responsible for filing "at least 470 claims for fraudulent unemployment insurance benefits in at least five States, including Michigan." Their activities resulted in "over $4 million and attempted losses of over $13 million."

Stunningly, the Subcommittee revealed that federal and state agencies "dropped basic fraud prevention guardrails during the pandemic, like data matching or consulting the federal "Do Not Pay" list." Unemployment insurance expert Amy Simon said poor oversight, outdated tools, shoddy verification of identity information, and failure to consistently prosecute may be behind the massive fraud. 

There is evidence that the DOJ is actively pursuing pandemic fraud cases. The Pandemic Oversight website is an official government website dedicated to relief spending and programs associated with the COVID-19 pandemic. It lists many instances of prosecutory action related to pandemic fraud.

However, one wonders whether four months in prison, as seen in the case of Joseph Harding, 36, a former Florida State Representative, is a stern enough deterrent for swindling $150,000 from COVID-19 relief programs. Harding also received two years of supervised release. In another case, a Massachusetts man, Darwyn Joseph, 26, was sentenced to two years, one day in prison, and three years of supervised release. Many individuals were sentenced to over two years in federal prison for pandemic fund grift.

Miller told the Subcommittee that the pandemic highlighted a "critical gap" in the federal government's ability to protect Americans against fraud. She opened with the idea that "there was a combination of inadequate oversight and internal controls, large scale organized fraud rings, and antiquated data and information systems that contributed to the widespread and massive fraud that we saw during the pandemic." She says the government needs to do better with its ability to analyze and share data. Miller believes not enough resources have been allocated or dedicated to the "necessary skills" to address the "accountability and technology" challenges agencies face at "every level of government." She said Congress should create a "Fraud Analytic Center of Excellence modeled on the PRAX or Pandemic Analytic Center of Excellence." 

It is both odd and confusing Miller mentioned the center as if the government knew nothing about it. The Pandemic Analytics Center of Excellence (PACE) was, in fact, set up in 2021 by the federal government to analyze and identify fraud, waste and abuse relative to pandemic response funding. It received $5 trillion in funding for its "suite of enhanced analytic tools" designed to chase fraud.

The Pandemic Oversight website also features a tip hotline for filing complaints, including links for Whistleblowers. 

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