A “poorly designed” national program allowed “highly experienced money launderers” to take advantage of “massive holes” to file more than 120,000 fraudulent claims through Illinois’ beleaguered unemployment benefits system during the coronavirus pandemic.
That was the assessment of Gov. J.B. Pritzker on Wednesday, who said that most of those instances of fraud — about 107,000 of them — have been committed since May through the state’s federal Pandemic Unemployment Assistance program for 1099 workers and other independent contractors such as Uber drivers.
Pritzker said the program, created through the federal coronavirus relief package, left it up to each state to develop its own system.
“As a result, there were massive holes for illegal fraudsters to steal federal dollars from taxpayers across the country,” the Democratic governor said during a COVID-19 briefing.
The Illinois Department of Employment Security is working with U.S. Department of Labor investigators and other federal authorities to track down the thieves, Pritzker said.
In the scheme, fraudsters have used Illinois residents’ personal information stolen in separate data breaches to apply for benefits to be paid through direct-deposit, debit cards and other financial tools employed by legitimate filers.
“The highly experienced money launderers who have perpetrated these crimes use the same payment methods that regular filers do,” Pritzker said, so the state can’t cut off “common dispersal mechanisms” that are also used by people who really need the help.
“Despite the fact that this is a national program that was poorly designed and susceptible to fraud, I can promise Illinoisans that our state government and our state law enforcement authorities will do everything in our power to support anyone who has been affected by this nationwide failure,” Pritzker said.
An additional 14,500 instances of fraud have been identified through the state’s standard unemployment insurance system since March.
As of July 23, the statewide unemployment rate was at 14.6%, and 16.4% in the Chicago area.
The fraud has come along with more than 2 million claims for unemployment benefits the state has fielded since COVID-19 gripped Illinois’ economy, compared to 271,000 claims filed all of last year.
That’s led to a massive backlog and thousands of people complaining of delays as the Pritzker administration has scrambled to bolster the agency’s workforce.
Pritzker warned that anyone who hasn’t requested benefits, but has received a debit card or unemployment insurance letter in the mail, has likely been a victim of identity theft and a target of the fraudsters.
Potential victims are urged to report fraud online at IDES.illinois.gov. Residents can also request a free credit report through the website.