Well-organized Nigerian criminal network exploits the COVID-19 crisis by committing large-scale fraud against several state unemployment insurance programs, with potential losses of several hundred million dollars, according to a new alert issued speak American secret service.
A memo seen by KrebsOnSecurity that the Secret Service released Thursday to U.S. field offices says the ring has filed unemployment claims in different states using social security numbers and other personally identifiable information (PII) ) belonging to victims of identity theft, and that ” much of the fraudulent benefits submitted used the personal information of first responders, government personnel and school employees. “
“It is assumed that the ring of fraud behind this has a substantial PII database for submitting the volume of requests seen so far,” the intelligence services warned. “The main state targeted so far is Washington, although there is also evidence of attacks in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.”
Secret services said the fraud network would be made up of hundreds of “mules,” a term used to describe voluntary and involuntary individuals who are recruited to help launder the proceeds of fraudulent financial transactions.
“In Washington State, people residing outside of the state receive several ACH deposits from the Washington State unemployment benefit program, all on behalf of different people with no connection to the account holder,” said the opinion.
The memo suggests that the criminal network works in the same way as scammers who specialize in filing fraudulent income tax refund claims with the United States and the US Internal Revenue Service (IRS), a a permanent problem that costs the states and the United States Treasury hundreds. millions of dollars in revenue each year.
In these schemes, scammers usually recruit people – often victims of online scams or those who are also unemployed and looking for any source of income – to receive direct deposits from fraudulent transactions, and then route the bulk of illicit funds to authors.
A federal fraud investigator who spoke with KrebsOnSecurity on condition of anonymity said that many states simply did not have enough controls in place to detect patterns that could help better filter out fraudulent unemployment claims , such as searching for multiple applications involving the same Internet addresses and / or bank accounts. The investigator said that in some states, fraudsters only have to submit the name, social security number and other basic information for their claims to be processed.
The alert follows media reports from Washington and Rhode Island regarding millions of dollars of fraudulent unemployment claims in those states. Thursday, The Seattle Times reported that the activity had stopped unemployment benefits for two days after authorities found more than $ 1.6 million in false claims.
“Between March and April, the number of fraudulent unemployment benefit claims increased from 27 to 700,” the state’s Department of Employment Security (ESD) told the Seattle Times. History has noted that the ESD anti-fraud hotline was inundated with calls and received so many emails over the weekend that it temporarily closed.
WPRI in Rhode Island on May 4, the State Department of Labor and Training received hundreds of unemployment insurance fraud complaints and “the number of allegedly fraudulent accounts keeps pace with the unprecedented rate of legitimate claims for unemployment insurance ”.
The increase in fraud comes as many states struggle to deal with an avalanche of jobless claims following the coronavirus pandemic. The US government announced Thursday that nearly three million people had applied for unemployment last week, bringing the total in the past two months to more than 36 million. The Treasury Department said unemployment programs paid $ 48 billion in payments in April alone.
Some of the states on the key target list for this fraud network have some of the highest unemployment rates in the country. Washington has seen nearly a million jobless claims, with nearly 30% of its workforce currently unemployed, according to figures released by the American Chamber of Commerce. Rhode Island is even worse off, with 31.4% of its workforce applying for unemployment, the House found.
“The targeted banks have been at all levels, including local banks, credit unions and large national banks,” concluded the secret service alert. “It is extremely likely that every state is vulnerable to this program and will be targeted if it has not already been.”
This entry was posted on Saturday May 16, 2020, 12:34 am and is filed under Latest warnings, The coming storm, Web 2.0 fraud.
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