Labor Dept. demands banks freeze nearly $1B in fraudulent COVID benefits
The Labor Department demanded Thursday that banks freeze nearly $1 billion in fraudulently obtained unemployment benefits distributed during the COVID-19 pandemic.
Officials said accounts at institutions across at least 12 states, including Illinois, California and New York, must be preserved through Dec. 31, 2026. Banks are also being asked to “cooperate proactively” with investigators to preserve the funds.
The Department of Labor Office of Inspector General first uncovered the fraud. The bogus benefits included $720 million in unemployment insurance loaded onto prepaid debit cards and another $192 million sitting unclaimed in state property offices.
“During the pandemic, criminals and bad actors exploited weaknesses to steal billions of dollars from the American people,” Acting Labor Secretary Keith Sonderling said, adding the department is working with Vice President Vance to recover funds and hold fraudsters accountable.
DOL Inspector General Anthony D’Esposito, who warned about the fraud in February, said the department will “pursue every avenue to recover these funds.”
The IG team examined 6.5 million prepaid debit cards. The investigation has led to 1,800 convictions and $2.2 billion recovered.
