From the first person: a fraudster told how he steals money from Americans

In a Zoom session with the camera off, Mayow describes how he receives unemployment benefits, backed by COVID-19 aid, instead of the Americans who are entitled to the benefits. Such an international identity theft attack took at least $ 36 billion from unemployed Americans, writes USA Today.

Photo: Shutterstock

Mayowa is an engineering student from Nigeria. By his own estimates, he has earned about $50 since the start of the pandemic. After compiling a list of real people, he turns to databases of stolen information to link the names on his list with dates of birth and Social Security numbers. Each connection between data costs $2, and sellers charge it in cryptocurrency.

In most states, this information alone is sufficient to apply for unemployment benefits. Even when applications require additional verification, a little more money spent on sites like FamilyTreeNow and TruthFinder gives the right answers: Your mother's maiden name, where you were born, is your mascot in high school. Mayowa said that about one in six applications he filed gets approved, he calls that kind of money easy.

The student agreed to talk about the scam in an interview arranged by security firm Agari, using only his first name to conceal his identity. The security company is another source of income for him: it pays him in bitcoins for providing information about active scams.

The coronavirus-era unemployment benefit scam was first identified in Washington state in May and has since spread to all 50 states, moving towards new targets as government agencies close previously uncovered holes. Mayowa and his team of foreign scammers focused on Hawaii, Florida and Pennsylvania in November.

When asked if he was tormented by remorse over theft from the unemployed, the guy replied that 70% of his peers at the university also use fraud as an additional income.

“There is no remorse,” Mayowa said. “We don’t know who they are; it's nobody."

Alarm bells

For years, states have been preparing for scams with particular attention to whether residents who filed unemployment claims are actually telling the truth. However, the recent wave of fraud, including from abroad, has caught them off guard.

In Washington, late on May 12, State Unemployment Commissioner Susie Levin learned of the active attack. She was aware that the number of applications is growing as the pandemic spreads. But suddenly there were 10 times more of them than expected.

Everything happened quickly. In the two weeks after the CARES Act introduced additional federal weekly benefits, $600 million was pulled out of the state system — about 8% of the $8,6 billion paid out over the entire summer. The state cut off all payments for two days while authorities tried to figure out what was happening.

Eventually, state computers began to detect anomalies: out-of-state banks, duplicate email addresses, and multiple names using the same bank accounts. But legacy computer systems were unable to flag foreign and duplicate IP addresses, or to identify methods for masking them. Typically, several dozen fraudulent applications are detected in Washington every year, but this year there were 122 of them since March.

This should have been a wake-up call for all states. But instead, they introduced two-factor authentication systems and third-party identity verification tools for six months, and slowly blocked suspicious addresses. The inability to act quickly, combined with the ingenuity of the scammers, allowed the attacks to spread across the country, resulting in delays in payments to unemployed Americans.

On the subject: Cashing in on Fear: US Scammers Spread Misinformation About COVID-19 Vaccine

The Office of the Inspector General of the Department of Labor estimated in a November report that these and other schemes aimed at unemployment benefits during the pandemic caused losses of about $ 36 billion from the beginning of the year to November.

Many states are reluctant to discuss the situation, citing security concerns as well as difficulties in determining what constitutes a scam. Some even refused to estimate the amount of losses or underestimated them.

The Labor Department, the FBI, and the Secret Service say they are working together to uncover fraud, repair holes in identity verification systems, and recover millions of inappropriate payments.

Prosecutors have tracked down a handful of "money mules" - US residents who help carry out the schemes. Security contractors estimate that Nigerians are responsible for half of all international unemployment fraud in the United States. Main cThe purpose of the investigation is to return as much of the stolen funds as possible. For example, Washington state returned $357 million of the $600 million it had stolen.

Among the victims are working Americans with stolen personal data

In late October, Kelly Maculan received a letter from the Illinois unemployment system stating that her last day of work was April 3. But no one fired the woman. She dialed the number indicated in the letter to report the error, and decided that the incident was over.

A few days later, she received another notice that the direct transfer of $ 822 to her account was found to be fraudulent and that she needed to return it or she would face legal action. Maculan was angry. But after her employer got involved, state officials told her to ignore all notices.

Scammers need real people to submit their bogus applications, so they look for people who haven't submitted them on their own. Maculan has no idea how anyone got her personal information, although she noted that her Discover card was hacked many years ago. She accuses the state of not having a "system to avoid this problem."

Illinois officials declined to comment specifically on the Maculan case, but spokesman Will Gomberg said the Illinois Department of Employment Security has halted more than 1 bogus filings since March 341 due to identity theft.

“If a victim received a notice that they owed us money after reporting the fraud, that notice was sent in error,” Gomberg said. “We want to apologize for any concern this may have caused and want to reassure victims that they do not owe any money stolen as a result of the scam.”

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Fraudsters use a network of “mules”

Unemployment payments rarely go directly to fraudsters. Instead, experts say scammers launder money through online accounts and people with legitimate US bank accounts. This not only disguises the identity of the fraudster, but also makes it harder for the government to identify the fraud and recover the funds.

Mobile banking and other online money transfer apps have opened up new possibilities for moving money more easily. They allow access to accounts without any personal visits (even avoiding ATM cameras) and offer debit cards that move easily on the black market.

In a Washington scam, scammers used Green Dot accounts to transfer funds in bulk. Nigeria-based scammer Mayowa said they are also using Venmo, PayPal, Cash App and Walmart2Walmart to extract funds.

Philip Lerma, Chief Risk Officer at Green Dot, said that the company is aware of its role in fraud and is actively involved in identifying problems, it works with third parties and is committed to preventing fraudulent transfers of funds.

The network of so-called “money mules” includes knowledgeable co-conspirators and those who may be unaware (sometimes for years) of their role. Half of them are unwitting partners of scammers from Nigeria, South Africa or the USA.

Judy Middleton, 70, of Ridgeville, Mississippi, is accused by federal prosecutors of serving as a "money mule" for a sophisticated scam that targeted Washington's unemployment system.

In a federal lawsuit filed in Jackson, Mississippi, prosecutors said the criminal group filed unemployment claims on behalf of eight people who were paid into Middleton's bank account for a total of $ 79.

The prosecutor claims that Middleton withdrew this money through ATMs and cashier's checks. She also allegedly bought Walmart and Kroger gift cards and sent money via bank transfers to other accounts. In one case, prosecutors said Middleton packed $ 19 in cash and sent it through the US Postal Service to a person in Colorado. If Middleton is found guilty of all 000 fraud charges, she faces hundreds of years in prison, fines and supervision.

On the subject: Fraudsters Send 'IRS Emails' Indistinguishable from Real: What You Need to Know

The consequences of fraud

Two unemployment insurance commissioners in Florida and Oklahoma have resigned since March. The other two, in Kentucky and Wisconsin, have been fired. Pressure has also increased on Washington Gov. Jay Inslee to fire his commissioner after hundreds of millions in funds were stolen.

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