Blumenthal Urges DOJ, Secret Service to Investigate Criminal Groups Defrauding Unemployment Insurance Programs

[WASHINGTON, D.C.] – Today, in a letter to U.S. Department of Justice (DOJ) Associate Deputy Attorney General William Hughes and United States Secret Service Assistant Director Michael D’Ambrosio, U.S. Senator Richard Blumenthal (D-Conn.) urged the DOJ and Secret Service to open an investigation into the large-scale “impostor fraud” schemes originating from abroad targeting unemployment insurance, as well as provide assistance to states grappling with a recent siege of scams.

The letter follows a June 9 hearing before the Senate Judiciary Committee on Covid-19 related fraud, during which Blumenthal questioned D’Ambrosio on investigations into scams targeted to unemployment insurance. D’Ambrosio acknowledged that state agencies are facing a massive campaign from international criminal organizations specifically targeting COVID-19 relief payments, though he declined to comment on specifics citing that it is an active investigation. Blumenthal requested information about any fraud targeting Connecticut and federal efforts to advise states on preventing such identity theft.

“I urge the Department of Justice and the Secret Service to vigorously investigate these reports of large-scale campaigns of identity theft and impersonation in unemployment insurance, and to bring these perpetrators to justice. Every dollar lost due to criminal maleficence is a dollar stolen from the pockets of Americans who deserve assistance in their hour of need,” wrote Blumenthal.

Blumenthal continued, “State labor and social assistance agencies are stepping up and moving quickly to make sure their residents can pay their bills and put food on their tables. We cannot expect these same state agencies to simultaneously fight off a siege of coordinated, international cybercrime while working tirelessly to ensure that their residents’ basic needs are being met.”

The letter can be found below.

June 10, 2020

Mr. William Hughes

Associate Deputy Attorney General

United States Department of Justice

Washington, D.C.

Mr. Michael D’Ambrosio

Assistant Director

United States Secret Service

Department of Homeland Security

Washington, D.C.

Dear Mr. Hughes and Mr. D’Ambrosio,

I write to urge the Department of Justice to open an investigation into the large-scale “impostor fraud” schemes targeting unemployment insurance across the United States, and to provide assistance to states that are grappling with this sophisticated, transnational cybercrime amid a nationwide pandemic. The Department of Justice and Secret Service must act forcefully and publicly to protect the millions of Americans in need during this unprecedented time and to create a powerful deterrence to the criminal organizations preying on them.

Since the onset of the COVID-19 pandemic, criminals have sought to exploit our financial assistance programs through an extensive campaign of identity theft, targeting multiple states and impersonating potentially hundreds of thousands of Americans. The Connecticut Department of Labor has found that scammers are targeting vulnerable and out-of-work residents, claiming to help residents file unemployment claims and requesting sensitive personal information such as their social security number.[1] Criminals also appear to be using personal information stolen from insecure websites, online illicit markets, and the dark web. This stolen information is then being used to submit fraudulent claims for unemployment insurance and CARES Act Economic Impact Payments.

States have faced a profound and unprecedented crisis in recent months, struggling to meet the cascade of demand for unemployment insurance as businesses close. Several states have also encountered sweeping campaigns of fraudulent filings during this time. According to a recent Secret Service alert, the total loses for state unemployment insurance programs could be in the hundreds of millions of dollars and states have estimated up to 20% of total claims have been imposture fraud.[2] State labor and social assistance agencies are stepping up and moving quickly to make sure their residents can pay their bills and put food on their tables. We cannot expect these same state agencies to simultaneously fight off a siege of coordinated, international cybercrime while working tirelessly to ensure that their residents’ basic needs are being met.[3]

As Michael D’Ambrosio, Assistant Director for Secret Service, acknowledged during the Senate Judiciary Committee’s hearing on June 9, 2020 regarding COVID-19 fraud, state agencies are facing a massive campaign of fraudulent activity emanating from organized and transnational groups that specifically target COVID-19 relief payments. Cybersecurity companies have connected a previously-known Nigerian cybercrime group to up to $4.7 million in fraudulent claims.[4] Moreover, cybersecurity reporter Brian Krebs identified multiple web forums and Telegram channels based in West Africa that offer, for a small fee, tutorials on defrauding unemployment insurance, and brag about their successful scams.[5] These criminal groups clearly have little concern for borders, targeting multiple American states from across an ocean, and have little fear of ending up behind bars.

I urge the Department of Justice and the Secret Service to vigorously investigate these reports of large-scale campaigns of identity theft and impersonation in unemployment insurance, and to bring these perpetrators to justice. Every dollar lost due to criminal maleficence is a dollar stolen from the pockets of Americans who deserve assistance in their hour of need. States are facing a voluminous, complicated, and targeted criminal campaign from foreign countries, which they simply cannot handle alone. Federal law enforcement must step up and protect all Americans in this challenging time.

As I requested during the Senate Judiciary Committee’s hearing, please provide responses to the following questions by June 16, 2020:

1. Has the Department of Justice or the Secret Service opened an investigation into impostor fraud schemes targeting unemployment insurance in Connecticut?
2. Has the Department of Justice or the Secret Service opened an investigation into impostor fraud schemes targeting other states?
3. What is the modus operandi of these imposture fraud schemes – who is behind these campaigns, how do they defraud unemployment insurance and CARES payments, and how do they move money?
4. What information or resources has the Department of Justice or the Secret Service provided to states to assist them in their efforts to prevent impostor fraud schemes, investigate fraudulent claims, and contribute to any existing federal law enforcement efforts?
5. What barriers or limitations does the Department of Justice face in prosecuting and extraditing individuals involved in financial fraud based out of Nigeria, or other Western African countries associated with high volumes of cybercrime?

I stand ready to work with you to provide any further resources necessary in this important effort. Thank you for your attention to this urgent matter.

Sincerely,

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