WASHINGTON — The Labor Department demanded Thursday that banks freeze almost $1 billion in fraudulently obtained unemployment benefits made available during the COVID-19 pandemic.
All accounts at the institutions, which span at least 12 states including Illinois, California and New York, are requested to be preserved until Dec. 31, 2026, officials said.
The financial institutions are also being asked to “cooperate proactively” with the department’s investigators to preserve the funds. Labor officials didn’t say which banks were involved, citing the active federal cases.
The bogus benefits, first uncovered by the Department of Labor Office of Inspector General, amounted to $720 million in unemployment insurance contained on prepaid debit cards and another $192 million sits unclaimed in state property offices, The Post previously reported.
“During the pandemic, criminals and bad actors exploited weaknesses to steal billions of dollars from the American people,” Acting Labor Secretary Keith Sonderling said in a statement.
“We are working with Vice President Vance to ensure we use every tool at our disposal to track down stolen funds, hold fraudsters accountable, and return money to the taxpayers to ensure this program is used as intended.”
DOL Inspector General Anthony D’Esposito had sounded the alarm about the fraud in February and affirmed Thursday that the department will “pursue every avenue to recover these funds.”
“Every dollar lost through delay or inaction is taxpayer money handed to fraudsters,” he said.
Unemployment benefits are typically provided via prepaid debit cards to avoid the use of paper checks or direct deposits, though some states still offer those services.
The DOL’s Employment and Training Administration had previously been tasked with sending guidance to states to help recoup the funds.
The IG team probed 6.5 million prepaid debit cards in order to determine who was receiving benefits during the pandemic.
Its investigation has so far led to 1,800 convictions and $2.2 billion in recovered funding.
