The U.S. Secret Service is investigating a vast fraud ring of suspected Nigerian hackers using bogus unemployment claims to steal hundreds of millions in taxpayer dollars intended to help jobless Americans.
The crime ring is exploiting the coronavirus pandemic and economic crisis by flooding overwhelmed state unemployment offices with bogus claims in the names of Americans who are still working, according to a memo reported by Krebs on Security.
The memo, sent to Secret Service field offices on Thursday, said that ‘substantial amount of the fraudulent benefits’ have used information stolen from ‘first responders, government personnel and school employees.’
Washington state, said to be a magnet for bogus claims, temporarily halted payment of benefits while it sorted through the surge of fraud, leaving jobless Americans in dire financial straits.
The state resumed benefits payments on Saturday.
The fraud comes as state unemployment offices have been overwhelmed by record-shattering numbers of claims, with more than 35 million people losing their jobs amid the lockdowns intended to slow the spread of coronavirus.
‘The primary state targeted so far is Washington, although there is also evidence of attacks in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida,’ the memo added.
‘In the state of Washington, individuals residing out-of-state are receiving multiple ACH deposits from the State of Washington Unemployment Benefits Program, all in different individuals’ names with no connection to the account holder,’ the notice continues.
The U.S. Attorney’s office in Seattle said on Friday that it is working with state authorities to track down and prosecute criminals who are stealing unemployment benefits.
‘Chasing these reprehensible criminals is just one part of the equation,’ U.S. Attorney Brian Moran said in a statement.
‘The other part is for the state to address and fix the vulnerabilities in their system, and I am advised that they are working to address that part of the problem.’
The Secret Service memo suggests that the suspected Nigerian scammers utilize American ‘mules’ — often victims of online romance scams — to receive direct deposits from the fraudulent transactions and forward the money to the overseas scammers.
The Secret Service was historically part of the Treasury Department, and in addition to protecting the president it is tasked with safeguarding the nation’s financial and payment systems.