On February 20, 2025, 29 of 30 people who were previously indicted of unemployment fraud using stolen identities pleaded guilty. The ringleaders of the scheme were all incarcerated for other crimes at the time fraud was committed. One would think obtaining stolen identities could be difficult while doing time in prison. But these fraudsters had a three-prong approach that guaranteed success in gaining personal identifying information.
Some fellow inmates provided their details willingly to the fraudsters in exchange for a portion of the proceeds derived from the fraudulently gained unemployment benefits. Other inmates had no knowledge that unemployment benefits were being applied for on their behalf. But if the identity couldn’t be borrowed or stolen, the fraudsters resorted to extortion. Using contraband cellphones within the Department of Corrections, the fraudsters posed as younger males or females and lured individuals to send them compromising photos. After obtaining the photos, the inmates used a second line feature on their contraband cell phones and contacted the victim posing as law enforcement. The inmates then extorted the victims into sending them not only money but photos of their Social Security cards and driver’s license.
Fraudulent applications were filed in South Carolina, Arizona, California, North Carolina, Nevada, New Jersey, Missouri and Pennsylvania. Non-incarcerated friends and family of the fraudsters received government checks and prepaid Visa debit cards in the mail to family and friends outside of prison. These non-incarcerated defendants then utilized ATM withdrawals, wire transfers, and mobile banking applications to make the proceeds available for the incarcerated fraudsters to access.
Excellent job by the COVID-19 Fraud Enforcement Task Force with this case.
Today’s Fraud of The Day is based on article “South Carolina prison inmates led ring that obtained $5 million in fraudulent COVID-19 unemployment benefits, feds say” published by Fox 8 News on February 20, 2025.
South Carolina prison inmates led a crime ring responsible for obtaining $5 million in fraudulent COVID-19 unemployment benefits, according to federal authorities. Twenty-nine of 31 people indicted in the five-year-long investigation have pleaded guilty, South Carolina’s Acting U.S. Attorney Brook B. Andrews’ office said on Thursday. Fourteen of the 29 have already been sentenced. One of the 31 suspects died after being indicted, and one remains at large.
The ring also included family members and friends outside the South Carolina Department of Corrections system. The fraudulent applications were filed in South Carolina, Arizona, California, North Carolina, Nevada, New Jersey, Missouri and Pennsylvania.
