In a significant development in the ongoing investigation into COVID-19 unemployment benefit fraud, 29 out of 31 defendants have entered guilty pleas. The investigation, which spanned five years, focused on a scheme orchestrated by inmates from the South Carolina Department of Corrections (SCDC) with assistance from individuals outside the prison system.
The court was presented with evidence showing that inmates acquired personal information, including social security numbers and birth dates, from fellow inmates. This information was then used to file fraudulent applications for COVID unemployment benefits both for themselves and other inmates. In some instances, this data was willingly shared in exchange for a share of the proceeds. Other times, inmates were unaware that benefits were being applied for using their identities. Additionally, extortion schemes were employed to obtain information from unsuspecting individuals outside the prison.
A prominent tactic used by those involved was referred to as “Johning.” Inmates used contraband cell phones to pose as young individuals online and solicited compromising photos from victims. Subsequently, they would impersonate law enforcement to extort money or additional personal information from these victims.
The fraudulent activity extended beyond state lines with applications filed in multiple states including South Carolina, Pennsylvania, North Carolina, Nevada, New Jersey, Missouri, Arizona, and California. The total financial impact of this scheme resulted in an estimated loss of nearly $5 million to the U.S. government.
Acting U.S. Attorney Brook B. Andrews commented on the situation stating: “This extensive fraud scheme exploited and misused individuals’ personal information...for financial gain at the expense of American taxpayers.” Bryan Stirling, SCDC Director added: “Inmates using this brazen scheme stole millions of dollars...It is shameful.”
Those convicted face severe penalties including up to 20 years imprisonment and fines reaching $250,000 alongside restitution obligations and supervised release post-incarceration. United States District Judge Sherri A. Lydon has already accepted guilty pleas from 29 defendants with sentencing ongoing.
The case is part of broader efforts by authorities like the COVID-19 Fraud Enforcement Task Force established on May 17, 2021. The task force aims to strengthen anti-fraud measures concerning pandemic relief efforts through enhanced coordination among agencies.
Information regarding potential fraud can be reported via the Department of Justice’s National Center for Disaster Fraud Hotline or their web complaint form.
Investigation into this case involved collaboration between entities such as the United States Secret Service and local South Carolina law enforcement agencies with prosecution led by Assistant U.S. Attorneys Winston Holliday and Scott Matthews.