Some Pandemic Unemployment Fraud Was Inside Job

By Craig Eyermann of the Independent Institute.

"Getting pandemic unemployment benefits was easy money in 2020. Lockdowns by state and local governments shut down thousands of businesses, throwing millions out of work. Uncle Sam rode to their rescue with billions in unemployment benefits, doled out through state unemployment offices.

That flood of aid triggered “the biggest fraud in a generation.” In New York, part of that fraud has proven to be an inside job, pulled off by two bureaucrats in the state’s labor department. The Albany Times-Union’s Brendan Lyons explains:

Two state Department of Labor workers allegedly conducted a massive identity fraud scheme to steal more than $1.6 million in unemployment benefits during the pandemic using co-conspirators they enlisted through an ad on Craigslist as well as “friends and acquaintances,” according to federal court records.

The pair, Wendell C. Giles, 51, a former Buffalo resident living in Albany, and 33-year-old Carl J. DiVeglia III of Albany were snared as part of investigation by the FBI and the U.S. Department of Labor. Both have been terminated from their jobs, according to state comptroller’s records.

It is good news that both DiVeglia and Giles were terminated from their state government jobs. That’s not often the case when bureaucrats get caught behaving badly. It is better news that DiVeglia pled guilty to charges of mail fraud and identity theft in federal court on April 13, 2022. Giles was arrested on charges for his role on April 22, 2022.

How the Fraud Was Made

Lyons’ report describes how DiVeglia and Giles’ pulled off their scheme to get rich at U.S. taxpayer expense:

According to DiVeglia’s plea agreement, he and Giles had work duties that included “processing unemployment insurance claims and distributing state and federal unemployment insurance benefits to eligible New Yorkers.” That work gave them access to the department’s computer systems, which they used to enter the fraudulent claims and to instruct the systems to release the benefits.

The plea agreement also said that DiVeglia “used other people’s identifying information, including names, dates of birth, and Social Security numbers, to fraudulently create and approve unemployment insurance applications.” Sometimes he would make up the information in required fields in the applications—which include information such as the maiden name of an applicant’s mother or their work history.

In many instances, the pair would make agreements with the individuals whose identities were used to file the fraudulent applications to share the payouts, which often were in the tens of thousands of dollars.

The payments were issued through debit cards in the name of banking institutions, including KeyBank, and mailed to the addresses in the unemployment applications. DiVeglia used his computer access to release partial payments “to secure his share of the fraud proceeds before releasing the remainder of the funds due on the claims.”

Overall, New York dished out $68.3 million of pandemic unemployment benefits to people who weren’t eligible for them. That larger fraud was enabled by other bureaucrats, who disabled the state’s anti-fraud safeguards to dish out the welfare payments faster."