Washington, DC – The U.S. Department of Labor is clawing back more than $9 million in federal taxpayer money from New Jersey after investigators uncovered a widespread COVID-era unemployment fraud scheme that resulted in more than 53,000 fraudulent unemployment insurance claims.
The recovery effort comes as federal prosecutors continue securing convictions against organized fraud rings that targeted government assistance programs, including a recent guilty plea by two Romanian nationals who admitted stealing more than $760,000 in SNAP benefits from recipients in New Jersey, Massachusetts, and other states.
Fraudsters exploited stolen identities to steal benefits
According to the Department of Labor’s Office of Inspector General, the New Jersey unemployment fraud involved criminals using stolen Social Security numbers belonging to people in other states, including prisoners, deceased individuals, children, and individuals whose identities had been compromised. Investigators also discovered multiple fraudulent claims tied to the same mailing addresses.
The inspector general’s office initially flagged nearly 220,000 suspicious unemployment accounts before deploying a strike team to New Jersey in April. Investigators ultimately identified more than 53,000 fraudulent claims and directed banks to freeze many of the suspected fraudulent benefit payments while federal officials worked to recover taxpayer funds.
Labor Inspector General Anthony D’Esposito sharply criticized the state’s oversight of the program.
“New Jersey’s 53,000 fraudulent accounts illustrate Governor Sherrill’s failure to safeguard funds and a complete disregard for the American taxpayer,” D’Esposito said.
“Allowing these accounts to go unchecked is unacceptable. New Jersey’s reckless approach demonstrates a profound betrayal of hardworking Americans. My office will not rest until every account has been examined and every stolen dollar is recovered.”
Romanian brothers admitted targeting New Jersey SNAP recipients
The federal government’s recovery effort comes as prosecutors continue dismantling organized fraud rings responsible for stealing government benefits.
Earlier this month, Marian Ovidiu Dumitru, 37, and Catalin Dumitru, 39, Romanian citizens whom prosecutors said were living in the United States unlawfully, pleaded guilty to wire fraud for orchestrating a multistate SNAP fraud scheme that victimized recipients in New Jersey, Massachusetts, and other states.
According to court records, the brothers and their co-conspirators installed skimming devices at ATMs, gas pumps, and other payment terminals to capture electronic benefit transfer (EBT) card data used by SNAP recipients. The stolen account information was transferred onto counterfeit bank cards and gift cards, allowing the group to make thousands of dollars in fraudulent purchases at warehouse clubs in North Carolina.
Prosecutors said the defendants purchased bulk quantities of coffee, candy, energy drinks, baby formula, and other high-demand products using cloned EBT cards loaded with stolen benefit information from New Jersey and Massachusetts recipients. The merchandise was then transported and resold for profit.
Investigators also recovered at least 15 counterfeit or unauthorized payment cards encoded with stolen SNAP account information, along with blank magnetic-strip cards used to create additional fraudulent access devices. Federal prosecutors said the scheme stole more than $760,000 in benefits and caused substantial hardship for more than 10 victims who depended on SNAP assistance.
Both men pleaded guilty to wire fraud and each faces up to 20 years in federal prison. Sentencing has not yet been scheduled.
Federal crackdown continues
The $9 million being recovered from New Jersey represents only a fraction of nearly $1 billion in suspected pandemic-related unemployment fraud under investigation by the Department of Labor’s Office of Inspector General.
Federal officials say they will continue working with banks, state agencies, and law enforcement partners to identify fraudulent benefit payments, prosecute those responsible, and recover taxpayer funds improperly obtained through identity theft and organized fraud schemes.
