Twenty-nine individuals have pleaded guilty in a case involving a scheme to fraudulently obtain COVID-19 unemployment benefits, as announced by the authorities in Columbia, South Carolina. The investigation revealed that inmates from the South Carolina Department of Corrections (SCDC), alongside their family members and friends outside the prison system, orchestrated the plan.
The court was presented with evidence showing that incarcerated inmates gathered personal information such as social security numbers and dates of birth from other inmates. This information was then used to apply for unemployment benefits both for themselves and others. In some instances, inmates willingly provided their details in exchange for a share of the proceeds. Others were unaware that applications were being made on their behalf. Information was also obtained from individuals outside the Department of Corrections through various extortion methods.
A notable tactic employed by the defendants was "Johning." Inmates used contraband cellphones to pose as younger individuals and coax victims into sending compromising photos. These images were then used to extort money or personal identification documents under the guise of law enforcement.
The fraud involved submitting COVID-19 unemployment applications across several states including South Carolina, Pennsylvania, North Carolina, Nevada, New Jersey, Missouri, Arizona, and California. The fraudulent activities resulted in a loss of nearly $5 million to the U.S. Government.
Acting U.S. Attorney Brook B. Andrews commented on the situation: “This extensive fraud scheme exploited and misused individuals’ personal information... Our agencies remain committed to holding those responsible accountable.” SCDC Director Bryan Stirling added: “Inmates using this brazen scheme stole millions... It is shameful, and the taxpayers deserve better.”
Each defendant faces up to 20 years in federal prison along with fines and restitution obligations. United States District Judge Sherri A. Lydon has accepted 29 guilty pleas so far, with sentences handed down for 14 defendants.
The case is part of broader efforts led by the COVID-19 Fraud Enforcement Task Force established by the Attorney General in May 2021 to combat pandemic-related frauds. The task force works with various agencies to prevent such schemes from undermining public trust in government programs.
Investigations were conducted by multiple agencies including the United States Secret Service and local law enforcement divisions. Assistant U.S. Attorneys Winston Holliday and Scott Matthews are leading the prosecution.
Anyone with information about similar fraudulent activities can report them via dedicated hotlines provided by authorities.
