South Carolina prison inmates led ring that obtained $5 million in fraudulent COVID-19 unemployment benefits, feds say

COLUMBIA, S.C. (WBTW) — 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.

“This extensive fraud scheme exploited and misused individuals’ personal information, some unknowingly, for financial gain at the expense of American taxpayers,” Andrews said in a news release. “The individuals involved showed a complete disregard for the law and used deception, manipulation, and extortion to unlawfully obtain nearly $5 million in unemployment benefits. Our agencies remain committed to holding those responsible accountable and ensuring that such fraudulent schemes do not undermine public trust in vital government programs.”

Andrews’ office said the scheme involved inmates gathering personal information, including Social Security numbers and birth dates, from other inmates and using that information to apply for COVID-19 unemployment benefits for themselves and other inmates.

“Some inmates provided their details willingly to the named defendants in exchange for a portion of the proceeds derived from the unemployment benefits,” Andrews’ office said. “Other inmates had no knowledge that unemployment benefits were being applied for on their behalf. The incarcerated defendants also obtained the information of unwitting individuals outside of the Department of Corrections using various extortion schemes.”

Andrews’ office said the inmates used a tactic known as “Johning,” which involved using contraband cellphones to persuade people to send them nude or compromising photos. After obtaining the photos, they were able to contact victims posing as law enforcement and extort money, Social Security numbers and driver’s licenses from them.

“After the defendants applied for unemployment benefits in the names of the extortion victims and Department of Corrections inmates, the benefits were diverted to the incarcerated defendants with the assistance of the non-incarcerated defendants,” Andrews’ office said. “The non-incarcerated defendants received government checks and prepaid Visa debit cards in the mail. The non-incarcerated defendants then utilized ATM withdrawals, wire transfers, and mobile banking applications such as Zelle, Venmo, Green Dot, and Cash App to make the proceeds available to the incarcerated defendants.”

Each defendant faces a maximum penalty of 20 years in federal prison, a fine of up to $250,000, restitution, and three years of supervision to follow the term of imprisonment. 

“Inmates using this brazen scheme stole millions of dollars from an effort to help everyday Americans survive the COVID-19 pandemic,” state corrections Director Bryan Stirling said. “It is shameful, and the taxpayers deserve better. I am grateful to everyone involved in bringing these defendants to justice.”