Elon Musk and his Department of Government Efficiency announced this week that they had found something especially startling in their government-wide hunt for fraud: tens of thousands of people claiming unemployment benefits who were over age 115, under age 5 or with birth dates in the future.
“Your tax dollars were going to pay fraudulent unemployment claims for fake people born in the future!” Mr. Musk posted on X, his social media platform. “This is so crazy that I had to read it several times before it sank in.”
He shared a claim by the group that it had even uncovered someone with a birth date in 2154 who claimed $41,000 in unemployment.
These were, indeed, probably fake people — but in a different way than Mr. Musk seemed to realize. It was also most likely a case of his team discovering fraud that had already been discovered by someone else.
The issue dates to early in the pandemic when millions of Americans surged onto state unemployment rolls in an unprecedented expansion of the safety net. The emergency aid program enacted during President Trump’s first term was also susceptible to fraud. As many as 15 percent of unemployment claims were fraudulent, often using stolen identities.
To preserve records of that fraud and protect victims of the identity theft, the U.S. Labor Department encouraged state agencies that administer unemployment benefits to create “pseudo claim” records — in effect, to tie real cases of fraud in their data to make-believe people. The implausibility of the records was the point. Agencies were seeking a way to keep track of fraud claims while detaching them from the identities of innocent people who might one day apply for unemployment benefits themselves.
Now four years later, Mr. Musk and his team appear to have found those make-believe people. Their claims about them were also repeated by Labor Secretary Lori Chavez-deRemer during a cabinet meeting at the White House on Thursday.
The cases they cite probably do refer to real instances of people fraudulently receiving benefits, said current and former unemployment officials with the Labor Department and state work force agencies. But it is not the case, those officials said, that a hapless government was duped into doling out benefits to people it didn’t realize weren’t even born yet.
“They’re trying to say the federal government has just been sitting there doing nothing to prevent fraud, and ‘Here we are going to save the day,’” said Andrew Stettner, who until January was the director of unemployment insurance modernization at the Labor Department. “They are undermining the belief that federal agencies and states protect taxpayers’ dollars.”
He and others said Mr. Musk appeared to be sowing distrust without regard for the details of government policies, following a similar pattern to his incursions into the Social Security Administration. There, he identified and widely shared on social media data that appeared to suggest the agency was giving benefits to millions of dead people. After news outlets and the Social Security Administration’s own acting commissioner explained why this was inaccurate, Mr. Musk continued to make the claim. It even later appeared in President Trump’s joint address to Congress in March.
With the unemployment insurance claims, the White House on Friday referred questions to the Labor Department.
“We were not surprised to learn of the suspected fraud found in DOGE’s initial U.I. data analysis, which in many cases matches similar findings from previous” inspector general reports, the Labor Department spokesperson Courtney Parella said in a statement. “We will continue to dig in with our subject matter experts to get to the bottom of this egregious waste and abuse.”
She cited a 2023 inspector general report identifying claims that had gone to seemingly small children and centenarians. But the Labor Department itself responded to the report at the time that the claims were these same pseudo records, and that mischaracterizing them risked sensationalizing the aid program.
Any benefit program must strike a balance between fraud prevention and ease of use, officials say. A benefit with a stringent application process can exclude qualified people. A benefit that’s easy to access can let in more fraud. And in the spring of 2020, Congress erred on the side of creating an easily accessible program when it temporarily expanded unemployment assistance.
“This was a decision made by Congress and signed by President Trump that we were going to focus on getting benefits out the door quickly, and that we were going to cover as many people as possible,” said Michele Evermore, a senior fellow at the National Academy of Social Insurance who was previously an adviser at the Employment and Training Administration within the Labor Department.
That was the right call in retrospect, she said, given how quickly the labor market recovered from the pandemic shock. But initially, this choice also led to a lot of fraud (as happened with other pandemic-era benefits). More guardrails were eventually added to the program, and the 2021 American Rescue Plan Act invested in helping states identify and combat unemployment fraud.
During this time, the Labor Department under the Biden administration sent guidance to states on how to handle fraud cases. Included in it was the recommendation that states could mitigate the harm to identity theft victims if they “establish a pseudo claim record and transfer all claim information regarding the impostor’s claim to the pseudo claim once the state makes a fraud determination.”
The New York Times confirmed Friday that several states had pursued this strategy.
“This data has been readily available, reported on and audited at various government levels and departments” for years, said Rebecca Cisco, a spokesperson for the Illinois Department of Employment Security, in a statement. “This is yet another example of a DOGE ‘report’ misunderstanding this data at best, blatantly mischaracterizing this data at worst.”
Jennifer Phillips, a former unemployment administrator in Illinois, said she worried that Mr. Musk was directing the public’s attention to the wrong place. It’s not that the federal government missed this fraud, she said, but that the states need continued investment to fight it.
“The fraudsters in many ways in 2020 were light years ahead of where states were internally in terms of understanding the dark web and how to buy people’s identities,” said Ms. Phillips, who now works with the Digital Benefits Network at the Georgetown University Beeck Center. “And that’s been catching up.”
https://www.nytimes.com/2025/04/12/upshot/musk-doge-fraud-claims.html
