Musk’s Team Misinterprets ‘Pseudo Files’ Dating from Pandemic-Era Fraud Cases
If you believe fraud is widespread, then almost everything you see looks like evidence. Even when it’s not.
That’s what happened when Elon Musk’s team of computer whizzes “discovered” people 150 years old still receiving Social Security checks. It turned out Muskboys really discovered a computer glitch, not a secret society of really old people.
The misnamed Department of Government Efficiency’s latest “discovery” involved thousands of people over age 115 and under age 5 who had fraudulently collected $382 million in unemployment benefits.
“Your tax dollars were going to pay fraudulent unemployment claims for fake people born in the future!” Musk proclaimed on his own platform X. Musk laid the blame on Democratically controlled states. Labor Secretary Lori Chavez-DeRemer reported the “discovery” at a cabinet meeting.
The Fraud in the Fraudulent Claims
The claims DOGE discovered were fraudulent but not in the way Musk characterized. The fraud occurred at the beginning of the Covid pandemic when newly unemployed workers flooded state unemployment rolls. It wasn’t hidden. It was anticipated and acknowledged.
To get dollars out the door as quickly and easily as possible, the emergency aid program enacted under President Trump was easy to access, which made it susceptible to fraud. Estimates indicate as many as 15 percent of claims were fraudulent. Many fraudulent filers used stolen identities.
The Labor Department ordered preservation of the fraudulent filings to protect the victims of identity theft. States were encouraged to create pseudo-records that tied fraudulent filings to make-believe people. The idea was to make the pseudo-records appear on their face so implausible that no one would assume they were real. They didn’t foresee the blind-eye of the DOGE team.
DOGE Discovered Pseudo-Records
Now, four years later, implausible pseudo-records were discovered by DOGE and instantly branded as more examples of rampant fraud.
“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,’” Andrew Stettner, who until January was the director of unemployment insurance modernization at the Labor Department, told The New York Times. “They are undermining the belief that federal agencies and states protect taxpayers’ dollars.”
“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, 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.”
Parella cited a 2023 inspector general report identifying claims that had gone to seemingly small children and centenarians and were connected tem to the pseudo records. It warned that mischaracterizing them risked sensationalizing the aid program, which was instituted during Trump’s first term as an easily accessible program that 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,” explained Michele Evermore, a senior fellow at the National Academy of Social Insurance who previously was an adviser at the Employment and Training Administration within the Labor Department.
DOGE Team Misinterpreted Pseudo-Records
Evermore told The Times it was the right call in retrospect, as proven by how quickly the labor market recovered from the pandemic shock. But it also led to a lot of fraud. She said more guardrails were eventually added to the program, and the 2021 American Rescue Plan Act passed during the Biden administration invested in helping states identify and combat unemployment fraud.
In light of fraud causes, Biden’s Labor Department sent guidance to states on how to treat fraud cases and “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.”
Jennifer Phillips, a former unemployment administrator in Illinois, told The Times she worried 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.
“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. “This is yet another example of a DOGE ‘report’ misunderstanding this data at best, blatantly mischaracterizing this data at worst.”
