Officials: Pa. inmates illegally received coronavirus unemployment benefits

State and federal officials say they have identified more than 10,000 inmates in Pennsylvania prisons who have illegally applied for unemployment compensation during the covid-19 pandemic — potentially costing the government more than $100 million.

So far, 33 inmates and accomplices face criminal charges.

Scott Brady, U.S. attorney for the Western District of Pennsylvania, and Josh Shapiro, state attorney general, announced Tuesday that inmates in state and county prisons, including Allegheny and Westmoreland, have been charged with fraud and related offenses.

“These 33 defendants represent, truly, the tip of the iceberg,” Brady said during a news conference.

Among those charged are Lisa Lutz, 60, of Greensburg, who is accused of filing an unemployment claim on behalf of her daughter, Terra Rager, an inmate at Westmoreland County Prison.

According to the complaint, Lutz used the funds to pay Rager’s expenses, including attorney fees and rent, and to put money on her commissary account.

Also charged are Jessica Rae Conrad and Homer Mizenko of Kiski Township. They are accused of recruiting people to apply for benefits and receiving $1,000 per person signed up.

“Our work is not done here,” Shapiro said. “There will be many more charges to come.”

The people charged in the scheme were taking advantage of the additional money offered under the federal CARES Act, passed in the wake of the pandemic.

To qualify for the additional $600 per week Federal Pandemic Unemployment Compensation program, a person only needed to show that they were not working because of the virus and that they were available to work. They were required to provide a name, mailing address and and Social Security Number.

Working with corrections officers, postal inspectors and the state Bureau of Labor and Industry, Brady said investigators were able to track inmates who were filing for unemployment.

One of the things that tipped them off, he said, were large quantities of mail being sent to post office boxes.

Each of the 33 defendants already charged received roughly $10,000 in unemployment benefits, Brady said.

When you extrapolate that out across the 10,000 inmates believed to have filed, he continued, “Even at a floor, we’re talking about $100 million in fraud.”

If you add in inmates in county jails and prisons, he said, that number could double.

The inmates, Brady said, used contacts on the outside of their facilities to help with the fraud, including family members, girlfriends and gang members.

Another part of the scheme involved inmates recruiting others to provide their Social Security information and then filing claims on their behalf.

One woman who has been charged is accused of filing 41 separate unemployment claims that all went through the small community of Coal Center, Washington County, with a population of 135, Brady said.

Of the defendants charged so far, five will be prosecuted in state court, while the others go through federal court.

“We all know that through the pandemic, people are hurting,” Brady said. “Every dollar matters.”

“Covid-19 has tested all of us,” Shapiro said. “It’s exposed deep disparities in our communities.”

The federal CARES Act was a lifeline for people who lost their livelihoods, he said.

From very early on in the pandemic, Shapiro said, law enforcement officials were keenly aware that some criminals would engage in potential scams to take advantage of people.

“When there is money on the line, we have learned that scammers start working overtime,” Shapiro said.

Shapiro said one man who has been charged, Thaddeus Crumbley, recruited other inmates using fliers and promising up to $15,000 in fees.

“These criminals took advantage of a public health emergency,” he said. “They stole taxpayer money. They undermined a safety net millions of people rely on.”

Investigators have listened to thousands of hours of recorded calls in state prisons and jails, Brady said. He said inmates talked about using the money to buy big-screen television or pay for attorney fees. Someone even discussed buying an engagement ring.

He urged anyone who has already filed an illegal unemployment claim to withdraw it, or if they’ve already received a check or debit card, to return it.

“We know who you are,” Brady said. “We have a list. If you don’t, I promise you, very, very soon, you’re going to hear a knock on your door.”