Fraudsters Stole Billions in Jobless Benefits. They Might Get Away With It

Summary

WSJ What’s News: Fraudsters Stole Billions in Jobless Benefits. They Might Get Away With It
Release Date: January 16, 2025
Host: Alex Osola

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Middle East Ceasefire Deal Between Israel and Hamas

Host Introduction:
Alex Osola opens the episode by highlighting the fragile ceasefire between Israel and Hamas, set to commence in Gaza on Sunday.

Key Developments:

• Delayed Israeli Cabinet Vote: The Israeli Cabinet has postponed its vote on the ceasefire deal. Prime Minister Benjamin Netanyahu accuses Hamas of violating the agreement reached in Qatar.
• Negotiation Continuity: The Cabinet meeting, initially scheduled for the day of the podcast, has been moved to the following day to allow negotiations to continue.
• Mediation Efforts: Arab mediators are actively working to resolve outstanding issues, including disagreements over the release of Palestinian prisoners.
• Hamas Commitment: A senior Hamas official affirmed the group's commitment to the deal despite ongoing challenges.

Notable Quote:
"Netanyahu's office also said that negotiations were continuing and a deal would be announced only once they were completed."
(00:32)

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Massive Fraud in Pandemic Jobless Benefits

Introduction:
Alex Osola transitions to a pressing issue of fraudsters siphoning billions from taxpayer-funded unemployment benefits during the COVID-19 pandemic.

Discussion with Paul Kiernan:

• Scope of Fraud: Paul Kiernan reveals that up to $135 billion in jobless benefits were fraudulently obtained, significantly funding organized crime.
  "It's going to be really bad for rule of law and accountability if we just close the door on these investigations."
  (00:13)

• Statute of Limitations: With the statute of limitations set at five years, prosecutors are racing against time to bring cases against these criminals.
  "Starting in March or April, it's going to become harder and harder to bring some of these cases."
  (02:18)

• Recovery Efforts: To date, only $1.1 billion has been recovered, less than 1% of the total amount stolen.
  "The Department of Labor Inspector General and pandemic oversight groups have been urging Congress to extend the statute of limitations from 5 to 10 years."
  (03:38)

• Legislative Hurdles: Although bills to extend the statute have been introduced, none have been passed, leaving many fraud cases vulnerable to expiring statutes.

Notable Quotes:

• "It's been almost five years. Pandemic broke out and these benefits started getting paid."
  (02:18)

• "We're getting really close to the point where the criminals will basically just get off scot free."
  (Paul Kiernan, 02:18)

Conclusion:
The conversation underscores the urgency for legislative action to prevent widespread impunity among fraudsters who exploited pandemic unemployment benefits.

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Business News Highlights

American Express Penalties:

• Deceptive Practices: American Express agrees to a $230 million penalty for misleading practices related to the sale of credit cards and wire services to small businesses.
• Regulatory Response: The company misrepresented card rewards, fees, and conducted unauthorized credit checks. Amex has committed to organizational changes and staff discipline.

Bank Earnings Reports:

• Morgan Stanley: Profits more than doubled in Q4 to $3.71 billion, surpassing analyst expectations, driven by investment banking and trading.
• Bank of America: Q4 profits surged to $6.67 billion, also more than doubling from the previous year. The increase was partly due to avoiding a $2.1 billion FDIC assessment charge taken by the bank earlier.

Market Performance:

• US Indexes Decline: Despite robust earnings from major banks, the S&P 500 and Dow fell by approximately 0.2%, while the Nasdaq dropped 0.9%, hindered by losses in tech stocks.

Mortgage Rates Surge:

• 7% Threshold: Mortgage rates climbed above 7% for the first time since mid-2024, marking a setback for the housing market.
• Freddie Mac Survey: Revealed that the average rate for a 30-year fixed mortgage reached 7.04% amidst declining home sales over two consecutive years.

Notable Quote:
"In business news, American Express has agreed to pay approximately $230 million in penalties to the Department of Justice and regulators at the Federal Reserve over deceptive practices tied to how it sold credit cards and wire services to small business customers."
(04:31)

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Rising Cancer Rates Among Young Women in the US

Introduction:
Alex Osola delves into a concerning trend: increasing cancer rates among young women in the United States.

Insights from Brianna Abbott (Wall Street Journal Health Reporter):

• Primary Driver: The rise in cancer rates is predominantly due to an increase in breast cancer cases among women under 65.
  "The main driver for this increase in women is breast cancer, sort of among younger women, and we don't know what's happening for sure."
  (07:30)

• Potential Factors:

  • Later childbearing or opting not to have children.
  • Rising obesity rates and increased alcohol consumption.
  • Enhanced cancer screening leading to more diagnoses.

• Positive Trends:

  • Overall cancer death rates in the US have decreased by 34% since 1991.
  • Significant reductions in lung cancer cases and deaths due to declining smoking rates, especially among older men.

Notable Quotes:

• "Women having children later or not at all, because we know that having children at earlier ages and breastfeeding lowers your risk for some kinds of breast cancer."
  (07:30)

• "Lung cancer is far and away the biggest cancer killer, but the trends are actually really positive because we've seen these declines in smoking rates over the last several decades."
  (08:22)

Health Recommendations:

• Continuation of existing guidelines: timely mammograms, healthy diet, smoking cessation, reduced alcohol intake.
• Increased awareness among young women to monitor for early signs of cancer.

Notable Quote:
"Getting your mammograms on time, eating right, diet, quitting smoking, lower alcohol use, all of those things that sort of we're familiar with."
(09:03)

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Additional Business and Technology News

Nicotine Pouches Regulation:

• Zyn's Future in the US: The FDA has determined that Zyn, a nicotine pouch by Philip Morris, remains on the market. The agency concluded that Zyn poses a lower cancer risk compared to cigarettes and traditional dipping tobacco, justifying its availability as a safer alternative for adult smokers despite concerns over youth usage.

TikTok's Survival Efforts:

• Inauguration Strategy: TikTok CEO Shou Zi Chew plans to attend former President Donald Trump's inauguration, positioning the app for potential legislative protection.
• Regulatory Pushback: Trump's advisors are exploring options to delay the impending TikTok ban, aligning with the president-elect's expressed desire to preserve the platform.

Treasury Secretary Nominee Scott Besant:

• Confirmation Hearing: Besant defended the imposition of tariffs and advocated for the extension of tax cuts.
• Senate Dynamics: Received support from Republican senators, while no Democratic Finance Committee members pledged support.

Rise of Ghost Jobs:

• Definition: Ghost jobs are advertised positions with no intention of being filled, causing frustration among job seekers.
• Analysis by Lynn Cook:
  • Corporate Strategy: Companies may post jobs to reserve the right to hire in the future or gauge the talent pool without immediate hiring intentions.
    "They're taking a look and saying, eh, we're not really committed to filling this role."
    (12:00)

Notable Quote:
"Some companies are doing this to save money or to fish for the perfect candidate they can't live without."
(11:22)

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Conclusion

The episode of WSJ What’s News covered a broad spectrum of critical issues, from geopolitical tensions and massive fraud schemes to significant business developments and public health concerns. The discussions emphasized the fragility of peace deals, the urgent need for legislative action against financial fraud, evolving business regulations, and the shifting landscape of public health challenges.

For listeners seeking deeper insights into these topics, the Wall Street Journal provides comprehensive reporting and expert analysis to stay informed on the most impactful news shaping our world today.

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Produced by Anthony Bansi and Pierre Bienname with supervising producer Michael Kosmides. Host: Alex Osola.

Transcript

[Alex Osola]

The ceasefire deal between Israel and Hamas starts to look a bit fragile and how fraudsters stole billions of taxpayer dollars and why they might get away with it.

[Paul Kiernan]

One of the sources I spoke with for the story noted that just the sheer amount of money that went out the door and into the pockets of organized crime really kind of funded a generation of criminals. It's going to be really bad for rule of law and accountability if we just close the door on these investig.

[Alex Osola]

Plus why young women in the US are more @ Risk for Cancer than men It's Thursday, January 16th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. We start this evening in the Middle East. We've been covering the ceasefire deal that would pause the fighting in Gaza set to start on Sunday. But that fragile agreement already seems to be encountering issues. The Israeli Cabinet has delayed its vote on the deal. Israeli Prime Minister Benjamin Netanyahu accused Hamas of reneging on parts of the agreement reached during negotiations in Qatar. The prime minister's office said that the cabinet, which was expected to convene today, wouldn't meet until Israeli negotiators said Hamas had accepted all aspects of the deal. Israeli officials said later that the meeting was moved to tomorrow. Netanyahu's office also said that negotiations were continuing and a deal would be announced only once they were completed. Arab mediators said they were working to resolve the remaining issues, including a disagreement over which Palestinian prisoners Israel would release. A senior Hamas official said today that the group remained committed to the deal. Time is running out to take action on what some lawmakers are calling the greatest heist of taxpayer dollars ever via fraudulently obtained Covid era unemployment benefits. Last year, federal prosecutors filed charges in an alleged transnational scheme to launder tens of millions of dollars. The schem, among the largest uncovered since Washington, rushed almost $900 billion in jobless benefits out the door following the COVID 19 outbreak in 2020. Paul Kiernan covers the U.S. economy for the Wall Street Journal and joins me now. Paul, how big a problem is this and how much does it cost?

[Paul Kiernan]

So in March 2020, Congress and the Trump administration were scrambling to just contain the economic fallout from the pandemic. And as part of the trillions of dollars that they pumped was a big expansion in unemployment benefits. As part of this rush, benefits were just being paid out really fast. State unemployment offices, which administer jobless benefits, were overwhelmed. And so, predictably, a lot of the money went to fraudsters. The Government Accountability Office has estimated up to $135 billion of jobless benefits, that is our tax dollars were paid to fraudsters. It's been almost five years. Pandemic broke out and these benefits started getting paid. The challenge that prosecutors are coming up against is that the statute of limitations for a lot of the conduct that enabled unemployment fraud is five years. So starting in March or April, it's going to become harder and harder to bring some of these cases. And we're getting really close to the point where the criminals will basically just get off scot free. And it's not just a few of the criminals. It's actually the vast majority.

[Alex Osola]

Has any money been recovered so far?

[Paul Kiernan]

So far, according to the latest data, prosecutors have recovered or kind of gotten court orders to recover about $1.1 billion. Again, this is out of up to $135 billion that were stolen. So that's like less than 1%. The Department of Labor Inspector general and the pandemic kind of oversight groups have been urging Congress to extend the statute of limitations from 5 to 10 years. Give them more time to go after more of these criminals. But some bills have been introduced, but they haven't been passed or signed into law. And the congressional aides that I spoke to said, look, a lot of people would like to get this done, but they don't really see a vehicle yet for this to be signed into law. But the clock is certainly ticking.

[Alex Osola]

That was Wall Street Journal reporter Paul Kiernan. Thanks, Paul.

[Paul Kiernan]

Thanks, Alex.

[Alex Osola]

In business news, American Express has agreed to pay approximately $230 million in penalties to the Department of Justice and regulators at the Federal Reserve over deceptive practices tied to how it sold credit cards and wire services to small business customers. The Journal was the first to report on these practices that involved misrepresenting card rewards and fees and checking credit reports without consent. Amex said it had cooperated with the agencies and regulators to address the problems, including disciplining staff and changing its organization and training. And big banks continue to report earnings today. Morgan Stanley says its profit more than doubled in the fourth quarter, fueled by its investment banking and trading businesses. Its profit rose to about $3.71 billion, beating analysts expectations. Bank of America's profit also more than doubled in the fourth quarter, reaching $6.67 billion. The profit gain was magnified because a year ago the bank took on a $2.1 billion charge for a sport special FDIC assessment all lenders had to pay. Despite those solid earnings from banks major US Indexes ended the day down, dragged by losses in tech shares. The S&P 500 and the Dow both fell about 0.2%, while the Nasdaq shed 0.9%. Mortgage rates rose above 7%, a key psychological threshold for buyers and sellers. For the first time since mid-2024, according to a survey of lenders by mortgage finance firm Freddie Mac, the average rate on the standard 30 year fixed mortgage rose to 7.04% this week. It's an early setback for a housing market that's coming off two straight years of poor sales. Coming up why Cancer Rates in the US Are Rising among Young Women that's after the break.

[Mike Gitlin]

Looking for fresh ideas and actionable insights? Tune in to Conversations with Mike Gitlin, brought to you by Capital Group. Join us as investment professionals share our distinctive investment approach. Each 30 minute episode dives deep inside one of the world's largest investment managers, offering stories and insights to help guide your investment decisions. Invest 30 minutes in an episode today. Subscribe now wherever you get your podcasts. Capital Client Group Inc.

[Alex Osola]

For decades, men have faced a greater risk of getting diagnosed with cancer. But according to a new report from the American Cancer Society released today, women are catching up. According to the report, cancer rates for women in the US have risen over the past half century, particularly among Women under age 65 diagnosed with breast cancer. Men, meanwhile, have experienced a decline in cancer rates compared with prior decades. My colleague Pierre Bienname spoke with Wall Street Journal health reporter Brianna Abbott and asked her what's behind this rise in overall cancer rates in women.

[Brianna Abbott]

The main driver for this increase in women is breast cancer, sort of among younger women, and we don't know what's happening for sure. But there are a couple of different factors researchers are considering, number one, women having children later or not at all, because we know that having children at earlier ages and breastfeeding lowers your risk for some kinds of breast cancer. Then we also see increasing obesity rates and sort of heavier alcohol consumption among younger women that might be contributing. And we don't know if screening is also contributing, like it's just catching more cancers. But all of these factors are at play here. The good news is that the overall US cancer death rate has dropped 34% since 1991, translating to some 4.5 million fewer cancer deaths than there would have been if the rate had stayed the same.

[Alex Osola]

There was also a marked decline in lung cancer rates, right?

[Brianna Abbott]

Lung cancer is far and away the biggest cancer killer, but the trends are actually really positive because we've seen these declines in smoking rates over the last several decades. So you see a marked drop in cases and deaths, especially among older men. And that's really great news. Women's declines in lung cancer are still there, but they're actually a bit slow, slower. And that's because women took up smoking later and they started declining smoking rates later as well. So their progress there has been slower. And not only did women's cancers increase overall, but you're seeing these really positive trends for men in lung cancer and also some sort of dropping in prostate cancer cases as well.

[Alex Osola]

And is this report maybe likely to lead to any new recommendations?

[Brianna Abbott]

I'm not sure if the report will change recommendations, in part because a lot of the things that we would recommend are things that are already recommended. It's getting your mammograms on time, eating right, diet, quitting smoking, lower alcohol use, all of those things that sort of we're, we're familiar with. And something else that women should probably keep in mind too, especially if you're on the younger side and you might feel a lump or something comes up, cancer is not out of the question. So that's something that women and men should really keep in mind going forward.

[Alex Osola]

Brianna Abbott covers health for the Wall Street Journal. She was speaking to my colleague Pierre Bienname. Meanwhile, US Health officials said that Zyn, America's most popular nicotine pouch, could stay on the market. The Food and Drug Administration said that Zyn, a product of Philip Morris, poses a lower risk of cancer and other serious health conditions than cigarettes or traditional dipping tobacco, and that its benefit as a safer alternative for adult cigarette smokers outweighed its potential risk to young people. With the TikTok ban set to go into effect in just a few days, the app has new hope for survival in the U.S. according to people familiar with the matter. CEO Sho Chiu is planning to attend Donald Trump's inauguration, and he's expected to sit among the president elect's high profile guests during Trump's inaugural address on Monday. Meanwhile, people involved in the discussions say that Trump's advisors are working to find ways to push back the deadline to ban the app. A spokeswoman for Trump's transition team said the president elect has repeatedly expressed his desire to save TikTok. And Scott Besant, Trump's nominee for treasury secretary, defended tariffs and argued for tax cut extensions during his confirmation hearing today. No Democratic members of the Senate Finance Committee committed to supporting him, while Republicans praised him. And finally, so called ghost jobs, the roles that companies advertise but have no intention of filling are on the rise. And for workers, they've become a real problem. According to an analysis of internal data by Hiring Platform Greenhouse, these fake job postings may account for as much as one in five jobs advertised online. Wall Street Journal careers and Work Bureau Chief Lynn Cook told our your Money Briefing podcast why some companies are doing this.

[Lynn Cook]

Somebody leaves a company, you want to backfill their position, you talk to hr, you advertise it, and then suddenly someone higher than you says, wait a minute, are we sure we want to backfill that position? We'll just leave some of these jobs unfilled and save some money. So that's actually a very reasonable, logical reason something might be posted and not filled. There are some not so reasonable. Some people would say more nefarious things that companies do too. They might decide, well, we don't really know if we want to fill this job, but let's just throw a posting out there and fish for somebody. Maybe there's a perfect candidate that we can't live without.

[Brianna Abbott]

But.

[Lynn Cook]

But there might be 800 people applying and they're taking a look and saying, eh, we're not really committed to filling this role.

[Alex Osola]

And you can hear more about this and how to recognize the fake job postings in tomorrow's yous Money Briefing podcast. And that's what's news for this Thursday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienname with supervising producer Michael Kosmides. I'm Alex Zosalev for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for.