Eastern European criminal gangs are spearheading ‘the largest campaign of fraud’ in British history as they plunder millions of pounds of coronavirus cash.
A whistleblower involved in the fight to staunch the flow of taxpayers’ money into the pockets of fraudsters has told The Mail on Sunday that up to 90 per cent of the fraud is being masterminded by gangs from Romania, Poland, Albania, Bulgaria and Turkey.
Fraud-busters in HM Revenue & Customs and the Department for Work and Pensions have been joined by experts from the National Crime Agency and Serious Fraud Office to track down and stop the criminal kingpins. It is believed the security services and other agencies are also involved.
Fraud-busters in HM Revenue & Customs and the Department for Work and Pensions have been joined by experts from the National Crime Agency and Serious Fraud Office to track down and stop the criminal kingpin
And as the scale of the illicit losses becomes apparent, this newspaper understands the Government is considering extending the use of so-called McMafia orders to claw back some of the stolen funds.
Officially called Unexplained Wealth Orders, they are granted by a court and compel people to reveal the source of their wealth or lose it. An NCA source confirmed they would consider using them against high-level Covid-19 fraudsters.
In a sobering assessment, the whistleblower claims fraud has become near endemic since the lockdown and the announcement of schemes by Chancellor Rishi Sunak and other Ministers to support the vulnerable, those whose jobs are at risk and firms facing the prospect of going to the wall. He said the caseload for his team had sky-rocketed since March.
Fraudsters have targeted the furlough scheme, the Bounce Back Loan initiative and Universal Credit, abusing the Government’s ‘Trust and Protect’ strategy which was to get cash to the needy first and ask questions later.
The DWP, for example, relaxed rules so people could make Universal Credit claims over the phone and receive funds before supplying proof that they were eligible. While it helped many to access much-needed cash, it also provided a lucrative opportunity for criminals.
‘Lockdown triggered a gold rush: Universal Credit, Bounce Back loans, furlough scheme payments – it was all up for grabs,’ the insider says in a chilling account of how the country is being fleeced.
On one occasion, a crook was caught trying to flee the country with £80,000 in their luggage. In another, 30 people claimed for rent and other benefits through the Universal Credit scheme from the same address.
A glimpse of the problem came last week when a report by the National Audit Office suggested that £26 billion may have been lost to fraud and defaults on the Bounce Back loan scheme, which provides firms with 100 per cent Government-backed finance worth up to £50,000.
‘The whistleblower told The Mail on Sunday the ‘scale of this fraud is eye-watering. I encounter shocking cases every hour of every day’
The NAO fears up to 60 per cent of the loans may never be repaid.
Last month, HMRC officials admitted that up to £3.5 billion of furlough scheme payments had been wrongly awarded and it was investigating 27,000 ‘high-risk’ cases where they believe a serious error had occurred.
The Government has spent more than £35 billion to support workers since March by paying 80 per cent of their wages, up to a maximum of £2,500 a month.
It is scaling back the scheme, which will end on October 31, but Mr Sunak is now offering financial support to workers in industries hit by local lockdowns.
The whistleblower said: ‘This is wholesale fraud, being committed on an industrial scale. We’ll be paying this back for generations.’
Last night, a DWP spokesman said: ‘Fraud and error in the benefits system remains very low with 96.5 per cent of benefits paid correctly.
‘The vast majority of claims to Universal Credit are legitimate and we continue to monitor and investigate emerging threats and have systems in place which successfully identify fraud.’
‘The scale of this fraud is eye-watering. I encounter shocking cases every hour of every day’
By an anonymous senior Government investigator
Out of adversity springs opportunity. Just as wartime spivs milked the black-market potential of the Blitz, so too are modern criminals and greedy opportunists exploiting the pandemic and, in particular, the Government’s generosity with your money.
Most of you are aware it is going on, but few will realise the outrageous, eye-watering scale of daily abuse. Millions of pounds, quite possibly billions, have been lost to Covid-19 fraud.
As a member of teams set up to combat the problem, I’ve encountered shocking cases every hour of every day. Take this one: a guy owning seven shell companies managed to secure a £50,000 Bounce Back loan for each one, so £350,000 in all.
The whistleblower says the cases they see are of such a high magnitude that they are referring them to the Serious Fraud Office and National Crime Agency all the time
Yet shell companies have no assets and are merely used to hold money. So why on earth was he deserving of an emergency loan aimed at helping small businesses? He wasn’t, of course.
When we rang he was evasive. ‘I’m in a bank, I’ll call you back.’ We were tracking him via his mobile phone so knew that he was lying and that he was elsewhere. Indeed, we got on to him in the first place because one of the identities he was using was stolen from a man who died last year.
Lockdown triggered a gold rush: Universal Credit, Bounce Back loans, furlough scheme payments, it was all up for grabs.
There was, sadly, an inevitability about it from the start. Soon after lockdown, the Department for Work and Pensions came up with the comforting phrase, Trust and Protect. This underpinned the Government’s approach to emergency pandemic loans. The idea was that people could get money without providing evidence and without face-to-face interviews. People were taken at their word, questions could come later.
Criminals and fraudsters, many of them part of European gangs, rubbed their hands with glee. All their Christmases had come at once. It has meant we’ve lost hundreds of millions of pounds to what must be the most systematic campaign of fraud this country has ever seen.
For myself and colleagues in the DWP anti-fraud team, it’s been the fight of our lives.
Before lockdown in March, we each worked at any one time on a couple of hundred suspicious cases across our area in the Counter Fraud and Compliance Debt Directorate. By June, that had spiralled to 15,000, and that’s just for Universal Credit and just in one small region.
And it’s systematic. If it’s money being handed out by the Government, these criminals are on to it. Only it’s not the Government’s money, of course, it’s our money and we’ll be paying it back for generations.
My day starts around 8am when I switch on my computer to see a flood of new emails in my inbox, all new cases. Each one doesn’t involve hundreds of pounds or even thousands. They are for tens of thousands and hundreds of thousands.
And it keeps going up. The cases we see are of a magnitude that means the Serious Fraud Office and National Crime Agency are often on the phone – and we’re referring cases to them all the time. What I see every day is that 80 to 90 per cent of the fraud is carried out by people from Eastern European countries. It’s almost exclusively those from Romania, Poland, Albania, Bulgaria and Turkey.
Our department has always had a team looking at fraud by Eastern European and Balkan criminals, but this is another level.
It might sound a bit dramatic but we’re under attack and as far as I’m concerned these criminals are pushing Britain to financial ruin.
My team investigates Universal Credit cases. On furlough schemes, HMRC takes the lead but we’re in constant contact as there’s so much crossover with criminals defrauding everything at the same time. First, I carry out all the searches, using the Government’s central information system and National Insurance numbers. Then I put together a report or even call the claimant. They might even phone us because their account is always frozen at this point.
In one case 30 people claimed for rent and other benefits through the Universal Credit scheme from the same address
I would say about 85 per cent never call or answer the phone after their account is frozen – they know what’s happened and move on to their next crime – but others will pick up and argue their case.
In six months I have sent back only about ten cases that were referred to us incorrectly, and I look at 20 to 30 a day. The rest are fraud.
You can often trip up the criminal because they’ve been using multiple dates of birth on different accounts or can’t tell you which school their children attend. On the bigger ones, such as a house with 30 people registered there, the SFO or NCA will get involved. Fraud officers will literally go out and make arrests, and just lift the people at the address.
Some of the fraudsters even try to leave the country with their ill-gotten money. We’ve heard of cases where individuals have been caught trying to leave with £80,000 in their luggage which they’ve claimed via Universal Credit and Bounce Back loans.
That’s one case. Others have bought multiple properties with the money they’ve illegally claimed or have paid for five cars with bank transfers over three months. Of course, it’s not just habitual criminals making illegal claims. I’ve had employees of major UK banks trying to claim benefits.
One claimant phoned up from a large financial firm claiming Universal Credit and she was on net £10,000 a month.
I could see all her tax, pension and salary details on the central information system and just read them out to her.
She just went quiet and she asked: ‘How do you know that?’
Another guy called up. He was a white-collar worker on furlough and was normally paid tens of thousands of pounds a month yet was trying to claim Universal Credit.
On another occasion, I had a Romanian woman on the phone whose account had been frozen because her claim had aroused suspicion. She claimed to live in a three-bedroom flat with three children in quite an impoverished area, yet was claiming £2,500 a month in rent. Her husband was also claiming.
When I challenged her, she wailed: ‘My fridge is broke, my cooker is broke. I need an advance and I can’t speak to my landlord.’
After further checks, I found they were among 15 people making claims from the same address and she was really living in a mansion in an area popular with professional footballers.
When I pointed this out, she hung up.
I was later told that she was linked to a network of traffickers who have recently bought a whole street of houses back in Romania.
Most of those we catch for defrauding tens of thousands of pounds will find themselves with a sanction saying they can’t receive benefits for a few months or a fine – but we need them in jail and we need the Government to stop burying its head in the sand.
Ministers don’t want to hear about the fraud, it’s a bad news story for them – but it’s worse for the country: we’re going to be paying this back for decades.