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Part I: Billions Of Dollars Of Unemployment Aid Stolen From State Likely Won't Be Recovered

Editor's Note: This is Part I of Andy Sheehan's investigation into billions of dollars of unemployment fraud in the state of Pennsylvania.

PITTSBURGH (KDKA) -- The pandemic has been tough on Carrie Trisch. Her husband, John, is out of work, recovering from open heart surgery, and in October she lost her job at a law firm. To add insult to injury, the state has denied her benefit claim.

"When I applied for unemployment, it came back flagged," Trisch said. "Somebody had already applied in my name ... Somebody stole my identity."

Trisch is just one of hundreds of thousands of Pennsylvanians victimized by unemployment ID theft. While the couple struggles to get by in their small Rankin home, cyber criminals have gotten rich, siphoning off billions of dollars from the state's unemployment system.

And as state and federal authorities are prosecuting about a dozen domestic thieves, Haywood Talcove, the CEO of government business for the security firm LexisNexis, said the lion's share of the money is now in the hands of international cyber criminal organizations in places like Nigeria, China, Russia and Romania.

"That money -- 70 percent of it -- went overseas to transnational criminal groups," he said. "They will never be able to arrest the individuals who did this because 70 percent of them don't live in this country. They've converted that money into anonymous wallets, then converted it into bitcoin, and it's now being used for nefarious purposes."

Talcove said that by using his firm's tracking data of international cyber thefts and the federal government's estimate of 18 percent fraud, Pennsylvania has shelled out $10 billion to fraudsters, most of them overseas. The Pennsylvania Department of Labor and Industry won't say how much money is missing.

WATCH: Andy Sheehan's full interview

"Could you imagine if a bank or an e-retailer lost the amount of money that the state of Pennsylvania has?" Talcove asked. "They wouldn't be in business. I can tell you this as a CEO: I wouldn't have a job and probably wouldn't have a company."

Trisch said her funds are running low.

"We have a little bit of saving but how long do you go before you're depleting that because you can't get anywhere with unemployment?" she asked.

In a late effort to stop the bleeding, the state is now backlogged in trying to verify new claims. Now, Pennsylvanians like Trisch are trying to talk with someone at Labor and Industry to verify claim, but are left on perpetual hold.

"It's four months going on five, and when I talked to them Monday, there was still 73,000 people in front of me that needed a return phone call," she said.

Talcove said the money stolen from the state is gone for good, and the only way to stop the fraud is to prevent it. He said it could happen by using the same identification screening technology used by banks and e-retailers like Amazon. But for now, Talcove said, the state is leaving its people to pay the price.

"Their citizens are being treated worse than the transnational criminals who are stealing from their state," he said.

Click here for Part II of Andy Sheehan's report.

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