Man Sentenced in Pandemic Unemployment Fraud Case that Used Bitcoin to Purchase Stolen Identities

News | May 24, 2024 By:

On Friday, May 10, 2024, the United States District Court for the Eastern District of New York sentenced Gianni Stewart for his role in a pandemic unemployment benefits fraud scheme.

Stewart pleaded guilty in January 2023 to one count of conspiracy to commit access device fraud. According to court documents, Stewart and his co-conspirators used personal identifying information (PII) purchased with cryptocurrency through encrypted messaging apps to file fraudulent unemployment claims with the New York State Department of Labor (NYSDOL) between June 2020 and April 2021.

In response to the economic hardship caused by the COVID-19 pandemic, the federal government passed legislation in 2020 that significantly expanded unemployment insurance benefits. It also created new temporary programs to provide assistance to those not normally eligible, including the self-employed. This created new opportunities for fraudsters.

Stewart and his associates obtained victims’ PII by purchasing it from unknown sources using Bitcoin on the Telegram messaging platform. They then submitted approximately 250 fake claims using the stolen identities. In total, the group received over $1.75 million in fraudulent benefits loaded onto debit cards before the scheme was detected. Stewart personally filed at least 23 claims, resulting in $178,800 for himself and his co-conspirators.

In addition to the financial gains, court documents state Stewart and others flaunted their ill-gotten wealth on social media, posting pictures of large piles of cash, designer clothes, and luxury vehicles obtained from the proceeds of their crimes. Two arrests in 2021 while Stewart was on pre-trial release also uncovered firearms, according to the government’s sentencing memorandum.

The advisory sentencing guidelines called for a prison term between 41–51 months. However, the defense argued for a downward departure, noting Stewart’s young age at the time of the offense (18–19 years old) and highlighting his rehabilitation efforts, including maintaining employment and becoming a father. The defense proposed a sentence of time served with probation.

While acknowledging mitigating factors like Stewart’s youth, lack of criminal history, and family support, the court ultimately disagreed that such a lenient sentence was warranted. In handing down a two-year prison sentence, the judge emphasized the serious and sophisticated nature of the large-scale fraud scheme, as well as Stewart’s repeated violations of pre-trial release conditions.

Stewart was also ordered to pay $178,800 in restitution to victims. Upon release, he will be subject to one year of supervised probation with standard and special conditions. In delivering the sentence, the court stated it was sufficient but not greater than necessary to accomplish the goals of the justice system in this case.

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