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Organized crime, identity thieves targeting CERB, Parliamentary committee told

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OTTAWA — Harsh penalties for defrauding the Canada Emergency Response Benefit are needed because organized crime and identity thieves are trying to scam the program, a House of Commons committee was told Thursday.

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A Canada Revenue Agency official said federal systems have already flagged a number of potential fraudulent applications for the $2,000-a-month CERB, including people involved in criminal activity that have now targeted the pandemic-aid program.

Ted Gallivan, the agency’s assistant commissioner in charge of compliance, said about five people already under a joint police-CRA investigation for other reasons are now being looked at for CERB fraud as well.

The agency is receiving leads on possible fraud and has “a number” of joint operations with local police, but Gallivan told the finance committee that it wants the power to go after fraudsters.

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READ MORE: Fraudulent CERB applications could land Canadians with $5K fine, jail time

Earlier this week, the Liberals were unable to get unanimous agreement from the opposition parties to swiftly pass a bill that included fines and possible jail time for CERB fraud. NDP Leader Jagmeet has argued that the penalties will hit Canadians who mistakenly applied for the benefit, despite government assurances that they’re intended to deal only with those who knowingly and deliberately defraud the program.

Gallivan said the measures being sought would target people who have filed hundreds of fraudulent claims, such as those who have reportedly gone into retirement homes to have seniors sign up for the benefit.

“We do think it’s important to have a criminal sanction at the end of that,” Gallivan said during an Thursday evening committee video conference.

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“Criminal sanctions being sought are really to deter people operating at scale because merely asking them to pay the money back won’t have the deterrent effect we need.”

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Gallivan said the system that doles out the CERB was set up to flag possible fraud, such as someone changing their direct deposit information a day before applying for the benefit, or someone filing thousands of claims on behalf of clients.

Figures released last week by the agency showed that 190,000 benefit payments had been repaid online as of June 3.

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NDP finance critic Peter Julian said new powers aren’t needed because criminal penalties already exist for fraud or people misusing social insurance numbers. He noted that criminal investigations are already under way without the additional powers.

Demand for the CERB has surpassed federal expectations, pushing its budget to $60 billion from $35 billion.

The most recent figures show that $43.51 billion in benefits have been paid out as of June 4 to 8.41 million unique applicants. But those numbers include $20.56 billion from the employment insurance account to 3.96 million EI-eligible workers who exhausted their benefits and couldn’t find work due to the pandemic.

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In a recent interview, Conservative employment critic Dan Albas said the spending raises questions about whether EI premiums will have to go up in the future.

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“There’s a lot of different things in play here,” Albas said. “There’s the overall spending trajectory of the government, there’s the current state of finances, particularly with the EI fund and because there’s been no budget, we just don’t know its status.”

Finance Minister Bill Morneau was pressed anew during his appearance Thursday at the finance committee about when the government would provide a budget or fiscal update. But he again said that won’t be possible until there is greater economic certainty.

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The total spending package on pandemic-related aid now tops $153.6 billion, not including tens of billions more in loan programs, as detailed by the Finance Department in its latest report to MPs.

A commercial rent relief program has doled out $39 million in loans to landlords as of June 8, representing help to more than 5,000 tenants. Delivered jointly with provinces, the federal government provides almost $3 billion to the program.

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Morneau said application numbers have gone up in recent days after provinces announced eviction bans.

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“That is starting to change the activity between tenants and landlords,” Morneau said, adding a moment later: “There are very encouraging signs that this program can have a big impact on commercial tenants.”

This report by The Canadian Press was first published June 11, 2020.