SEATTLE — The top law officer in Washington state said federal agents warned Washington’s Employment Security Department (ESD) about fraud in mid-April, raising new questions about whether the agency could have acted sooner to stem the loss of hundreds of millions of dollars to fraud rings that struck during the COVID-19 crisis.
United States Attorney Brian T. Moran said that agents notified ESD about fraudulent unemployment claims when they were first detected in April.
“We started noticing we had a couple of complaints to the Social Security Administration about fraudulent claims filed on behalf of public service workers, and public service workers at that time were not employed,” Moran said.
An ESD spokesperson said it was too soon to tell that massive fraud schemes were unfolding and “…it was over the following weeks that it became apparent this was an unusual and coordinated attack. We then stopped payments and took the dramatic steps to address it.”
That was in mid-May, when ESD launched a two-day shut down of payments to root out thousands of fraudulent claims by crime rings that were submitting for unemployment using stolen IDs.
However, there are fresh questions about why ESD had such a hard time seeing the fraud, especially when many claims were being filed in the names of government employees.
ESD has said that, because of COVID-related shutdowns, it had a hard time contacting employers to verify unemployment status. To keep claims moving along, it verified them without stringent security checks.
In the case of government workers, though, it would seem that one state agency, ESD, should be able to quickly determine whether another state agency has laid off workers.
Washington State Auditor Pat McCarthy, whose office opened an investigation into ESD this week, said 27 of her employees had false claims filed using their stolen identities.
Investigators are even looking into whether the identities of ESD’s own employees were used to file claims.
In a press conference on Thursday, ESD Commissioner Suzi Levine refused to say if she was personally targeted.
“I am deeply focused on the work for Washingtonians overall. And I’m not going to disclose with regards to any claimant their information, myself included,” LeVine told reporters.
The ESD spokesperson also countered US Attorney Moran’s claim that the feds contacted ESD with a warning in April.
“It was actually our investigations staff who contacted them after receiving reports of imposter fraud,” the spokesman said.
A Nigerian fraud ring, called “Scattered Canary” by the internet security firm Agari which uncovered the group, has received much attention. But Moran said there are several players who successfully scammed ESD out of unemployment payments.
“We’re not just looking at one organization,” Moran said, while declining to provide further information about ongoing investigations.
He expects that some of those people, including “mules” in the US who withdrew money from various bank accounts, will be charged in federal court in Seattle.