False jobless claims swarm city of Tacoma, CHI Franciscan in scheme costing state millions
The state’s Employment Security Department on Thursday said “hundreds of millions of dollars” in fraudulent claims may have been paid out with state and federal funds in a sophisticated imposter fraud scheme that targeted the state.
Imposter fraud filings are defined as those where individual criminals use stolen personal information to fraudulently apply for benefits.
In the department’s weekly news release on claims, ESD Commissioner Suzi LeVine said: “We have also zeroed in on stopping the increase in fraudulent claims we’ve seen in recent weeks. We are working closely with federal law enforcement to stop fraudulent activity, to investigate these crimes and get as much of the stolen money as we can returned to us.”
In a news conference Thursday afternoon, LeVine noted that the state may have become an attractive target as a result of paying among the nation’s highest weekly claims benefits and being one of the first states to roll out extra benefits as part of the federal coronavirus relief effort.
“There was no breach of our ESD system, and no information has been stolen from ESD,” she emphasized, a message she’s previously delivered when addressing the issue with reporters.
LeVine did say that the stolen information drawn from “tens of thousands” of legitimate workers had been used and was sourced from previous data breaches, such as the massive 2017 Equifax data breach.
Accounts from various entities in Pierce County of the false filings continue to add up as the state has ramped up its investigations.
On Thursday, in response to questions from The News Tribune, the city of Tacoma reported that hundreds of city employees may have been targeted.
“Based on information received from ESD and reports from city employees as of this morning, we have reports of 332 possible fraudulent claims filed with ESD,” Maria Lee, media representative with the city, told The News Tribune via email.
The cases involve workers across multiple departments.
Lee said the city’s human resources department “received a weekly charging notice from ESD dated 5/2/2020 that included names of persons who filed for benefits but were still actively working for City of Tacoma.”
“If a city employee has been notified by the ESD that they filed a claim and did not, they have been asked to notify HR, the ESD and file a police report,” Lee said.
She added that the Tacoma Police Department’s financial crimes detective “is going through each Tacoma police report, ensuring the needed information has been collected on each one, then sending them to the federal task force, which will be primary on the investigation. The source of the fraud is still unknown at this point.”
Tacoma Public Schools, while not providing a specific number of cases, said it too had come across false filings. In a memo sent to employees May 14, it stated that its human resources department was reviewing lists it received from ESD “to identify any employees who might be victims of an imposter claim. Human Resources will be contacting employees to confirm whether or not they actually filed for unemployment benefits.”
University of Washington’s Victor Balta, director of UW News on the Seattle campus, told The News Tribune on Thursday, “About half of the unemployment claims we have received are suspected fraudulent since we started tracking them for faculty, staff and medical personnel over the past several weeks.
“We don’t typically tally them in this way, so we started the count at different times for faculty, staff and medical employees. These are rough counts, but among the claims we have counted in this way since late March, more than 1,100 are suspected fraudulent out of just over 2,300 claims included in this count.”
Those numbers, he added, represent all three UW campuses (Seattle, Tacoma, Bothell) and the UW Medicine sites.
John Burkhardt, director of communications at UWT, said via email Thursday that he’d been one of the fraud victims.
“I was just reviewing the FTC site to see how to submit a fraud report to them,” he wrote in response to questions from The News Tribune.
“In a further twist, I also recently got a new ATM card in the mail from a bank with which I have no account. I contacted that bank, and they closed the account and put a flag on the data they have about me in their database, so it will not be used to open future accounts.
“I suspect that is related to the ESD fraud – the fraudsters opened the account in order to have some place to put the unemployment benefits.”
He added, “What I noticed in my case is that the initial claim with ESD dated from March 22, so I assume the fraudsters did indeed get money from their operation.”
In the ESD roundup of filings, Pierce County was among those counties in the state with the largest number of initial filings during the week of May 10-16, the most current data available, with initial regular claims filed increasing from 12,938 to 16,240 — up 26 percent from the week before.
LeVine said the department was still working on how to best correct the state numbers for future reporting cycles, with some portion of the high numbers in filings statewide most likely attributable to the fake filings.
She added that the department was still trying to find the right balance in security vs. getting legitimate claims paid quickly, but that with the additional level of review now in place, those filing legitimate claims will see an additional one- to two-day waiting period for direct deposit.
The New York Times reported May 16 that in a memo it obtained, “Investigators from the U.S. Secret Service said they had information suggesting that the scheme was coming from a well-organized Nigerian fraud ring and could result in ‘potential losses in the hundreds of millions of dollars.’”
According to the memo, Washington state was a primary target, but there also was evidence of attacks in other states.
LeVine noted Thursday that all states were at risk and that her department had shared what they’d learned from the activity with other states, banks, other agencies and the U.S. Department of Labor.
Dennis Greenlee Jr., general counsel for Puyallup-based Absher Construction, told The News Tribune on May 8 that his company appeared to have been one of the targets, with more than 20 false claims filed using employee data.
He noted at the time that most of the employees did not know why they were receiving notifications via mail from ESD, and many ignored them, only to later discover the false filing information when looking up their own information on ESD’s website.
LeVine, in Thursday’s call, said reports had at first trickled in from employees and employers but that it was around May 11 or 12 when the situation “became a flood.”
“We are hiring more than 100 additional staff to answer questions on our fraud hotline and bringing on more investigators and external fraud experts and analysts,” she said in describing the ongoing response.
The department also has added a secure uploading feature for both individuals and businesses to more easily report when they discover false claims.
LeVine said the “countermeasures are working.”
“We have successfully prevented hundreds of millions of additional dollars from going to criminals and prevented thousands of fraudulent claims from being filed,” she said.
Specific numbers though, in terms of what had been paid out versus blocked, were not made available, and she declined to offer more specifics citing it was still an active criminal case.
Victims of fraud will not have to repay the benefits “and if they need to apply, they will still be able to do so,” LeVine added, though a person’s account has to be cleared by the department before that can happen.
The scam has even hit those on the front lines of the pandemic.
CHI Franciscan, in a statement, told The News Tribune that approximately 400 CHI Franciscan employees in Washington state had been targeted by fraudulent unemployment claims among its more than 12,000 workers.
“We work closely with employees when a fraudulent claim is identified, and we immediately notify Employment Security to void the claim. We also help our employees to report the identity theft,” said Cary Evans, vice president for communications and government affairs with the health system.
Tacoma-based MultiCare Health System, in a statement in response to questions from The News Tribune on Thursday, said it knew of “approximately 50 MultiCare employees who have had the unfortunate reality of learning that they have been victims of unemployment fraud recently.
“While MultiCare has not had a breach of our data, bad actors have taken advantage of COVID-19 to file false unemployment claims using data obtained through their own methods.”
The health care system said it’s distributed information to employees along with issuing an internal memo to offer guidance on next steps.
It added, “Currently, the state is delayed in sending us unemployment claims to review, so an employee may unfortunately become aware of fraud several weeks before MultiCare receives their claim to review. For example, right now, we are seeing claims both from March and from May come in from the state.
“We encourage any employee who believes they may be a victim of unemployment fraud to reach out to their manager and file a claim with the state Employment Security Department.”
If you are a victim of a false filing, go to the ESD website esd.wa.gov/unemployment/unemployment-benefits-fraud to learn next steps you should take and information you should provide to the department.
The department also advises to go to the FTC identity theft website: www.identitytheft.gov for more resources on reporting ID theft.
You also can proactively set up an ESD account, even if you have not been laid off. Go to ESD’s website to create and activate a SecureAccess Washington (SAW) account. Doing so also could help alert you if fraud has already taken place using your Social Security number. Setting up your account also helps prevent someone else from doing so.
This story was originally published May 21, 2020 at 4:26 PM.
