Washington state has recovered nearly $500,000 in stolen unemployment benefits.
Washington is the first state in the nation to use its asset forfeiture power to recover the stolen funds, Attorney General Bob Ferguson announced, noting the money will be returned to the Washington unemployment insurance trust fund.
Fraud rings stole billions of dollars from at least 11 states, including Washington, during the COVID-19 pandemic.
Ferguson’s novel approach to rooting out the embezzled funds included searching for bank accounts where the scammers had not yet withdrawn all stolen funds and then initiating a legal effort to reclaim the funds.
Investigators from the Attorney General’s Office (AGO) analyzed some 96,000 unemployment claims the state Employment Security Department (ESD) had identified as fraudulent or probably fraudulent.
From there, the AGO subpoenaed 37 banks that had received wire transfers from the ESD on behalf of those suspect claims, further scrutinizing those accounts for other indications of fraud.
Telltale signs of fraud included receiving unemployment benefits payments from multiple states; receiving payments in the names of multiple claimants; and mismatches between names on bank accounts and names on unemployment claims.
“My team is using every tool in our toolbox to recover stolen dollars,” Ferguson said in a statement Monday. “Stay tuned because we’re not done.”
A King County Superior Court judge granted Ferguson’s motion, ordering Cherry Hill, New Jersey-headquartered TD Bank – which did not oppose the motion – to transfer back to Washington $495,937.70 from 120 accounts where the stolen funds were deposited.
The Washington State Employment Security Department estimates it paid out suspect claims totaling more the $640 million. The state reports that about $315 million in stolen funds have yet to be recovered.
“The attorney general should be applauded for recovering a small portion of the hundreds of millions of dollars the Employment Security Department paid out to the fraudsters,” said Max Nelsen, director of Labor Policy for the Olympia-based Freedom Foundation. “Unfortunately, it’s not enough. To date, state officials haven’t been meaningfully held to account for the scandal, and taxpayers have no assurance that changes have been made to ensure such a mistake won’t happen again.”
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