Maryland uncovered 47,500 fraudulent unemployment claims attempting to collect $501 million in benefits, Gov. Larry Hogan said Wednesday, part of a nationwide scam seeking billions in federal cash.
Hogan, a Republican, said the “massive and sophisticated criminal enterprise” was detected over the July 4 weekend. Maryland’s discovery, he said, led federal authorities to related scams in “at least” 12 other states.
The governor said none of the fraudulent claimants in Maryland received payments, but a small number of people in legitimate need had their benefits frozen during the investigation.
He said that hose people’s benefits will be reinstated, but that he could not estimate how many people were affected.
Hogan told reporters the onslaught of fake claims appeared to use identities constructed from a huge cache of recent national data breaches. As examples, he cited breaches at the Experian credit rating agency and the federal Office of Personnel Management.
The fake claimants posed as out-of-state companies seeking federal benefits of up to $600 per week under a process that allows claimants to self-certify job loss, rather than to have unemployment verified by the employer.
The process was created to quickly funnel benefits to small businesses and others who wouldn’t normally qualify for relief.
“Fraudsters are capitalizing on the hardships created by the pandemic,” Maryland Labor Secretary Tiffany Robinson said.
Maryland’s unemployment system has come under sharp rebuke after its new website crashed repeatedly and people waited days to file claims. Some jobless residents told a panel of state lawmakers in May that they waited months for benefits.
Hogan said Wednesday that much of the backlog has been cleared, and the state has processed 96.4% of the more than half-a-billion claims it received.
The FBI warned last week that it had detected a “spike” in scammers using stolen identities to file for unemployment, saying the scheme had been perpetrated in several states.
“Many victims of identity theft related to unemployment insurance claims do not know they have been targeted until they try to file a claim for unemployment insurance benefits,” the agency said in a July 6 statement.
Officials in Arizona, New Jersey, New York and Pennsylvania have reported unemployment fraud in recent days, and it was not immediately clear whether the cases were connected.
Special Agent Dereck Pickle, with the inspector general’s office at the U.S. Department of Labor, said at the news conference that unemployment fraud has been reported in all 50 states.
In normal times, he said, his office dedicates 10% of its staff to detecting such fraud. But more than 50% of the office is working on the issue during the pandemic.
Pickle left the news conference without taking questions.
The Hogan administration released a statement by Robert Hur, the U.S. attorney for the District of Maryland, saying his office will investigate and prosecute the matter.
The crush of unemployment claims during the pandemic created enduring delays in securing jobless benefits across the country.
As of this week, about 18 million Americans are officially unemployed. Maryland processed 66,559 unemployment claims last week, and 489,000 state residents have received $4.3 billion in benefits so far.
(c) 2020, The Washington Post · Erin Cox