A fraud network siphoned hundreds of millions of dollars in unemployment funds.
A sophisticated fraud network targeting Washington State’s unemployment system claimed hundreds of millions of dollars before officials were able to identify and crack down on the coordinated attack, state officials said Thursday.
“I realize this is a jaw-dropping figure,” said Suzi LeVine, the commissioner of the state Employment Security Department. The fraudulent claims had been filed on behalf of tens of thousands of people, and many involved individuals who had not lost their jobs, she said.
Officials confirmed the fraud on the same day the federal government reported that another 2.4 million American workers filed for jobless benefits last week, bringing the total to a staggering 38.6 million in nine weeks.
And while the Labor Department has found that a large majority of laid-off workers expect their joblessness to be temporary, there is growing concern among economists that many jobs will never come back.
“I hate to say it, but this is going to take longer and look grimmer than we thought,” said Nicholas Bloom, an economist at Stanford University.
The stunning scale of the job losses, and the billions of dollars in benefits approved by Congress to sustain workers without incomes, has made unemployment systems ill-equipped to handle the surge of claims vulnerable to fraud. The U.S. Secret Service said in a memo last week that it appeared that an international group of fraudsters was targeting unemployment systems, particularly in Washington State, but there was also evidence of attacks in Florida, Massachusetts, North Carolina, Oklahoma, Rhode Island and Wyoming.
Investigators said the impostors appeared to be working with an extensive database of personal information stolen in earlier hackings that allowed them to submit claims.
Washington State had moved to make payments available quickly and deliver them to direct-deposit accounts. But the state began realizing the scope of the problem when people who had not filed for unemployment received mail saying that they had.
Ms. LeVine said the state had increased security on its systems and delayed payments to prevent further fraud. That has blocked thousands of other claims worth an additional hundreds of millions of dollars.
The pain, though, is already widespread. A household survey from the Census Bureau released Wednesday found that 47 percent of adults said they or a member of their household had lost employment income since mid-March. And Mayor Bill de Blasio of New York City said on Thursday that nearly one in four New Yorkers needs food.
To address the problem, the city will increase to 1.5 million the number of meals it distributes each day by next week. A million meals will be delivered; the rest will be available for pickup at schools.
