Washington Gov. Jay Inslee looks on as Suzi LeVine (right), the state’s Employment Security Department commissioner, talks to reporters in 2019. (AP Photo/Ted S. Warren)

Washington Gov. Jay Inslee looks on as Suzi LeVine (right), the state’s Employment Security Department commissioner, talks to reporters in 2019. (AP Photo/Ted S. Warren)

State auditor to probe causes of massive jobless claims fraud

Auditors want to know how criminals used stolen IDs to collect up to $650 million in benefits

OLYMPIA — Washington’s embattled Employment Security Department will be the subject of two new investigations into how criminals using stolen identities managed to file claims and collect hundreds of millions of dollars in jobless benefits from the state.

State Auditor Pat McCarthy said Wednesday her office will review factors that led to those improper payments and delayed payouts to thousands of actual jobless residents. A second audit will focus on potential weaknesses in the computer systems that support the unemployment program.

McCarthy said in a statement she chose these areas to “provide the public and state leaders with a greater understanding of how needed benefits were stolen and delayed.”

Suzi LeVine, commissioner of the Employment Security Department, welcomed the reviews.

“We believe that the key learnings from this audit will help not just ESD, but all of state government,” she said in a prepared statement. “Our goal in this unprecedented crisis has been and continues to be getting benefits out to eligible Washingtonians as quickly as possible.”

Gov. Jay Inslee echoed the sentiment when asked about it an afternoon press conference.

“It sounds like a good idea to have an audit in these circumstances,” he said, adding that it may uncover issues “to help this situation.”

Since early May, tens of thousands of fraudulent claims have been filed by impostors using stolen identities.

Hundreds of public school employees in Snohomish County are among those caught up in the elaborate scam that’s overwhelmed the state unemployment agency tasked with quickly providing money to people whose jobs disappeared or were curtailed overnight because of the COVID-19 pandemic.

LeVine said last week the final amount paid out fraudulently may be as much as $650 million. The state has recovered $333 million. She also has said her agency has not had a security breach and no data has been taken from it.

A West African fraud ring using identities stolen in prior data breaches, such as the massive 2017 Equifax breach, is believed to be behind the fraud, which has targeted nearly a dozen states, experts say.

Inslee said the agency is working simultaneously to “root out the crime” while accelerating action on unpaid claims. Although the agency has beefed up staff to deal with both challenges, more people may be hired, he said.

“It is so terribly frustrating to people right now who have not received resolution of their claims while they are out of work,” Inslee said. “If the audit can help us identify any additional work to be done, we’ll look forward to that.”

At Wednesday’s news conference, Inslee also renewed his call for President Donald Trump to invoke the Defense Production Act to beef up production and distribution of personal protective equipment for states. The president has done this for ventilators and testing supplies.

Inslee said the president also needs to replenish the Strategic National Stockpile, which is one of three critical sources of PPE for the state. The others are direct purchases by the state from domestic and foreign suppliers, and private donations.

Washington has received 4 million items from the federal stockpile while acquiring 80 million on its own with 200 million more on order, he said.

He voiced frustration with what he characterized as “a lack of commitment and enthusiasm” on the part of the president to requests for help with PPE supplies from governors of many states.

Inslee released a letter he sent Wednesday to Vice President Mike Pence on this subject. In it, the governor says states are forced to compete with one another for PPE and the situation will become more dire as demand for equipment increases as each begins to reopen.

The lack of a coordinated federal response to ensure PPE for every person who needs it is akin to fighting a war in which each state is responsible for procuring its own weapons and body armor, he told the vice president.

”While the challenges we are facing are significant, they are far from insurmountable,” he wrote Pence.

The Associated Press contributed to this report.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com. Twitter: @dospueblos.

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