Are state officials more than a bit chagrined knowing that Washington -- home to some of the great tech companies of the world -- is, so far at least, the hardest-hit victim of a massive fraud that exploited the unemployment benefit claims process to the tune of hundreds of millions of dollars?
That's one of many questions arising from recent news that previous identity thefts were at the core of countless fraudulent jobless claims here in the past several weeks. Those improper claims were paid out amid a pandemic-
induced perfect storm of thousands upon thousands of suddenly jobless, desperate Washingtonians applying for benefits coupled with state and federal efforts to get checks into their hands as quickly as possible. In their haste, state officials missed some red flags that could have stanched the financial bleeding.
Loath to keep new claimants waiting, the state Employment Security Department let down its guard. And the enemy -- a sophisticated and ruthless West African crime ring called Scattered Canary -- was ready, as documented in a recent special report in The Seattle Times.
The scam was revealed May 21 by Suzi LeVine, commissioner of the state Employment Security Department, who said at the time that her agency was working with federal law enforcement, financial institutions and the U.S. Department of Labor to investigate and try to get back what they could. Indeed, on Thursday LeVine shared that $300 million had been recovered to that point.
It's encouraging to hear that the various investigative labors are bearing fruit. But LeVine and cybersecurity experts agree that it will be months if not longer before the total damage can be tallied.
Meanwhile, more questions remain. For one thing, has the barn door been shut?
LeVine said at the time the fraud was revealed that countermeasures by the state had "prevented hundreds of millions of additional dollars from going out to criminals and have prevented thousands of fraudulent claims being filed." She offered no details on the countermeasures.
But there's collateral damage from this fraud fight. Claimants are now having to wait an additional two days before receiving payments after normal waiting periods had been set aside as the ESD worked to get checks out as quickly as possible. Also, based on the hurry-up climate and the pure volume of applications, not all typical verification steps were being taken previously. With a more stringent verification process in place now, legitimate claims are taking longer to fill -- and some who have received money properly are now under investigation.
"We will pay people all the benefits that they are owed," LeVine said. "At the same time, we need to take these additional precautions to ensure that we're not sending taxpayer dollars out to the criminals."
It's worth exploring how the barn door got propped open to begin with, if only to contemplate the future and learn from mistakes. Nobody foresaw the brutal COVID-19 era or all its ramifications, and for sure we hope to never see the likes of it again. But somewhere, sometime, the next crisis lurks.
Besides the well-intentioned efforts to get money into the hands of the jobless as quickly as possible, there were red flags that were missed or ignored by ESD, such as payments to out-of-state banks and applicants' use of suspicious email accounts, security exports said. It was also noted that all this was happening while ESD was just a couple of years off a software upgrade -- one that was budgeted at less than $47 million but grew to $64 million and was supposedly designed to help detect fraud.
How much was taken and how much will be recovered? Time will tell -- just like time will tell if our state officials, including tech experts, learn their lessons from this expensive and embarrassing episode.
"This is a national attack by sophisticated criminals and isn't just happening to Washington state," LeVine said recently.
But it happening to Washington state, of all places.
