The National Guard has been enlisted to help Washington state process some of the tens of thousands of unemployment claims that are being delayed as investigators deal with a sophisticated identity-theft scheme that may have siphoned off $650 million.
Starting next week, the first of 100 National Guard troops will begin assisting the state Employment Security Department in verifying the identities of individuals whose claims for jobless benefits are being scrutinized for potential fraud, Commissioner Suzi LeVine announced during a news conference Thursday morning.
LeVine wasn’t sure how long the troops would be deployed with ESD. Also unclear is how long it will take to train the troops for their new duties with the agency, which has struggled for months to bring on enough staff to process a backlog of claims filed by jobless workers in one of the worst economic crises in U.S. history.
“The National Guard will be helping initially with the ID verification and then we’re going to be looking at other paths to which we can enlist their help,” said LeVine.
Although the number people filing for unemployment insurance in Washington continues to fall — the state saw 29,713 new, or “initial,” claims for regular unemployment insurance for the week ending June 6, down 4.8% from the previous week — the ESD is still trying to resolve a large number of previous claims that have been stalled over concerns about fraud and other issues.
On Thursday, LeVine also acknowledged technical problems with ESD’s processing system that resulted in claimants who had already undergone identity verification being asked to resubmit proof of identity. “We are working toward resolving this quickly with our vendor,” LeVine said.
The Washington State Auditor announced an investigation Wednesday into how the ESD fell victim to the fraud as well as the reasons behind the continued delays in paying claims. Last week, LeVine was named in two legal actions by individuals whose claims have been delayed by ESD.
Washington’s move to enlist National Guard troops, which follows a similar initiative in Oregon, is the latest effort by ESD to balance clearing the persistent backlog of legitimate claims and avoiding the payment of any fraudulent claims that remain in the claims queue.
The agency has already brought on hundreds of contract workers via at least two out-of-state vendors — Virginia-based Faneuil and California-based Alorica — to help clear stalled claims, an ESD spokesperson confirmed. The agency has also brought staff from other parts of the department to work on fraud operations.
The fraud scheme, which ESD disclosed publicly May 14, was reportedly carried out in part by a Nigerian-based crime group, dubbed Scattered Canary, which used Social Security numbers and other personal information obtained in previous data breaches to file tens of thousands of bogus unemployment benefits claims in Washington and other states. In response to the fraud, ESD paused all benefits payments for two days and flagged the claims of nearly 200,000 individuals for further scrutiny by fraud investigators.
Washington was among the first to be hit by the fraud scheme, and so far, has reported the largest losses. But other states have reported fraud problems. Earlier this week, Michigan halted payments on 340,000 unemployment insurance accounts, roughly 20% of the total, over fraud concerns, according to media accounts.
In Washington, the nearly 200,000 individuals flagged for additional review were asked to submit driver’s licenses and other personal documents to ESD for verification — a time-consuming process that left many claimants still waiting for benefits.
As of Thursday, ESD said it had resolved more than half of the claims originally flagged for fraud review. But the claims of about 78,000 individuals are being held up as the agency tries to clear up questions around identity and other issues. About 42,000 of those belong to individuals who had been receiving benefit payments but saw payments stop due to the fraud investigation, LeVine said.
LeVine said the agency’s goal was to resolve those fraud-review claims by June 19. Because ESD has prioritized efforts to resolve claims flagged for fraud, the agency has acknowledged that it may take longer to resolve claims that were under review before the fraud hit, and which currently number about 35,000.
The state’s anti-fraud efforts have resulted in the recovery of about $337 million in stolen funds, LeVine said, up slightly from $333 million last Thursday. Anti-fraud efforts likely have helped reduce the number of new jobless claims filed each week.
Still, the state’s new claims are falling more slowly than the rest of the country, which saw initial weekly claims drop by nearly 19%, to 1.5 million, for the week ending June 6, according to U.S. Labor Department figures released Thursday.
LeVine acknowledged that Washington continues to face attacks from criminals whose techniques evolve as states step up security.
“Criminals will continue to do what they are doing,” LeVine said. “They will continue to try to run faster than we are, be smarter than we are, and they will continue to try to get into our system and steal from us.”
“It is a matter of how are you outrunning them,” she added. “But the race continues.”
Thursday’s news conference left a number of other questions unanswered. LeVine declined to respond to questions about the lawsuits, which have questioned the agency’s authority to halt payments to eligible claimants who had been receiving those payments without a hearing.
LeVine also declined to share the total number of claims ESD has identified as fraudulent. “When we’ve been able to make our way through these identity-verification numbers, we’ll have a much better sense, but right now we still don’t have a good enough view of what are the fraudulent claims distinguished from the legitimate claims,” LeVine said. “So I am not yet ready to share that.”