State audit of massive unemployment fraud welcome

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Washington state Auditor Pat McCarthy made the right decision, albeit belatedly, to investigate how the state Employment Security Department was bamboozled by a massive fraud scheme that initially got away with as much as $650 million in taxpayer money.

McCarthy on Wednesday notified Gov. Gay Inslee and the state Legislature that her office was launching two separate audits into the matter. One will examine weaknesses in the Employment Security Department’s computer system while the other will focus on factors that led to the fraud as well as the delay in paying legitimate unemployment benefits.

Generally, these are not the types of audits that McCarthy’s office conducts. The auditor’s role is to focus on misconduct by public employees.

But McCarthy, after months of public uproar as the depth of the fraud unfolded, wisely opted to take on this important investigation.

What’s known so far is that scammers, including a Nigerian cybercrime network known as “Scattered Canary,” tricked the state into paying out between $550 million and $650 million in fraudulent claims. The state, with the help of federal law enforcement, has recovered about $333 million.

The Seattle Times reported that the widespread fraud affected employees at the state’s largest public and private employers, as well as small businesses and nonprofits.

“Everybody is frustrated with what happened,” McCarthy, a Democrat, told the Times.

Earlier this month 37 Republican state lawmakers formerly requested an audit.

“Public trust in government is so shaken by this malfeasance … we must do something to prevent this from ever happening again,” the GOP legislators wrote.

On Wednesday, Inslee said he believes the audit is a good idea.

So, too, did state Sen. Reuven Carlyle, D-Seattle, who leads the committee overseeing the state’s information technology.

“I think at the end of the day, we have a fiduciary and a public and a moral obligation to protect the public’s money. And these dollars are intended for unemployed workers. People have paid into the system, businesses have paid into the system, and it needs to be managed with the highest integrity,” he said.


This is not a political matter, it’s about restoring public trust and ensuring good government.

Something went very wrong at the Employment Security Department. Those problems need to be detected and corrected.