UPDATED: Federal Investigators Uncover Massive Fraud That Targeted RI’s Unemployment Insurance
Sunday, May 17, 2020
The U.S. Secret Service has reportedly uncovered a massive fraud ring that has hit Rhode Island and at least seven other states, according to multiple reports.
The depth of the impact on Rhode Island is unknown yet. To date, more than 218,000 have filed for unemployment insurance in Rhode Island.
“Investigators from the Secret Service said they had information implicating a well-organized Nigerian fraud ring, and that stolen information such as social security numbers had allowed the network to file claims on behalf of people who in many cases had not lost their jobs,” reported the New York Times in a breaking story Saturday night.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTA top-level Rhode Island State Police official told GoLocal that the fraud may be in the thousands or tens of thousands of cases.
Most of the fraudulent claims have so far been concentrated in Washington state, but evidence also pointed to similar attacks in Florida, Massachusetts, North Carolina, Oklahoma, Rhode Island, and Wyoming,” reported the Times.
Since the coronavirus hit more than 36 million Americans have been forced to file unemployment claims leaving state offices overrun with filings.
Rhode Island Department of Labor and Training has not responded to requests for comment from GoLocal.
Breaking News
The Hill reports, ‘The attack was first reported in Washington State, where people who did not file for unemployment reported receiving benefits they didn’t ask for. The attack adds yet another obstacle as state governments work to send out unemployment benefits in a timely manner.”
At Western Washington University in Bellingham, more than 400 out of the roughly 2,500-staff have been targeted with fraudulent claims, the University’s spokesman told the Times.
“This is a gut punch,” Suzi LeVine, the commissioner of Washington State’s Employment Security Department, told the newspaper.
The fraud attacks, which the Secret Service warned could conceivably target every state, could result in “potential losses in the hundreds of millions of dollars,” according to a memo obtained by The New York Times.
"The discovery has added to concerns that jury-rigged efforts to rapidly dispense economic relief could be easily exploited by fraudsters. The I.R.S. last month documented losses of at least $16.9 billion because of identity theft as it raced to dole out trillions of dollars in economic stimulus checks," according to the Times.
Security industry newsletter KrebsonSecurity - a security industry newsletter - reports that many states do not have proper controls.
"A federal fraud investigator who spoke with KrebsOnSecurity on condition of anonymity said many states simply don’t have enough controls in place to detect patterns that might help better screen out fraudulent unemployment applications, such as looking for multiple applications involving the same Internet addresses and/or bank accounts. The investigator said in some states fraudsters need only to submit someone’s name, Social Security number and other basic information for their claims to be processed," reports KrebsonSecurity.
"Elaine Dodd, executive vice president of the fraud division at the Oklahoma Bankers Association, said financial institutions in her state earlier this week started seeing a flood of high-dollar transfers tied to employment claims filed for people in Washington, with many transfers in the $9,000 to $20,000 range," according to KrebsonSecurity.
“'It’s been unbelievable to see the huge number of bogus filings here, and in such large amounts,' Dodd said, noting that one fraudulent claim sent to a mule in Oklahoma was for more than $29,000. 'I’m proud of our bankers because they’ve managed to stop a lot of these transfers, but some are already gone. Most mules seem to have [been involved in] romance scams.'” according to Krebs.
This story was first published 5/16/20 8:05 PM
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