New weekly jobless claims in Washington fall sharply in wake of coronavirus fraud revelations

May 28--A week after state officials acknowledged "hundreds of millions of dollars" in potential losses from an organized fraud scheme in Washington's unemployment insurance system, the state saw a sharp decline in new claims for jobless benefits.

For the week ending May 23, Washington received 48,445 initial claims for unemployment insurance, a decrease of nearly 68% from the prior week, according to figures released Thursday morning by the state Employment Security Department.

The decline, the state's first in three weeks, was "due in large part due to significant fraud prevention measures that were put in place over the past two weeks," according to a statement by the ESD.

The decrease in initial claims brings Washington more in line with the rest of the United States, which has seen new claims fall steadily in recent weeks. Nationally, claims decreased 13.2% last week, to 2.1 million, the Labor Department reported. The national decline is viewed by some labor experts as evidence that the job market has begun to recover following a virtual shutdown to contain the coronavirus pandemic.

The fall in the number of new claims in Washington state comes as state and law enforcement officials investigate a Nigerian fraud ring, dubbed "Scattered Canary" by fraud experts, that may have filed "hundreds of millions of dollars" in bogus claims for jobless benefits from the ESD. As of May 23, Washington had paid out nearly $4.7 billion in benefits since the start of the coronavirus crisis, with most of the money coming from the federal government's $2.2 trillion pandemic relief measure.

ESD officials have not released an estimate of how many of the 1,130,519 individuals who have filed claims since the start of the pandemic were legitimate filers.

As part of its investigation, the ESD is more closely scrutinizing all claims for unemployment benefits, a measure that appears to have slowed some payments for legitimate claims. Of the 1,130,519 individuals who have filed claims since the start of the pandemic, roughly 323,000 appear not to have not yet received benefits, according to ESD figures released Thursday.

State officials say the fraudsters used Social Security numbers and other personal data stolen in previous data breaches to file fraudulent claims for job benefits in Washington, which was one of the first states to offer the extra $600 weekly benefit from the federal pandemic relief legislation.

Fraud experts said the criminals used the stolen data to set up impostor accounts in the ESD's in the names of actual Washington workers. The criminals then filed multiple weekly claims for jobless benefits and instructed the ESD's system to transfer the benefit payments to their own bank accounts, often out-of-state, or into online debit cards.

The scheme, which appears to have hit Washington harder than any other state, began to come to light several weeks ago as employers started receiving notifications from the ESD requesting verification of claims filed in the names of thousands of employees who were still working and had no knowledge of the claims.

In other cases, unemployed workers in Washington who were trying to file legitimate jobless claims discovered bogus claims had already been filed in their names -- and, often, that benefits had already been paid out to unfamiliar bank accounts.

This is a developing story and will be updated.

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