Unemployment fraud problem persists in Virginia with backlog topping 90K

RICHMOND, Va. (WRIC) -- The Virginia Employment Commission is investigating another batch of suspected unemployment fraud as a daunting backlog continues to cause long waits for victims.

When Governor Glenn Youngkin's administration took over in January 2022, VEC Commissioner Carrie Roth said 258,320 paid and unpaid claims were under investigation for potential fraud. She said 90,265 claims were still awaiting review for the week ending on Sept. 30.

Despite some progress, the agency hit another snag this week.

On Wednesday, the VEC announced the identification of approximately 4,200 unemployment insurance claims that may have been compromised. The press release said the claims have been "isolated" to prevent further damage as the agency works with law enforcement.

Asked if those impacted by the recently announced fraud investigation will be added to the backlog, Roth said in an email that a dedicated team is prioritizing these claims separately.

"We have already been able to recoup some of the funds that have been identified and are working to return payments to customers," Roth said in a statement.

It's not clear how the suspected fraud occurred or how it was detected.

Roth wouldn't comment further on the ongoing investigation. She declined an interview request on Thursday but agreed to meet next week.

Virginia has only gotten a fraction of its money back from fraud cases since the pandemic first hit in March 2020, overwhelming the outdated unemployment system. Roth said nearly $292 million in taxpayer dollars has been recovered in fraudulent and non-fraudulent overpayments so far.

As of the end of September, Roth said 133,669 unemployment claims were confirmed to be the result of identity theft and 21,821 claims were determined fraudulent. She said more than $858 million was paid out in connection with those confirmed identity theft and fraud cases, with another $750 million still under investigation for potential fraud.

Alicia Hanrahan is among those waiting for results. The single mother first shared her story in June 2022, when she said a months-old unresolved fraud case on her account was preventing her from accessing unemployment benefits after she lost her job.

After Hanrahan's interview aired, Commissioner Roth sent us an email. She said, "We are working to resolve Ms. Hanrahan's issue."

But nearly four months after that email was sent and almost one year since the fraud was committed, Hanrahan is only growing more frustrated. In a follow-up interview on Thursday, she said customer service representatives have continued to give her conflicting information and her regular requests to speak to a supervisor have been rebuffed. She said she has reached out to local leaders, federal lawmakers and even the White House.

"I'm baffled by how incompetent these people are," Hanrahan said, referencing staff at the VEC. "It's crazy. Nobody knows what is going on. Nobody knows when I'm going to get unemployment."

Hanrahan, who is now working again, said the state owes her $2,000 in back pay. She has no idea when that money will arrive, if at all. She said she needs it to pay off missed bills that are gaining interest.

In an email on Thursday, VEC Spokesperson Joyce Fogg didn't say how long on average it is taking to resolve fraud cases. She said each case is unique and requires different types of investigations.

In a previous interview, Roth said the fraud backlog is the result of historic underfunding and understaffing at the start of the pandemic, coupled with a record number of weekly claims and a relaxed application process designed to get money out the door quickly during a sharp economic downturn.

But Hanrahan has completely lost faith in the state's safety net. She wishes she could opt out of paying into it.

"The amount of money, time off of work, anxiety, stress, panic attacks this whole ordeal has caused me is too much," Hanrahan said. " I know there are people out there with less and needing more. It's sad. It makes me angry. Virginia should do better."