During the pandemic, sophisticated fraud rings stole billions of dollars from at least 11 states, including Washington. While multiple states suffered substantial losses, Attorney General Ferguson is the first state attorney general to exercise state asset forfeiture powers to recover stolen funds. Attorney General Ferguson initiated a unique investigation searching for bank accounts where fraudsters had not yet withdrawn all stolen funds, and launched a legal effort to reclaim these funds for the state.
Today, Ferguson announced that King County Superior Court Judge Johanna Bender granted the attorney general's first motion for forfeiture, ordering TD Bank to transfer back to Washington $495,000 from 120 accounts where the stolen funds had been deposited. The bank did not oppose the motion. Ferguson's office is pursuing similar recoveries involving other large banks.
"My legal team is using every tool in our toolbox to recover stolen dollars," Ferguson said. "Stay tuned because we're not done."
This action is wholly separate from the multi-agency federal law enforcement task force investigation resulting in multiple arrests of Nigerian citizens allegedly connected to the fraud. Ferguson's office has been assisting federal efforts, while also searching for additional ways to use its authority.
A new approach
The Attorney General's Office used data from the Employment Security Department and subpoenaed more than 35 banks across the country to identify accounts with balances of $1,000 or more that bore red flags, or indicators of fraud.
Red flags included:
* Accounts that received unemployment benefit payments from multiple states;
* Accounts that received deposits of unemployment benefits to multiple people; or
* A mismatch between the personal information of the account holder and the person who supposedly applied for the benefits deposited in the account.
The office is using the Attorney General's asset forfeiture authority to reclaim stolen funds identified with this process, making Washington the first state in the nation to do so.
Assistant Attorney General Jeff Sprung in the Complex Litigation Division is leading this effort, along with Assistant Attorneys General Spencer Coates, Nick Quijas, Robert Staley, Paul Crisalli, and Cristina Sepe, paralegal Sara Cearley, legal assistant Christine Truong, investigator Rick Barry and legal intern Nick Mendolia.
To assist in the investigation, Ferguson's office retained former FBI Agent Gregory Coleman, the case agent responsible for all aspects of the "Wolf of Wall Street" investigation.
Massive fraud impacted multiple states
As of June 18, 2021, ESD estimated it paid out approximately 96,000 known or probable fraudulent claims totaling over $640 million. The state of Washington recovered a substantial portion of the fraudulently paid funds. However, as of June 18, 2021, approximately $315 million in stolen funds had yet to be recovered.