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The Pandemic Creates A Perfect Environment For New Types Of Fraud

ARI SHAPIRO, HOST:

The state of Washington this afternoon admitted that it has lost hundreds of millions of dollars in what appears to be a massive pattern of fraudulent unemployment claims during the pandemic. NPR's law enforcement correspondent Martin Kaste joins us now from Seattle.

Hi, Martin.

MARTIN KASTE, BYLINE: Hi, Ari.

SHAPIRO: This is an astonishing figure - hundreds of millions of dollars.

KASTE: Yeah. Yeah. And you should've seen the look on the face of the commissioner for employment security here - her name is Suzi LeVine - when she did the Zoom call talking about this earlier this afternoon. She won't say whether the number of dollars lost is at the lower end of that range - hundred million or up toward a billion. But she says the numbers of suspicious claims - the number of impostor claims - are in the tens of thousands.

SHAPIRO: And do they have any ideas yet about how this scam worked?

KASTE: Well, this doesn't seem to be about some system getting hacked. At least, it's not that kind of cybercrime. What this is is someone pretending to be other people and filing unemployment claims in their names. They call it impostor fraud. Impostor fraud - you often see it with W-2 forms and income tax.

And when you file a claim normally here in Washington, you're supposed to say who you used to work for, where you lost your job. And the state would normally notify your old employer to make sure you're really out of work.

What seems to have happened here - and the state won't get into too much detail - was the state was in a hurry to get the money out, understandably, during this crisis, and it wasn't waiting for confirmation from former employers to see if that job really was lost and that criminals somehow realized they had a hot slot machine here. The state of Washington was paying out fast, and they rushed to get as much of that money as they could before the state caught on.

It finally did. Right around May 11, it says it noticed a flood of messages from supposedly former employers saying, wait a minute; that person still works here. And now the commissioner - Commissioner LeVine says because of this fraud, the state is going to have to take a little longer before it pays out.

SUZI LEVINE: That's what makes me especially mad. I want nothing more than to get those benefits out to those who so desperately need them. But we now have sophisticated criminals attacking us and impacting that effort. How dare they?

SHAPIRO: She sounds furious. Have they been able to figure out who is behind this - who the criminals are?

KASTE: They talk about this being an active investigation. They don't want to get into details. Independent cybersecurity firms think they've seen this happening. They've got their own methods of following some of these groups overseas. They think that these are cybercrime - well-known cybercrime networks out of places like West Africa. And they say they saw a pattern of these groups targeting Washington state, you know, couple of weeks ago.

SHAPIRO: And is it only Washington state that's been targeted by this group?

KASTE: No. Other states have definitely been targeted, and there are other kinds of fraud going on with this kind of COVID-19 pandemic aid being stolen. Really, what some of the experts are telling me is this is kind of a gold rush right now, that a lot of the cybercrime networks have spent the last few years accumulating stolen personal information about us, you know, through things like the notorious Equifax data breach in 2017.

But that kind of information is hard to turn into money. It takes a lot of work. But right now, there's this - all this money just flowing out of the federal government for aid in different forms. And it's sort of a bonanza for them to finally take this personal information they have about us and try to get money for it.

SHAPIRO: Any hope of getting any of the money back?

KASTE: The past is not very promising here. In past cases, this kind of cybercrime - once it leaves the country, it's really hard to get back.

SHAPIRO: NPR's Martin Kaste. Thank you, Martin.

KASTE: You're welcome. Transcript provided by NPR, Copyright NPR.

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