More than $100 million has disappeared from the Washington State Unemployment Office and officials there are blaming Nigerian scammers.
The head of the state’s Employment Security Department said impostors have used stolen information from tens of thousands of people to fraudulently receive hundreds of millions of dollars in unemployment benefits, San Francisco Gate reported.
The U.S. Secret Service, part of the Department of Homeland Security, says some of the scammers are tied to an organized group — the Nigerian Scattered Canary criminal gang.
Scattered Canary used gmail to generate fraudulent accounts, file claims, and receive payments.
The scam group emerged about a decade ago and tends to target government services including unemployment fraud, social security fraud, disaster relief fraud and student aid fraud, according to Armen L. Najarian, CMO and chief identity officer of email security company Agari.
Scattered Canary is a Nigerian fraud ring that began in 2008. It started with just one actor dubbed “Alpha.” Alpha ran Craigslist scams with the help of a more seasoned mentor, dubbed “Omega,” AXIOS reported. The pair reportedly committed 419 total Craigslist scams, averaging $24,000 in profits. For 10 years, Agari has been tracking and gathering intelligence on the ring that has grown to include at least 35 people.
Suzi LeVine, commissioner of the state Employment Security Department (ESD), acknowledged that the department had given “hundreds of millions of dollars” to an international fraud scheme that crippled the state’s unemployment insurance system, the Post Millennial reported. Levine did not specify exactly how much the losses were.
Washington state is working with federal law enforcement, financial institutions and the U.S. Department of Labor to recover the money paid out during the huge increase in joblessness from the coronavirus crisis, LeVine said.
In April, Washington Gov. Jay Inslee and LeVine, whom he appointed in 2019, said that they were relaxing the vetting of unemployment claims to speed up the process of getting money to recipients. “ESD officials acknowledged that, because of the elimination of the ‘waiting week’ between the time a claim is filed and the time the benefit is paid, the agency wasn’t always able to get verification from employers about a claim before payment was made,” Post Millennial reported.
ESD officials claim that fraudsters targeted Washington state because it was among the first to begin paying out new benefits available under the federal stimulus bill.
The scam has led to payments to the actual unemployed being delayed.
A U.S. Secret Service alert issued last week identified Washington state as the top target so far of a Nigerian ring seeking to commit large-scale fraud against state unemployment insurance programs, The New York Times and Seattle Times reported.
More than 1.1 million people in Washington state have filed for unemployment benefits since businesses started closing in March due to covid-19. But some of these were most likely fraudulently, officials said.
“These are very sophisticated criminals who have pretty robust collections of information on people, and they are activating and monetizing that information,” LeVine said.
The Nigerian scammers are hitting other targets too.
In the last nine weeks, 38.6 million people nationwide have filed for unemployment benefits, The Washington Post reported.
Scattered Canary recently attempted to exploit the CARES Act on May 17, filing two fraudulent unemployment claims through Hawaii’s Department of Labor and Industrial Relations website, SC Media reported.
“Since its inception, at least 35 different actors have joined Scattered Canary in its fraudulent schemes,” according to a recently released whitepaper on the gang. “The group has turned to a scalable model through which they can run multiple types of scams concurrently.”
In addition to a new rash of bogus claims in Hawaii, there have been at least 259 bogus other claims in Florida, Massachusetts, North Carolina, Oklahoma, Rhode Island, and Wyoming. In Washington, the latest figure of bogus claims has been in tens of thousands, according to reports. Considering unemployment claims are sent out weekly, and these bogus payments have been sent out over a nine-week period, this can quickly add up to millions of dollars.
The scams had been designed to take advantage of the CARES Act providing financial relief in the form of Economic Impact Payments (EIP). The bogus claims were tracked by email security company Agari.
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The fraudsters took advantage of cities and states that have been struggling to process an overflow of jobless claims amid the covid-19 pandemic and related government shutdowns, Business Insider reported.
