By Amber Duke
MARY-LAND OF THE FRAUD
I was catching up with a friend shortly after Christmas when he asked if I was aware of the “massive unemployment fraud” in Maryland.
I couldn’t say that I was. But my friend indicated that he heard scammers had stolen millions of dollars from the state and its taxpayers by applying for unemployment benefits with stolen identities.
Then, on Jan. 10, the Maryland Office of Legislative Audits released a report indicating that the state had overpaid $807.4 million in unemployment benefits and that $760 million of those payments were unrecoverable.
Alarm bells started going off in my head.
Surely these weren’t just clerical errors? If they were, why was so much of the money unable to be recovered?
The Maryland Labor Department notes on its website that “overpayments can occur for several reasons, including unreported wages, changes in work availability, or identity theft or fraud committed by a third party, which was particularly an issue during the COVID-19 pandemic.”
I haven’t fully solved the case, but let’s just say all available evidence points to my friend being correct — there is mass unemployment fraud happening in Maryland.
Let’s start with this clue: Gov. Larry Hogan uncovered a major unemployment fraud scheme in 2020. Hogan said there was a “massive, sophisticated criminal enterprise” where scammers tried to rake in $501 million. How did they do it? Identity theft. The thieves trawled national data breaches for information they could use to fraudulently apply for unemployment.
Hogan’s administration stopped the scam after they noticed a sharp uptick in out-of-state claims.
While this iteration of the fraud was busted, it appears there are plenty of similar schemes. Three Baltimorons were sentenced to years in prison earlier this year for stealing multiple victims’ identities and using them to apply en masse for unemployment benefits. Two P.G. County men, along with a Richmond, Virginia, co-conspirator, stole more than $300,000 from the state by using stolen Social Security numbers to apply for COVID-era unemployment benefits. Three Baltimore-based cousins were just indicted for a six-year identity theft-based scam that sought $550,000 in fraudulent benefits.
This looks like just the tip of the iceberg. Maryland residents are now coming forward indicating that the state has reached out to them asking them to repay benefits they never applied for nor received.
“I’ve been working at the same place since 2018,” one woman who the state claims owes $250 in overpaid benefits said in an interview with a local news outlet.
A Marylander on Reddit posted that they reported identity theft to the state years ago but now are being asked about unemployment overpayments.
“Would there be any additional steps I can take to finally be rid of this nonsense that should easily be apparent from the MD DOL UI’s records? Are they not trying at this point or do they just not want to put any effort in to resolve their mistake?” they asked.
A commenter said, “I got stuck in a loop when I tried to collect UI a couple of years ago because someone had collected in my name during Covid.”
“I got this too, and I feel panicked. Is this a scam? If so, I’m upset my Social Security number is on there. If it’s real, then wtf? I did everything right, and paid taxes on that money too,” another reported.
Another seemed to sum up the state’s primary problem and why the alleged fraud was so rampant: “Why would they send money out to people without confirming their identity?”
WBAL reported that they have spoken to some Marylanders who were defrauded and are now facing demands to pay back the state the stolen money.
Maryland Labor Secretary Portia Wu admitted that the letters being sent to Marylanders, even the victims of identity theft, are merely an attempt to sort out which of the more than 2 million claims filed in the last five years or so are legitimate.
“Those letters relate to as much as $1.3 billion in potential payments. Now, we know a lot of that money either may have been stolen by fraud … I mean, that’s a lot of what happened in the pandemic,” Wu said.
So how much money was actually lost to scammers in Maryland? I wouldn’t be surprised if we’re looking at Minnesota Somali-level fraud here.
