Unemployment fraud wreaks havoc
Though Lyn Adams is still working from home during the COVID-19 pandemic, she — most every morning — still visits the campus mailroom of Oklahoma City University. Two weeks ago Adams received two fraudulent claims for unemployment insurance against Oklahoma Children's Theater, the nonprofit she's directed for more than 30 years.
The very next day, she received two more claims, and the next day, six. As of last week, she's received 15 fraudulent claims filed by people “who never, ever worked for us.”
“It's like somebody broke into your house,” Adams said.
“People talk about the Oklahoma Standard, and this is so non-Oklahoma Standard,” she said.
In the ominous lette rs received by thousands of Oklahoma employers, the Oklahoma Employment Security Commission asks
that fraudulent claims be reported by email within 10 days at f raud@ oesc. state.ok.us. It's a growing problem with nearly 1 1 , 000 cases of known fraud since the coronavirus pandemic began affecting Oklahoma this spring.
Stuck in limbo
“There is ram pant amount of fraud ,” said David O st rowe, the Oklahoma Secretary of Digital Transformation and Administration.
Fraudulent claims are just one of the many reasons nearly 60,000 Oklahomans are current ly stuck in limbo waiting for approval of their unemployment claims. Some of those 60,000 claims that have yet to be issued payment are due to suspicion of fraud, user error or incomplete claims.
Suspicious claims are being investigated by a task force formed Friday and made up of the OESC, the state attorney general` so ff ice, and the Oklahoma State and Federal Bureaus of Investigation, OE SC spokesman Trey Davis said.
Davis said the OESC a few weeks ago instituted aC APT CH A system to ensure only non-robot claimants submit claims. The agency, he said, believes the fraud may be the result of a 2017 hack of the Equifax credit bureau in which hundreds of mill i ons of Social Security numbers and other personal data were stolen.
Thousands of remaining incompleted claims, often due to an issue as simple as checking the wrong box in an online form, are being reviewed by about 150 employment specialists.
Claims made by gig workers and independent contractors, eligible for Pandemic Unemployment Assistance, are causing the most trouble in completing claims, Ostrowe said.
“Most of the issues we've heard are on the PUA claims ,” Ostrowe said. “About half of those applications received are incomplete, so we've sent emails back to them. We suspect some of those claims are not valid.”
Ostrowe is hoping to nearly double the number of workers reviewing claims in the coming weeks to continue driving down the number of unfulfilled requests. Already the number has dropped from its high of about 1 30,000 unprocessed claims, and is even down from nearly 86,000 unprocessed claims last week, Ostrowe said.
There have been more than 450,000 successfully completed and paid w eek lyun employment relief claims, totaling nearly $587 million in benefits including about $355 million in federal pandemic assistance, according to the OESC.
Sole proprietors hit too
Meanwhile, no employer is too small to be victimized by fraud.
Kerri Harris, of Kingston, the sole employee of her own bookkeeping company, so far has received eight fraudulent claims.
“I am beyond irritated with all the time I' ve wasted making fraud reports,” said Harris, who has a client who's also been victimized.
Adam C hilde rs, an employment attorney with Crowe & Dunlevy, has several clients who've received fraudulent claims. Those include a bank, two hospitals and one public agency t hat received more than 100 in a few days — all filed under the names of current employees who still work for the agency.
Alex Gerszewski, communications director of the attorney general' s office, isn't surprised. He said the same thing happened at the AG office, which has fielded 4,200 fraud claims since the end of April, when it established a process for the criminal investigation of claims.
Those claims are still being processed and will be investigated by the new task force, Gerszewski said. No cases have been filed so far.
C hilde rs, in helping companies investigate fraud, said he' s never found a breach of information on the sides of his clients.
In one case, they traced the fraud to a home address in Edmond, where fraudsters involved more victims by using someone else's mailbox.
Some fraudsters target a whole block, Ostrowe said, knowing cards will be delivered by mail and the theft will occur straight from the box. Others find ways to electronically divert funds from a card before it even arrives.
One dentist received several fraudulent claims, including a former employee who'd filed an unemployment claim four years ago and was trying to piggyback on that former claim, by acting as if she'd been reemployed and laid off again.
`Combustible mix'
Child er sat tributes the widespread fraud to a confluence of f actors, including the sheer volume of claims the OESC has fielded and the waived waiting period granted by the governor to get help quickly to the thousands of Oklahomans who've lost jobs or been furloughed due to the COVID-19 crisis.
Unemployment insurance was to be paid to workers on all claims related to the coronavirus, and their employers wouldn't pay higher rates ont hei run employment insurance because of C OVID-19-related claims.
When it passed the $2 trillion CARES Act in March, Congress relaxed rules on unemployment insurance, which is a state-federal program, by temporarily, through December, waiving work history requirements and loosening eligibility to include part-time workers, freelance rs, independent contractors and the self- employed. The act also extends the duration of benefits by 13 weeks and supplements state benefits by $600 per week through July 31.
“All that's turned out to be a combustible mix,” C hilde rs said .“What was meant to be a safety net has become a piggy bank for fraudsters.
“Ultimately, the loser in all this could be the employers, who could bear the real cost, in higher unemployment insurance, for years to come ,” C hilde rs said. “With the amount of pressure being put on the system, I can't imagine that increased costs won't find their way back to employers in the future.”
The state-federal program is“like a massive mandatory insurance policy funded by what are in a sense premiums, which they pay through federal and state taxes,” he said. Respective rates are based on many factors, including the number of employees and number of approved and denied claims.
“So benefits that may feel free today will have consequences tom orrow,” Childers said.