Fraud alleged

Inmates allegedly provided info to others who filed jobless claims in their names

Inmates reportedly provided information to others who filed jobless claims in their names while they were in a Franklin County facility.

Two inmates pleaded not guilty in U.S. District Court on Thursday to charges that they had conspired to defraud the state-administered unemployment insurance program from inside a Franklin County correctional facility. The Department of Labor paid out over $30,000 as a result of the alleged scheme.

Two separate indictments detail a strategy whereby the inmates at Bare Hill Correctional Facility in Malone distributed their personal information to outside collaborators who would submit unemployment insurance claims under the inmates’ names.

Reginald Thornton, 28, was accused of providing his identification to a female co-conspirator who fraudulently filed for unemployment on his behalf.

Thornton also allegedly provided information to another person to file claims for two other inmates, including 40-year-old Lord Paulin, who also pleaded not guilty before U.S. Magistrate Christian F. Hummel on Thursday.

The state Department of Labor has come under increased scrutiny for its susceptibility to fraudulent unemployment insurance claims since the onset of the COVID -19 pandemic.

When New York’s economy plummeted in March 2020 and forced millions of people to lose their jobs, the ensuing increase in applications for unemployment benefits “crashed on New York like a wave, pushing our systems to the brink,” according to testimony from state labor Commissioner Roberta Reardon last August. The Times Union reported that key security protocols for identity verification were dropped in the face of the urgent situation.

For many New Yorkers, the resulting benefits provided a key lifeline.

But in the final quarter of 2020, the same period when claims were filed on behalf of Thornton and Paulin, the state reported more than $68.3 million in payouts to New Yorkers ineligible to receive money, in a mixture of fraudulent schemes or claimants unaware of their ineligibility. Law enforcement officials also reported a high rate of identification-theft cases involving individuals whose information was used illegally by others to file false claims.

In response to this and other pandemic-related increases in fraudulent activity, the U.S. attorney general formed a COVID -19 Fraud Enforcement Task Force on May 17, to “bolster efforts to investigate and prosecute the most culpable domestic and international criminal actors,” according to the Department of Justice.

One of the two federal indictments against the inmates noted that each unemployment insurance applicant was required to certify that they were available for work right away, with the exception of those who could not work due to the COVID -19 pandemic.

“Inmates were not eligible to receive UI benefits because they were not available for employment due to their incarceration, not the COVID -19 pandemic,” the indictment states.

While both men have been charged with mail fraud, Thornton faces the additional accusation of aggravated identity theft, which carries a mandatory minimum prison sentence of two years.

Paulin is serving a sentence of up to seven years for drug possession for a 2018 conviction in Orange County. Thornton is serving a 7- to 9-year sentence for a 2018 conviction in Nassau County for weapons and drug charges.

Their alleged co-conspirators were arraigned on Aug. 13.