LOCAL NEWS

New audit reports find that Employment Security Department failed to protect against fraud

Apr 13, 2021, 1:23 PM | Updated: Apr 15, 2021, 8:17 am
Employment Security, audit reports, unemployment tax, unemployment suspect...
A sign at the headquarters for Washington state's Employment Security Department at the Capitol in Olympia, Wash. (AP Photo/Ted S. Warren, File)
(AP Photo/Ted S. Warren, File)

Three audit reports released by the State Auditor’s Office on Tuesday concluded that the state Employment Security Department failed to take certain fraud prevention measures, making it more vulnerable to an attack that plagued the department last year, and potentially leading to greater fraud losses than previously believed.

ESD whistleblower says she was told not to help people

The audits found that total losses to the department could top $1 billion, including not just the nearly $650 million known to have been paid to scammers in last year’s attack, but also another $460 million in “questionable payments” that the Auditor’s Office said the ESD has not yet investigated.

The ESD responded to those audits shortly after they were released, calling the $460 million figure “deeply flawed,” and noting that it included tens of thousands of claims that were found to be legitimate, or that were being investigated and had seen payments stopped. The ESD also noted that even if the numbers outlined in the audits were accurate, that would put improper payments “at less than 5%” of all benefits paid out last year, which is below the federal baseline of 10% for improper payments.

The ESD has since recovered more than $350 million of the $647 million stolen in the fraud attack.

The audits noted that certain factors made ESD a target for fraud, such as emergency federal legislation that bypassed certain security steps, the lack of a “proactive anti-fraud unit” at the department before the pandemic, and the fact that some of its fraud-prevention tools weren’t working, such as checking identities with state prison registers before sending payments.

A financial audit released by the State Auditor’s Office in December found that an automated process that flags suspicious claims was out of commission during the time that much of the fraud attack took place.

Head of WA unemployment office leaves to join Biden administration

The reports also found that ESD has only been able to answer a small percentage of phone calls from claimants about their cases and from business owners asking about unemployment insurance.

“Our goal as auditors was to establish the facts surrounding a massive fraud that targeted our unemployment insurance system,” State Auditor Pat McCarthy said in a statement. “Together these reports paint a detailed picture. There are fraud prevention techniques Washington’s program could have used to lessen the impact of these schemes, but the agency’s resources also were overcome by circumstances truly beyond its control.”

The performance audit report stated that since the attack, ESD has made changes to guard more strongly against fraud, such as hiring staff for a dedicated anti-fraud office.

“We make no additional formal recommendations, but strongly encourage ESD to continue its efforts to address these issues,” the report said.

The ESD responded to this audit more favorably, stating that the department “greatly appreciates the work done in this audit and agrees that, while there have been significant challenges and lessons learned over the course of the crisis, the steps the agency has and continues to make are effective in combatting fraud and improving customer service.”

Another audit on ESD’s technology will be published later this month.

The auditor’s office is doing a separate review investigation into potential misappropriation by ESD employees.

Local News

hospitals...
Nicole Jennings

More staff in hospitals reporting vaccination, but some losses still likely

Reports of vaccination are growing among staff of the state's hospitals, but there will likely still be cuts to services caused by staffing shortages.
22 hours ago
school, vaccine...
Stephanie Klein

Seattle school district reports 99% COVID vaccine compliance

Seattle's school district says the "overwhelming majority" of its staff has shown proof that they have been vaccinated against COVID-19.
22 hours ago
money, minimum wage...
MyNorthwest Staff

Seattle minimum wage will increase on Jan. 1

Minimum wage in Seattle, and across Washington state, will increase on Jan. 1, 2022. Large companies will pay their employees $17.27/hour.
22 hours ago
stolen LEGOs...
Stephanie Klein

Seattle store owner arrested for trafficking stolen Star Wars LEGOs

A store owner in downtown Seattle was arrested on Friday for trafficking stolen Star Wars LEGOs, among other items.
22 hours ago
vaccine mandate...
MyNorthwest Staff

Seattle fire chief reports high compliance with vaccine mandate, consistent response times

Mayor Durkan, Fire Chief Scoggins allayed concerns over emergency service response times, report high compliance with vaccine mandate
22 hours ago
Dow Constantine, King County vaccine requirement...
Nick Bowman

Up next: King County vaccine requirement for restaurants, bars, more takes effect on Oct. 25

A King County vaccine requirement for restaurants, bars, music venues, and more is on the horizon, set to take effect on October 25.
22 hours ago

Sponsored Articles

...

How to Have a Stress-Free Real Estate Experience

The real estate industry has adapted and sellers are taking full advantage of new real estate models. One of which is Every Door Real Estate.
...
IQ Air

How Poor Air Quality Is Affecting Our Future Athletes

You cannot control your child’s breathing environment 100% of the time, but you can make a huge impact.
...
Swedish Health Services

Special Coverage: National Prostate Cancer Awareness Month

There are a wide variety of treatment options available for men with prostate cancer. The most technologically advanced treatment option in the Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform.
...
Marysville Police Department

Police Opportunities in a Growing, Supportive Washington Community

Marysville PD is looking for both lateral and entry level officers. Begin or continue your career in law enforcement for a growing, supportive community.
...
Comcast

Small, Minority-Owned Businesses in King County and Pierce County Can Now Apply For $10,000 Relief Grants Through Comcast RISE

Businesses in King County and Pierce County can apply beginning on October 1, 2021, at www.ComcastRISE.com for a chance to receive a $10,000 relief grant.
Courtesy of JWatch Photography....
Experience Anacortes

Summer Fun Activities in Anacortes

With minimal travel time required and every activity under the sun, Anacortes is the perfect vacation spot for all ages.
New audit reports find that Employment Security Department failed to protect against fraud