King 5 reports that one of the Employment Security Department (ESD) employees has defrauded the taxpayers of Washington of at least $360,000, in a benefit skimming operation.

The employee has been charged with bribing unemployment benefit claimants, offering to either make sure benefits continued when they should stop or threatening to cancel legitimate benefits if the claimant refused to cooperate. The payback was a percentage of the benefit that the employee was paid directly.

According to the US Attorney’s office, the employee will be charged with six counts of wire fraud, nine counts of bribery, one count of extortion and four counts of aggravated identity theft.

ESD has struggled with transparency and fraud since the beginning of the pandemic in 2020.

The largest loss was an estimated $640 million in unemployment funds due to a Nigerian scam last year, followed by an estimated additional $500 million that was discovered during the Washington State Auditor’s office audit that was published after an investigation into ESDs security and fraud prevention capabilities.

ESD would like you to think that the problems are due to COVID-19 claims overwhelming their computer systems. The reality is, however, that the many of problems existed before COVID-19 and have persisted for at least a year prior, despite $44 million dedicated by the legislature to specifically fix ESD’s computer systems.

Relaxation of the fraud review policies by ESD in order to reduce claims backlogs, likely contributed to the ongoing fraud that the agency is unable to detect or prevent sufficiently. As reported by Shift Washington and the Puget Sound Business Journal, the department has repeatedly changed the claim qualification criteria with little explanation to the public as to the reason why.

At the Washington Policy Center, we recognized these problems with ESD after the initial fraud earlier this year and have published numerous articles describing the changes needed for ESD to provide the services they are required to do in a secure, transparent and timely manner.

Additionally, the Washington Policy Center has released a detailed Policy Brief summarizing the problems with ESD and solutions for those problems. Some of these problems have been addressed by legislative action this year.

ESD officials need continue to provide the public with more transparency into its internal policies, improve fund balance reporting accuracy, data timeliness and data availability. ESD needs to improve authentication and fraud protections against scams and individual fraudulent claims and needs reform to employer taxation policy and trust fund use.