Fraudsters Claimed Up To $2 Billion In Unemployment Benefits, Maryland Comptroller Peter Franchot Says
ANNAPOLIS (WJZ) -- Maryland state Comptroller Peter Franchot on Wednesday estimated that about $2 billion in federal and state unemployment funds distributed during the pandemic were fraudulently obtained.
The Maryland Department of Labor is set to hold a hearing at 1:30 p.m. Thursday to address what happened and how the state can do better moving forward.
Franchot said Maryland is not alone in being a target for unemployment fraud. In California, $30 billion in paid-out claims were later determined to be fraudulent.
Franchot said that, since the COVID-19 pandemic began, 1 million Marylanders have filed first-time unemployment claims. They're the ones who need the money, he said.
"They needed unemployment relief because they were not working, could not pay bills, so payments were critical," Franchot said.
Franchot said he doesn't believe there was intentional wrongdoing by state labor officials. Rather, he said, the pandemic sent everyone into an emergency state and poor judgment may be to blame. Many of the fraudulently obtained payments "went directly to crooks, many in Russia and China," Franchot said.
Besides draining state coffers, the fraudulent claims and payments also delay legitimate claims, with many people telling WJZ they have holds on their accounts for reasons they cannot explain.
"There are lots of people denied benefits because of the fraud incidents," Franchot said.
Franchot said his office pays about half a million dollars for a cybersecurity system to keep tabs on money being sent out. It's an electronic check on the system in place. Franchot hopes officials will invest in something like this so more money is not lost for good.
"We spend a lot of time making sure the Maryland treasury is not robbed by criminals in the tax area. The Department of Labor did not do that," Franchot said.
Labor officials did not immediately respond to a request for comment.
This story was originally posted on July 28, 2021.
