State catches unemployment scammers www.privateofficer.com

Seattle Wa. Jan 3 2008

With the help of a high-tech data mining staff and an investigation into phone records, the state has cracked down on a national ring of scammers collecting unemployment benefits from Washington, investigators said Wednesday.
Fraud investigators were tipped off to the scheme in July when several claims used the same Washington-based cell phone number. The benefit checks for those claims were mailed to Louisiana addresses.
The state traced the cell phone to a father and son who had filed claims and passed the number on to friends, according to the Employment Security Department.
Investigators have identified at least 54 people who they believe have improperly collected more than $400,000. The people live in several states, including Montana, Texas, Louisiana and Florida. The state has recovered $40,000 and stopped an additional $200,000 from being paid, it said.
To collect an unemployment benefit, a person must call and certify each week that he or she is in the state and looking for work, spokeswoman Hilary Young said.
Benefit payments are tied to the average annual wage, which is higher in Washington than others, she said.
"One of the reasons that people like to collect benefits in Washington, if they can, is because our benefit rate is higher," Young said. "In most cases, you're going to get more here than you are in a Southern state where the cost of living and the average wage is a lot lower."
People are allowed to collect unemployment benefits from Washington, even if they do not live here, under federal law. But the people seeking money must have worked here, or must be in the state when they file for benefits.
The state's data mining unit was created in 2005 and has four employees. That unit uncovered the scam, said Annette Taylor, chief investigator for the department's office of special investigations.
Her office oversees about 30 who work in various units, including fraud management, new hires, identity claims and data mining.
"We got a tip," Taylor said. "The tip was that, 'We believe that there are individuals using a Washington-purchased cell phone.' We started digging into it."
Using a phone tracking system, data miners detected patterns of calls placed to the state agency. The computer system looked for similar patterns among other callers, and spit back the matches, allowing investigators to narrow their focus.
"We interviewed some of the claimants, and they admitted to not being in the state of Washington when they filed the claim, which is part of the requirements," Taylor said.
Some of the claimants have appealed and won their case with an administrative law judge.
"We didn't have enough evidence to counterappeal," Taylor said. "We've lost a couple of them but in the scheme of everything, we've prevailed."
If caught, a scammer has to pay back benefits with interest. Starting this year, under new state legislation, the penalties have become more stringent. On first offense, a person is disqualified from benefits for 26 weeks. On second offense, a scammer has to pay back the benefits plus a 25 percent penalty and cannot collect unemployment for a year. On third offense, the person cannot collect unemployment for two years and must pay back benefits plus 50 percent.
The state can pursue criminal theft charges, and does so on the most egregious cases; it has not done so with this case.
The data-mining unit must earn its keep under state law. It must prevent $1.8 million in overpayment of benefits per year, and must detect $2.125 million in fraud, Taylor said.
A steady stream of dishonest applicants means there are always new schemes to uncover.
"For 16 years of my career, I've been in investigations, either criminal or civil," Taylor said. "You have to have a strong investigative arm for any agency if you are going to be providing a service that includes giving money to individuals."

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