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Auditor decries 'gaps in accountability' in $315,000 unemployment fraud case

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FILE – In this April 26, 2017 photo, the Washington State Capitol, also known as the Legislative Building, is seen in Olympia, Wash. A push by media groups to gain access to records created by Washington lawmakers is before the state’s highest court. The Washington Supreme Court is set to hear oral arguments Tuesday, June 11, 2019, in a case that will determine whether state lawmakers are subject to the same disclosure rules that apply to other elected officials under the voter-approved Public Records Act. (AP Photo/Elaine Thompson, File) Elaine Thompson/AP

Auditor decries ‘gaps in accountability’ in $315,000 unemployment fraud case

December 07, 01:00 PM December 07, 01:00 PM

The Washington State Auditor’s Office (SAO) issued a new report Monday charging the Employment Security Department (ESD) with “gaps in accountability” that allegedly allowed one former employee to misappropriate $315,282 and authorize an additional $121,503 in “questionable unemployment benefit payments.”

That adds up to $436,785 that SAO claims should not have been spent, authorized by an ESD employee.

“Much of the massive fraud that hit our unemployment system in 2020 was orchestrated by cybercriminals from across the globe, but this case is different,” said State Auditor Pat McCarthy in a statement. “It’s a reminder to every public agency to be vigilant in preventing fraud, whether it is perpetrated by actors on the outside or inside of government.”

The former ESD employee in question has been identified as Reyes De La Cruz, III, by the United States Department of Justice, which brought a 20-count indictment against him on Sept. 24 for allegedly “filing false unemployment claims and demanding kickbacks.”

“Dedicated investigators continue to build criminal cases against those who sought to unlawfully enrich themselves during our country’s pandemic crisis,” said Acting U.S. Attorney Tessa M. Gorman in a statement at the time. “In this case, an insider used his official access and knowledge to illegally enrich himself.”

Monday’s SAO report found, “No one at ESD reviewed many questionable decisions made by the employee,” according to the press release.

The actions of De La Cruz are reported to have included using the same address for multiple people “supposedly filing unemployment insurance benefit claims”; using online banking and debit cards to perpetrate fraud; processing claims for people in jail; and using a fake Social Security card for verification.

ESD spokesman Nick Demerice responded to a request for comment by pointing to a statement that the department made at the time of De La Cruz’s indictment and the official reply within the auditor’s report.

“After becoming aware of the situation, we took immediate action by separating the employee, notifying the state auditor and referring the case to law enforcement,” Employment Security Department Commissioner Cami Feek had said in a statement. “We fully support the prosecution of these crimes and will assist in any way necessary.”

In the auditor’s report, the ESD promised to “implement varying control activities that can help detect and prevent future employee fraud,” hold more training sessions, and “work with the prosecutor” to recover funds if De La Cruz is convicted.

ESD also argued that three of De La Cruz’s questioned unemployment claims “totaling $37,862 were legitimate and should not be classified as questionable.”

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