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‘Sophisticated’ unemployment scam costs Washington state hundreds of millions of dollars

Jean Klundt thought something was off when she received unemployment notifications for a couple of employees who had quit Klundt Hosmer, the Spokane-based web design and marketing business she owns, last year.

“I was a little perplexed because I had noticed that they had quit for one thing, so they had left on their own,” she said.

Things got even stranger when she received an unemployment notification for one of her current employees. She also received a letter notifying her that her employee had received five payments of $1,050.

“That’s when we really knew that something was really wrong,” Klundt said. “We just reported immediately to ESD (the state Employment Security Department) online.”

And the kind of fraudulent unemployment claims Klundt detected have been replicated on a mass scale statewide, costing Washington hundreds of millions of dollars and delaying the process for residents who really have found themselves without a job and in need of assistance amid the pandemic.

Last week, the employment department received 138,733 claims for unemployment. This represented a 26.8% increase from the previous week.

An unspecified fraction of those claims has been fraudulent, said Suzi LeVine, commissioner of the Employment Security Department, during a news conference on Thursday.

A ring of scammers in Nigeria is believed to be behind the fraud, according to the U.S. Secret Service.

State officials are attempting to recover the stolen money, but LeVine didn’t say if such efforts have been successful.

“This isn’t just happening in Washington state,” she said. “This is part of a sophisticated fraud operation from criminals that all states are vulnerable to and many states have been targets of.”

Washington was one of the first states to make the Pandemic Unemployment Assistance Program and other provisions of the federal Coronavirus Aid, Relief, and Economic Security, or CARES, Act available to residents, LeVine said.

Department officials are working to address the rising number of fraudulent claims, including hiring over 100 people to answer questions coming in from the fraud hotline and bringing in more investigators to track down fraudulent activity, LeVine said.

Applicants also will be required to provide more information or verify their identity in more steps, which could cause a two-day delay to process claims and direct deposits.

Last Thursday, the department suspended unemployment benefits for two days after seeing a dramatic increase in fraudulent unemployment claims.

“This makes me the most angry and the most upset – that we need to delay payments to Washingtonians who need these benefits,” LeVine said. “But we also need to build more time for analysis.”

Victims of fraud will not have to repay anything, and if they find themselves in need of unemployment assistance, they can still apply, she said.

There was no data breach within the employment department, and officials have said that criminals gained access to personal data from other agencies, she added.

Employers and employees of private companies and government agencies across the country have reported fraudulent unemployment claim activity.

People should be aware of fraudulent web pages that ask them to upload their personal information, LeVine said. The ESD will only ask people to input information directly to its official website, LeVine added.

The department is working to increase the fraud unit’s capacity so that it will be able to respond to fraud victims quicker, she said. The department expects unemployment claims to continue to increase.

If someone believes they have been the victim of unemployment fraud, they should report it immediately to the Employment Security Department at and the Federal Trade Commission Identity Theft website at