State tackles rise in unemployment fraud during pandemic

Oct. 23—Wendy Konicky had never filed an unemployment claim in her life.

Konicky said she was shocked last spring when her employer in Johnstown received a letter from the Pennsylvania Department of Labor and Industry informing the company that she had made a claim.

That letter contained her Social Security number.

"My boss said, 'Did you file for unemployment?' " she said. "I said, 'I need to call someone. Someone has my Social Security number.' "

She wrote "Fraud" all over the letter, and faxed it to the unemployment office with a personal note.

Months later, she hasn't received a response.

"I'm assuming the case is closed," she said, although she still wonders how someone accessed her Social Security number.

"I've just been watching my credit report so nothing shows up on it, but I basically felt nobody cared," she said.

"Nothing has come up on credit report, but it is one of those things that sticks in the back of your mind."

'I didn't apply for it'

Labor and Industry has detected more than 375,000 fraudulent initial unemployment claims filed since the June 8 start of its new Unemployment Compensation system, department press secretary Alex Peterson said in an email.

In June, the state's unemployment system transitioned from a 40-year-old mainframe system to a modern computer system.

The department also hired hundreds of new staff since the pandemic's surge in demand, to handle claims and complaints of fraud.

In June, George Milkie, sole corporate shareholder at Milkie's Lawn & Landscape on Eisenhower Boulevard, received a check from the department at his home for "a significant amount of money," he said.

"I had no clue what it was for," he said. "It was an unemployment check. I didn't apply for it. Somebody at the system applied in my name."

Milkie, 70, said he has never filed for unemployment. He kept his business open through the pandemic, as lawn care was considered essential, he said.

Milkie voided the check and sent it back. The next week he received a debit card — and sent that back, too.

The department had begun mailing checks to help prevent the theft of people's identities and started linking benefits to direct deposit bank accounts.

And the state continues processing returned payments, debit cards and checks; answering fraud-related calls; and investigating identity theft complaints.

Milkie was one of many people who a few months ago walked into state Rep. Jim Rigby's office puzzled that they had received unemployment benefits for which they never filed.

In other cases, visitors to Rigby's office were people who hadn't received benefits though they had been waiting for weeks.

"We've filed on their behalf to the unemployment office to find out where their claims are," Rigby said. "It's frustrating for them when they call a call center and no one answers."

It appeared to Rigby that the consternation was the result in part of some unemployment fraud as well as the state's a learning curve in operating a new call center and system.

"A few months ago, we felt like we were an unemployment center — it was every day," Rigby said. "In the past month, I saw it trail off."

Fraudsters bought stolen identities obtained through data leaks that occurred outside state government, then used those stolen identities to apply for the temporary federal unemployment benefits, state officials said.

Pandemic unemployment benefits ended in early September, but the Department of Labor and Industry continues to investigate fraud while using an identity identification vendor to bolster security measures.

"The department has successfully addressed a great deal of fraudulent activity in the new UC system following the implementation of ID.me," Peterson said.

"Efforts of our fraud prevention staff have prevented more than $3.6 billion in fraudulent payments from reaching fraudsters."

Fraud related to the federal Pandemic Unemployment Assistance program was a national issue. The FBI has reported spikes in fraudulent unemployment insurance claims filed using stolen identities.

The state Department of Labor and Industry has also worked with the National Unemployment Insurance Fraud Task Force, the FBI, the state treasury and the state attorney general's office to identify and stop fraudulent attempts related to pandemic unemployment benefits.

"Pennsylvania Attorney General Josh Shapiro has arrested and charged dozens of criminals for illegally obtaining unemployment benefits," Peterson said. "In some cases, inmates have even been charged."