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Hogan: Maryland Caught Fraud Attempt In Unemployment Insurance Claims

Rachel Baye / WYPR

Maryland officials have uncovered a scheme to defraud the state unemployment insurance program of $501 million dollars, Gov. Larry Hogan announced Wednesday.


Speaking at a press conference, Hogan said the “sophisticated criminal enterprise” used stolen identities to file more than 47,500 fraudulent claims. He said the state was alerted to the scheme because of an unusually high number of out-of-state claims. 

“Not only did we identify the fraudulent activity here in Maryland and save the taxpayers a half billion dollars, we also helped the federal authorities uncover related illegal activity in states across the country,” Hogan said.

There is no indication that the personal information of Maryland unemployment claimants was compromised, Hogan said. The identities used in the fraudulent claims appear to have come from previous data breaches across the country. 

This criminal effort was tied to instances of fraud in at least a dozen states, Hogan said, and part of a national surge in unemployment insurance fraud during the COVID-19 pandemic.


“Unemployment insurance fraud investigations have historically made up approximately 10% of our agency's investigative workload,” said Special Agent Derek Pickle, who oversees investigations in the Washington region for the U.S. Department of Labor’s Office of Inspector General. “Today, more than 50% of our investigative matters pertain to unemployment insurance, and that number continues to grow by the day, and that includes investigative matters in all 50 states.”


Nationwide, states are grappling with unprecedented numbers of unemployment insurance claims, as a result of the COVID-19 pandemic. That makes states a rich target for fraud.


“Fraudsters are capitalizing upon the hardships created by the pandemic and are targeting unemployment insurance programs due to the additional benefits offered by the CARES Act,” said Maryland Labor Secretary Tiffany Robinson.


The high volume of claims also underscores the value in uncovering the criminal effort, Hogan said.


“Detecting and stopping this fraud ensures that money remains available in these funds for the tens of millions of deserving people all across America who actually need the help,” he said.


The state has paid out more than $4.3 billion in state and federal unemployment benefits and has processed more than 96% of claims, Hogan said.


Despite the record numbers of Maryland residents struggling with unemployment, Maryland is faring better than many other states, he said, because Maryland has been able to reopen businesses with guidelines in place to help prevent the spread of COVID-19. 


However, Hogan said he is concerned about some trends among young adults. The positivity rate — the portion of people tested who are confirmed to have COVID-19 — is 6.47% for people under age 35, compared with 3.54% for people who are 35 or older.


He also warned that some bars and restaurants ignoring capacity restrictions and other pandemic-related rules could force him to close all bars and restaurants again.


“We're really concerned about our small business owners. We're concerned about those people who work in those restaurants,” Hogan said. “We're trying to crack down on the bad apples without killing the entire industry and all those folks that work there and causing more unemployment. But look, if if this gets out of control, if people continue to not follow the rules, we'll have to take another look.”

Rachel Baye is a reporter for WYPR's newsroom. @RachelBaye
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