Up to $1.1 billion lost by state agency due to fraud, auditor’s report says
OLYMPIA – Sen. Jeff Wilson, R-Longview, is calling for legislative hearings on a possible $1.1 billion fraud loss at the state Department of Employment Security, as well as on the governor’s emergency powers.
Wilson, ranking Republican on the Senate State Government and Elections Committee, called on the panel to conduct a work session regarding the massivr fraud, to be held sometime after the current legislative session adjourns. Legislative committees currently are scheduling meetings for the summer and fall, before the 2022 legislative session convenes.
Wilson said it’s time the Legislature started asking questions about the fraud that snarled benefit payments for thousands of Washington residents last year. Last week the state auditor’s office released a report indicating the state’s losses could total $1.1 billion, nearly twice as much as had previously been revealed.
“This is one of the biggest fraud cases in the history of our state, if not the biggest – and it involved the public’s money,” Wilson said. “The fraud was so significant that at a time of record unemployment, tens of thousands of legitimate applicants were kept waiting weeks and even months for benefits. I would think every member of the Legislature would be interested in fully exploring this enormous management failure. Asking a few questions about this billion-dollar fraud would be a good place to start.”
Wilson made the suggestion at a committee meeting Tuesday. Majority Democrats on the committee, however, expressed no enthusiasm about probing an agency under the control of the governor, also a Democrat. The committee’s interim schedule remains undetermined.
Last year the state Department of Employment Security reported that $646 million had been lost to Nigerian fraudsters who posed as legitimate applicants for unemployment benefits. The performance audit released last week by the state Auditor’s Office found that the agency was unprepared for the fraud, with gaping vulnerabilities in its system, inadequate procedures, and software tools that were not functional. Benefit payments were delayed while the agency reexamined claims and processing procedures. Those who received their first benefit checks in August waited an average of 70 days for their first payment.
The same audit noted ESD’s poor record in responding to phone calls and other queries from anxious applicants, and said the agency’s ability to respond to crisis remains a concern. A separate financial audit from the State Auditor’s Office, also released last week, pointed to possible misappropriations of funds by other parties. An upcoming audit will deal with the agency’s implementation of technology.
At Tuesday’s committee meeting, Wilson urged that the panel schedule a work session on the troubled agency. Majority Democrats were hesitant, some suggesting that all reports should be in hand before the Legislature considers whether to hold a hearing.
Wilson said afterward there is no need to wait. “This started a full year ago, and so far the Legislature has taken no action. When I came aboard in January, I heard from dozens of constituents who were still waiting for their first checks. We should have been talking about this months ago. Now that the state auditor is telling us this fraud is even bigger than anyone imagined, further delay is tantamount to sweeping the matter under the rug.”
Wilson also suggested Tuesday that the State Government panel hold a work session on another topic of controversy – the governor’s emergency powers. Gov. Jay Inslee has controlled all COVID decision-making since he declared a state of emergency last February. Though the Legislature had the ability to take control when it convened in January, majority Democrats immediately voted to cede the Legislature’s authority to the governor for the duration.
Wilson suggested a presentation from the National Conference of State Legislatures, which has been tracking the differences in emergency policies in all 50 states. Democrats notified Wilson late in the day that such a hearing would be arranged in November.
“I’m glad my colleagues are willing to discuss this issue,” Wilson said, “but I wish we didn’t have to wait another seven months to do it.”