Big government fail: Washington state unemployment fraud loses ‘hundreds of millions'

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The state of Washington just openly admitted that it lost “hundreds of millions” of taxpayer dollars in a massive fraud scandal. A group of Nigerian scammers successfully exploited the state’s system as it became the first to enact the $2.2 trillion CARES Act’s massive expansion of unemployment benefits and eligibility.

The Seattle Times reports:

“The legislation not only boosted benefits available under existing state unemployment insurance systems, including an extra $600 per week; it also gave state officials less time to verify new claims for those benefits. [State government] officials have acknowledged that, because of the elimination of the so-called waiting week between the time a claim is filed and the time the benefit is paid, the agency wasn’t always able to get verification from employers about a claim before payment was made.

“Furthermore, because federal benefits were technically available beginning in March, several weeks before Washington was able to upgrade its processing system to be able to pay them, many claimants had retroactive claims for multiple weeks waiting to be paid in the [state government’s] system. Those retroactive payments went out all at once, which added to the volume of the fraud.”

That’s right: The state government started handing out taxpayer cash without verifying payments with employers and without a waiting period.

And sadly, this is just the beginning. The Secret Service suspects similar attacks have occurred in Florida, Wyoming, Massachusetts, North Carolina, Rhode Island, and Oklahoma. It will be interesting to see, when the crisis has passed and we can fully account for all the waste and fraud in retrospect, how many billions of taxpayer dollars such attacks cost.

Of course, only an anarchist would argue that no government response was needed to the coronavirus crisis and ensuing economic downturn. But any response relying on 1,000-page relief bills and bloated state agencies was always going to result in rampant waste and fraud.

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