The Washington Policy Center reported last September that an Employment Security Department (ESD) employee was charged with bribing unemployment benefit claimants and stealing money from the Employment Security Benefit system.
The, now former employee, Reyes De La Cruz plead guilty on June 22 to three felonies and faces up to six years in prison. According to the US Attorney’s office, last year, De La Cruz was facing charges for six counts of wire fraud, nine counts of bribery, one count of extortion and four counts of aggravated identity theft.
ESD has struggled with transparency and fraud since the beginning of the pandemic in 2020.
The largest financial loss to the agency was an estimated $640 million in unemployment funds due to a Nigerian scam, followed by an estimated additional $500 million that was discovered during the Washington State Auditor’s office audit that was published after an investigation into ESDs security and fraud prevention capabilities.
Relaxation of the fraud review policies by ESD in order to reduce claims backlogs, likely contributed to the ongoing fraud that the agency is unable to detect or prevent sufficiently. As reported by Shift Washington and the Puget Sound Business Journal, the department has repeatedly changed the claim qualification criteria with little explanation to the public as to the reason why.
At the Washington Policy Center, we recognized these problems with ESD after the initial fraud earlier this year and have published numerous articles and a detailed Policy Brief summarizing the issues facing ESD and solutions for those problems, some of which have been adopted.
ESD officials need continue to provide the public with more transparency into its internal policies, improve fund balance reporting accuracy, data timeliness and data availability. ESD needs to improve authentication and fraud protections against scams and individual fraudulent claims and needs reform to employer taxation policy and trust fund use.